Comparison between Trust System and Corporate system


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There are several organizational forms for a family office, but the two that are widely used are the trust system and the corporate system. Next, we make a comparison of the shortcomings of these two forms of organization.


The trust system generally has the following disadvantages:

1.No legal person qualify;

2. It is not recognized in some areas (or may have an adverse effect on the trust arrangement due to mandatory inheritance and regulation);

3. Exemption from probate;

4. Tax exemption.


The disadvantages of the corporate system are as follows:

1. It must be liquidated before it can be dissolved (in the civil law system);

2. Dividends are distributed according to the amount of profit, and the liquidity is poor;

3. Stamp tax (voucher tax).

Through comparison, we can know that the trust system and the corporate system have their own advantages and disadvantages, and there is no absolutely perfect organizational form. As for the organizational form to choose to establish a family office, it needs to be comprehensively considered in combination with the law, taxation, regulatory environment, and the specific circumstances of the family. Therefore, before setting up a family office, you should first seek advice from expert.


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