Our Team

We are proud to have Vanessa Yeung to be First Fund’s Independent Consultant. With years of experience and expertise in inheritance insurance planning, she is dedicated to helping clients find the best insurance solutions tailored to their needs.

Beyond her extensive knowledge of inheritance insurance planning, Vanessa also has a strong direct network with medical practitioners in Hong Kong. This allows her to provide valuable advisory service for wealth management solutions, which covers from design and set up of wealth planning structure, assets allocation to medical coverage tailored made to clients on a family basis. She has dedicated to ensure that her clients have a well-designed structure to manage their assets and wealth on a macro view so as to achieve their financial goals.

Hong Kong Insurance & Family Trusts: A Powerful Estate Planning Strategy

Vanessa Yeung believes that combining a Hong Kong insurance policy with a family trust is a highly effective estate planning strategy that enhances wealth protection, tax efficiency, and inheritance planning. Here’s how it works:

1. Structure: How a Hong Kong Insurance Policy and a Family Trust Work Together

A family trust is a legal entity that holds and manages assets for beneficiaries. When paired with a Hong Kong life insurance policy, the structure typically involves three key roles:

Role	Description
Settlor (Grantor)	The individual (typically a high-net-worth individual) who establishes the trust and transfers assets, including insurance policies, into the trust.
Trustee	A professional trustee company or a trusted individual who legally owns and manages the trust assets (including the insurance policy) on behalf of the beneficiaries.
Beneficiaries	Family members or designated individuals who receive trust benefits, usually in the form of insurance payouts.

Step-by-Step Process

1️ Set Up a Family Trust – The settlor establishes a trust, often in an offshore jurisdiction (e.g., Hong Kong, Singapore, BVI, Cayman Islands) for asset protection and tax efficiency.

2️. Purchase a Hong Kong Life Insurance Policy – The settlor (or the trust) buys a whole life insurance, universal life insurance, or private placement life insurance (PPLI) policy.

3️. Assign the Trust as the Policy Owner & Beneficiary – The trust owns the life insurance policy and is designated as the beneficiary.

4️. Wealth Growth & Management – The insurance policy accumulates cash value, while the trustee manages investments and distributions.

5️. Tax-Efficient Wealth Transfer – Upon the policyholder’s passing, the insurance payout is directly transferred to the trust, bypassing probate and estate taxes.

6️. Controlled Distribution to Heirs – The trustee distributes funds according to the trust’s terms, ensuring responsible multi-generational wealth transfer.

2. Key Benefits of Using a Hong Kong Insurance Policy with a Family Trust

✅ Tax Efficiency

• No Estate Tax in Hong Kong – Unlike certain jurisdictions that impose inheritance taxes, Hong Kong has no estate duty, making it an attractive location for wealth preservation.
• Tax-Deferred Growth – The policy’s cash value grows tax-deferred, maximizing wealth accumulation.
• Potential Tax Shielding for Beneficiaries – If structured properly, the trust may help mitigate estate taxes in other countries.

✅ Asset Protection & Confidentiality

• Protection from Creditors & Legal Claims – Trust-owned assets, including insurance payouts, are shielded from lawsuits, divorces, and creditors.
• Privacy & Confidentiality – Unlike wills, which become public records, trusts and insurance policies remain private, ensuring discreet wealth transfer.

✅ Probate Avoidance & Faster Wealth Transfer

• No Probate Delays – Since the insurance payout is directly received by the trust, beneficiaries avoid lengthy probate processes.
• Efficient Cross-Border Asset Transfers – Particularly beneficial for international families with beneficiaries in multiple jurisdictions.

✅ Flexible & Controlled Wealth Distribution

• Customized Beneficiary Payouts – The trust can define how and when beneficiaries receive funds, such as staggered payments, education funds, or milestone-based distributions.
• Multi-Generational Planning – Ensures wealth is preserved and distributed across generations in accordance with the grantor’s wishes.
  
  

3. Common Types of Insurance Policies Used with Family Trusts

Insurance Type	Why Is Insurance Paired with a Family Trust
Whole Life Insurance	Ensures a guaranteed payout, providing liquidity for inheritance planning.
Universal Life Insurance (UL)	Offers flexible premiums and investment-linked growth, maximizing wealth accumulation.
Private Placement Life Insurance (PPLI)	A tax-efficient structure for high-net-worth individuals, allowing investments inside the policy to grow tax-free.
Second-to-Die Life Insurance	Pays out after both spouses pass away, ideal for estate liquidity and tax planning.

4. Example Scenario: How a Hong Kong Insurance Policy & Trust Work Together

Case Study: High-Net-Worth Business Owner

• Background: A wealthy entrepreneur from Mainland China wants to ensure a smooth inheritance process while avoiding capital controls and legal disputes.
• Solution: He establishes a family trust in Hong Kong and purchases a US$10 million universal life insurance policy under the trust’s ownership.
• Outcome:
  • o Upon his passing, the insurance payout goes directly to the trust, bypassing probate and inheritance taxes.
  • o The trustee immediately distributes US$2 million to cover family expenses, while the remaining funds are invested and gradually distributed to his children as they reach adulthood.
  • o Since the policy is held offshore in Hong Kong, it is not subject to Mainland China’s capital controls, ensuring smooth cross-border transfers.
    
    

5. Key Considerations & Potential Risks

⚠️ Legal & Tax Compliance

• Different countries have varied tax laws regarding trusts and offshore insurance—professional legal and tax advice is essential.
• Some jurisdictions (e.g., the U.S., U.K.) have Controlled Foreign Corporation (CFC) rules that may impact the tax treatment of trust-held assets.

⚠️ Trustee Selection

• Choosing a reputable trustee (e.g., a Hong Kong trust company or international fiduciary service) is critical for proper administration.

⚠️ Jurisdictional Risks

• If beneficiaries reside in countries with inheritance taxes, additional structuring (e.g., offshore trusts) may be necessary to minimize tax exposure.
  
  

Conclusion: Why HNW Families Use Hong Kong Insurance & Trusts for Inheritance Planning

By integrating a Hong Kong life insurance policy with a family trust, high-net-worth individuals can:

✅ Ensure tax-efficient wealth transfer
✅ Protect assets from legal disputes & creditors
✅ Avoid probate delays & inheritance taxes
✅ Customize multi-generational wealth distribution
✅ Maintain privacy & financial security

This strategy is particularly attractive to Mainland Chinese, Southeast Asian, and international high-net-worth families seeking long-term asset protection and cross-border wealth management.

📩 For expert guidance on inheritance insurance and trust planning, contact First Fund today!

✉️ info@ffund.hk