From Waqf, Ancestor Worship to the Rise of the Global Trust: A History of the Use of the Trust as a Vehicle for Wealth Transfer in Singapore

• Author: Tang Hang Wu
• Position: Professor and Director of Centre for Cross-Border Commercial Law in Asia, School of Law, Singapore Management University
• Pages: 2263-2292

2263

From Waqf, Ancestor Worship to the Rise

of the Global Trust: A History of the Use

of the Trust as a Vehicle for Wealth

Transfer in Singapore

Tang Hang Wu*

ABSTRACT: This Article explores the hi storical use of the trust in Singapore

from the early colonial days to modern times as a means of wea lth transfer.

English trust law which travelled to Singapore by reason of its colonial past

had to be adapted and negotiated by the colonial judges in light of cultural

and religious norms worlds away from that found in England. This essay

traces three major uses of the trust as a means of wealth tra nsfer in Singapore’s

history. First, the trust was used by ric h Chinese families for succession

purposes which included the pro motion of ancestor worship and b urial

grounds. However, the custom of perpetual a ncestor worship ultimately

proved to be incompatible with the Engl ish law against perpetuities. This

irreconcilability, coupled with the fa ct that the practice of ancestor worship is

becoming less common, has meant that such trusts are virtually unheard of

these days. Second, the trust was us ed by wealthy Arab merchants who

controlled much of the business and land holdings in Singapore to fur ther

succession planning and religious pu rposes. The popularity of the use of the

trust by these Arab traders may be d ue to the fact that the trust was not an

alien concept to them because Muslim law utiliz es the concept of the waqf,

which is similar to the trust. However , Islamic concepts inherent in the wa qf

proved to be too discordant with English trust law doc trines for the sustained

use of the trust in this context. Th is incompatibility together with c oncerns of

proper governance of the waqf led to statutory reforms. Such reforms resulted

* Professor and Director of Centre for Cross-Border Commercial Law in Asia, S chool of

Law, Singapore Management University. Earlier versions of this paper were presented at various

conferences in Harvard, Leeds, Singapore, and Iowa. I am grateful to Thomas Gallanis, Masayuki

Tamuraya, Richard Nolan, Kelvin Low, Yip Man, Zinian Zhang, Gerard McCormack, Jingchen

Zhao, Ahmad Nizam, Raymond Gwee, George Zhou, Nick Piska, Lim Ping Ping and Robert

Sitkoff for their helpful comments on earlier drafts. Thanks are also due to Elizabeth Naumczyk

and Chai Yee Xin from the Singapore Management University Law Library and Carolyn Wee

from NUS Law Library for their help in procuring some of the historical sources used in this

article. The usual disclaimers apply.

2264 IOWA LAW REVIEW [Vol. 103:2263

in the waqf being compulsorily managed b y the Islamic Council of Singapore.

Finally, the modern contempora ry use of the trust coincided with the arriva l

of what I term as a form of global trust to Singapore. Rooted in doctrinal

developments in English law, inspired by developments in offshore financia l

centers, and created by ingenious draftpersons, th e quintessential global trust

is a form of a highly discretionary trust. Such discretionary trusts are used by

the financial industry in Singapore and elsewh ere as one of the principal

means of modern wealth management. This final wave reflects the emergence

of Singapore as a major wealth manag ement center in Asia. This Article

traces this development and hig hlights the challenges on the horizon—

especially in the context of international pressures for transparency.

Ultimately, this case study on the historical a nd contemporary use of the trust

in Singapore demonstrates the flexibili ty of the trust concept in facilitating

wealth transfer through the ages.

I. INTRODUCTION ......................................................................... 2264

II. ENGLISH TRUST LAW ARRIVES IN SINGAPORE ............................ 2267

III. EARLY USES OF TRUST LAW IN COLONIAL SINGAPORE ............... 2269

A. THE USE OF THE TRUST FOR THE PERFORMANCE OF

SINCHEW RITES (CHINESE ANCESTRAL WORSHIP) .................. 2269

B. USE OF THE TRUST BY THE CHINESE FOR BURIAL

GROUNDS ............................................................................ 2275

C. ARABS USING TRUST LAW TO ESTABLISH WAQF ..................... 2277

IV. EARLY USES OF THE TRUST BECOMING SUPERSEDED IN

MODERN TIMES ......................................................................... 2281

V. THE GLOBAL TRUST ARRIVES IN SINGAPORE ............................. 2283

VI. CONCLUSION ............................................................................ 2291

I. INTRODUCTION

Due to its colonial past, the laws of Singapore are essentially derived from

English law.1 In the early days, the legal application of English law to a

multicultural society like Singapore, with very different customs, norms and

social context, created embarrassing problems. For instance, as Andrew

Harding points out, 2 early colonial judges had to decide awkward questions

1. See ANDREW PHANG BOON LEONG, THE DEVELOPMENT OF SINGAPORE LAW 34–51 (1990).

2. Andrew Harding, Global Doctrine and Local Knowledge: Law in South East Asia, 51 INT’L

& COMP. L.Q. 35, 35 (2002).