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Labuan trust: how it works and how to set one up
A Labuan trust is a trust set up under Malaysia's Labuan statute of 1996, in which you transfer assets to trustees who hold them for the beneficiaries named in a deed. One trustee must be a trust company based in Labuan. We coordinate the checks, documents and reporting around it. Ask us for a quote.
Reviewed by a senior trust administrator, updated
Key facts
- Governing law
- Labuan Trusts Act 1996 (Act 554), as amended up to Act A1368 of 2010[1]
- Perpetuity period
- Unlimited duration unless the trust terms fix one (section 16)[1]
- Reserved settlor powers
- Settlor may keep powers such as revoking or directing the trustees (section 8B)[1]
- Registration
- A Labuan trust may be registered with the Authority (section 12)[1]
- Trustee requirement
- A Labuan trust company must be one of the trustees (section 7)[1]
Numbers in brackets point to the Sources list at the end of this page.
Swipe sideways to see the whole diagram.
- SettlorSets up the structure and transfers assets into it
- transfers assetsTrusteeHolds the assets and manages them under the trust deed
- holds and distributesBeneficiariesPeople who benefit from the trust under its terms
- Investment adviser gives investment directionsInvestment adviserGives investment directions that the trustee follows
- Trustee holds legal titleTrust assetsThe property held in the structure
Roles and notes
| Part of the structure | What it does |
|---|---|
| Settlor | Sets up the structure and transfers assets into it |
| Trustee | Holds the assets and manages them under the trust deed |
| Investment adviser | Gives investment directions that the trustee follows |
| Beneficiaries | People who benefit from the trust under its terms |
| Trust assets | The property held in the structure |
- The settlor transfers assets to trustees under a written trust deed governed by Labuan law.
- A trust company based in Labuan must be one of the trustees; the deed can name others.
- The deed can let the settlor keep certain powers, such as giving binding directions on investments.
- A letter of wishes guides the trustees' discretion; it is not binding on them.
- We coordinate onboarding, documents and reporting between you, the law firm, the bank and the Labuan trustee.
What a trust in Labuan is
A trust is a legal relationship set out in a deed, not a company. You, the settlor, transfer assets to trustees. They become the legal owners, but hold and manage the assets under the deed, for the beneficiaries.
Labuan, a federal territory of Malaysia, has its own trust statute, the Labuan Trusts Act 1996 (Act 554), as amended up to Act A1368 of 2010 (source: Laws of Malaysia, Labuan Trusts Act 1996).
The Act also says a trust continues for an unlimited period unless its terms fix a duration (section 16).
Each feature and its source is set out on the law and features page.
Most families choose a discretionary trust. The trustees decide who receives what and when, guided by a letter of wishes that you write and can update. The letter is not binding, so the trustees can respond when circumstances change.
A trust is not a way to hide assets or to put them beyond the reach of every rule. Banks, tax authorities and the trustees themselves need to know who stands behind the trust.
What a trust does offer is continuity. Professional trustees follow the deed after the settlor steps back, falls ill or dies.
Who a trust in Labuan suits
The people we work with are settlors who live outside Malaysia, often founders and business owners with assets or companies in more than one country.
Typical aims are to pass on a family company in Southeast Asia, to keep shares together across generations, or to hold investments in a structure near Hong Kong and Singapore.
The Act lets a settlor keep certain powers without the trust failing, such as revoking the trust or giving binding directions on investments (section 8B).
How far a reservation works depends on the deed’s wording, and your lawyer drafts it with that in mind.
Families that want a structure with a longer horizon also look at the duration rule. A trust may run without a fixed end, unless the terms say otherwise.
If you are comparing places, read the Hong Kong trust guide next. The two differ in who acts as trustee.
Existing trusts are welcome too. If your trust sits with another trustee, we can coordinate the papers and reporting with that trustee, or look at a move to Labuan once your lawyer confirms the steps.
If a trust already exists, our trust administration service shows what administration covers once we are appointed. For a family office, see family office structuring.
What the trustee does
The trustees must follow the deed, act in the interests of the beneficiaries and keep proper records.
Under the Act the trust company based in Labuan holds one of the trustee seats, and the deed can add others, such as a family member or a professional (section 7).
In our Labuan service that trust company is named in your documents before you sign. We coordinate the case around it.
