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Securities Trust

What is Securities Trust?

  1. Settlor trusts securities (TWSE stocks, TPEx stocks and private equity, OTC stocks etc.) and transfers to our bank (trustee), and our bank then performs management, use and disposition of the trust property for the benefits of the beneficiary or specific purpose according to the purpose of trust and terms specified in the trust contract. Through the trust mechanism, the security of the trust property is protected and securities are transferred successfully. In addition, upon the diminishing of the trust relationship, the trust property is delivered or returned to the beneficiary or other obligee according to the terms of the trust contract.

If you possesses a large quantity of shares, do you worry about the high gift tax that may be required when transferring the stocks to your next generation or worry about the income tax generated annually due to high dividends? Please join Chang Hwa Bank’s “Stock Trust” service.

【Case Example and Sharing】

  1. Mr. Wang is a president of a public company, and he wishes to transfer a portions of his stocks to his children, and also plans to retain the control rights on the company at the same time. After consulting Chang Hwa Bank, our trust professional specialist recommends him to sign the type of “principle for own benefit, accrued interests for benefit of others” of stock trust with Chang Hwa Bank, and also specifies that during the trust period, the dividends are provided to the children as gift, and upon the expiration of the trust period, the trust principle is then returned to Mr. Wang. Through the aforementioned trust planning, Mr. Wang is able to continue to possess the equity of the company while enjoying the saving of gift tax legitimately. In addition, if Mr. Wang’s children are all adults and their income tax rates are lower than the income tax rates of Mr. Wang, then it can also achieve the merit of reducing the income tax payment, which is beneficial in various aspects.

Advantages of Applying for Stock Trust

  1. At the era of high dividend and low interest rate, through the planning of the method of “principle for own benefit, accrued interests for benefit of others”, it is able to not only successfully transfer property but also save gift tax legitimately when the stock price and dividend rate are above a certain level. (Note 1) 
  2. Through appropriate planning of the method of “principle for own benefit, accrued interests for benefit of others”, by providing the accrued interests to children at adult age with lower income tax rate, it is able to reduce the income tax payment. 
  3. Trust property is different from the property owned by the settlor, and under the structure of the Trust Law, the confidentiality of the asset of the settlor can then be protected. 
  4. Settlor can adopt the method of “reserved discretion” to perform the trust planning, such that the settlor is able to still retain the property control right and the management right of the company. (Note 2) 
  1. Note 1: The effect of gift tax saving depends on the actual calculation result of each individual case.
  2. Note 2: It shall be noted that if the settlor is a director of a company whose shares are issued to the public, if during his term of office in the company, more than one half of the company's shares being held by the director at the time when he is elected, the director shall, ipso facto, be discharged from the office of director.

Trust Structure Diagram

  1. Trust Structure Diagram
  2. Please contact the service telephone of Trust Division of Chang Hwa Bank at (02) 2536-2951Ext. 2215