Trust Arrangement 信託安排

Concept of Trust 信託的概念

A trust separates the name in which property is held from the right to benefit from it. The trustee is the registered owner and holds the property for the beneficiaries. Property has its broad legal meaning: it covers the assets entrusted to the trustee and is not limited to land or buildings.

As a general feature of trusts, one or more trustees may be appointed, and a trustee may be an individual or a corporation. These general features do not mean that every individual or company qualifies to act as an MPF trustee.

Registered ownership does not give the trustee beneficial ownership. The trustee cannot treat trust property as its own by giving it away or taking benefits from it unless the trust terms permit this. Income and profits from the property belong to, or accumulate for, the beneficiaries.

A trust is normally established through a trust deed, which defines the duties, powers and rights of trustees and beneficiaries. To decide whether a trustee may deal with an asset, check its powers under the deed and the applicable law; registration in the trustee's name does not give unrestricted control.

Fiduciary Duties of Trustees 受託人的受信責任

Fiduciary duties require the trustee to use its position for the beneficiaries' benefit. When exercising discretion, it must consider their interests as a whole. A decision that benefits the trustee cannot justify sacrificing the beneficiaries' interests.

The trustee must apply a high degree of diligence and care to fund management and asset security, and ensure that investments are wise and proper. Its role therefore involves careful management, safekeeping and appropriate investment, beyond merely holding assets in its name.

Payments must be confined to those eligible when the entitlement arises. The trustee must also maintain proper and adequate accounts and other records, make them available to those entitled to inspect them, and administer the trust under the law and trust deed. Inspection is not a right available to every member of the public.

Recourse against Trustees 對受託人的追索權

A breach of trust may arise from failing to perform a required duty or taking an action outside the trustee's authority. Where the breach causes trust property to be lost or reduced, beneficiaries may bring legal proceedings against the trustee to recover the resulting loss.

Restoration: the defaulting trustee must bear the cost of returning or restoring the affected property. If this cannot be done, it must provide sufficient compensation. It cannot use MPF scheme assets to discharge its liability for its own mistake, since that would leave the scheme bearing the trustee's liability.

Accountability: profits obtained by the trustee from trust property must be passed to the beneficiaries. Restoration addresses loss to the trust, whereas accountability addresses profits that must be handed over. The absence of a loss therefore does not allow a trustee to retain an unauthorised profit.

Advantages of the Trust Arrangement 信託安排的優點

Trust property is separate from the own assets of the employer, trustee and other service providers. If any of these parties faces financial difficulties, its creditors cannot require scheme assets held on trust to be used to repay its debts. This gives members basic protection for their assets. [MPFA explanation of asset separation](https://www.mpfa.org.hk/en/info-centre/press-releases/6690_record)

For example, an employer cannot use assets already paid into an MPF scheme and held for members to settle a supplier's bill. This protection concerns other parties' debts. It does not imply that a trust guarantees rising investment values or requires the trustee to compensate every fall in value without a breach of trust.