In practice the trustees’ work looks like this:
- holding title to the assets and keeping them separate from their own;
- trustee meetings with minutes for each distribution or major decision;
- accounts and an asset report that we send you;
- a periodic refresh of identity checks on the people connected to the trust;
- collecting the self-certification forms used for tax information exchange.
Distributions follow the deed. The trustees weigh a request against the deed and the letter of wishes, and record their reasoning in minutes.
They check who will receive the money, then pay from the trust account. Unusual requests take longer, because the trustees ask for supporting papers.
What stays with you is the choice of beneficiaries, the letter of wishes, and any powers the deed lets you keep.
We coordinate onboarding, documents and reporting with the partner trustee. Legal and tax questions go to your own advisers.
Documents and steps to start
The steps run in the same order for almost every family. What changes is the time each takes, which depends on documents and third parties.
- Enquiry. You tell us the family, the assets and the aim. We reply with the questions that matter and a list of documents.
- Identity checks. We verify who you are and where the wealth came from. The local trustee reviews the file before it accepts you.
- Structure design. We, the local trustee, the law firm and your tax adviser agree what the trust holds and who has which powers.
- Drafting. A law firm drafts the deed and helps with your letter of wishes. You review both with your own lawyer.
- Signing. You sign the deed, and the trustees accept office. The law firm confirms the signing formalities.
- Funding. The bank opens the trust account, and each asset moves into the trustees’ names.
The trustee asks for identity documents, evidence of where your money and wealth came from, and the details that go into the trust documents.
| What we ask for | Who it concerns | Why |
|---|---|---|
| Passport and proof of address | Settlor, protector, anyone who can direct the trust | Identity and address checks |
| Occupation and evidence of where the wealth came from | Settlor | To show where the assets came from |
| Names and details of beneficiaries | Beneficiaries | Identification; for a class, enough detail to identify them at payout |
| Incorporation papers and share register | Any company placed in the trust | To confirm ownership and control |
Basis: our onboarding checklist, dated 2026-11-05.
Timing depends on how complete your documents are and on third parties: the law firm, the bank and any registry. We give you a checklist and show where each step stands.
The step-by-step set-up guide walks through each stage in more detail.
What affects the cost
A trust in Labuan has three kinds of cost: our work, the local trust company’s fee, and third parties such as the law firm and the bank. We publish the set-up fee for a standard trust or foundation; the rest is quoted after we review your case.
Ask for a quote. It states its assumptions and shows the trustee’s part separately. The cost guide lists who charges for what and what moves the total.
Tax and reporting
Tax depends on where you, the beneficiaries and the assets are, and on how the trust is built. We do not give tax advice and do not promise a tax result.
The trustees collect tax residence forms from the people connected to the trust and report what the rules require. Your own tax advisers confirm your position before you sign.
Labuan compared with other places
The clearest difference between places is who acts as trustee and how the law shapes that choice.
Here a Labuan trust company always sits among the trustees. We coordinate your case around it.
In Hong Kong we act as trustee ourselves, so one team does both. Our Hong Kong service shows that model.
Beyond that, weigh three things:
- Where your family and assets are. A trustee close to the business and the bank is easier to work with.
- Which place your advisers know best. Their familiarity with the law shortens drafting and review.
- How many hands touch your file. A partner model adds a hand-off that a single trustee does not.
Tax and legal comparisons belong with your advisers, because the outcome turns on your residence and your assets, not on the place alone.
Facts we reviewed, with source and date
The facts carry their source and date and are not legal advice; your lawyer confirms how each applies to your case.
| Field | What the Act says | Section |
|---|---|---|
| Trustee requirement | A trust company based in Labuan shall be one of the trustees | 7 |
| Duration | A trust continues for an unlimited period unless its terms say otherwise | 16 |
| Settlor powers | Retained powers do not affect the validity of the trust | 8B |
| Registration | A trust may be registered with the Authority | 12 |
Basis: Laws of Malaysia, Labuan Trusts Act 1996 (Act 554), as amended up to Act A1368 of 2010, accessed 2026-11-05.
Short answers to common questions are in the questions and answers. You can also browse every place we cover, or compare places side by side. When you are ready, request a quote for Labuan. It is an estimate based on what you tell us, not a binding offer.
Frequently asked questions
Who can set up a trust in Labuan?
Your lawyer confirms whether you can act as settlor under the Act and what follows if Malaysian property is involved, as the position can differ with the assets. We check your identity and the source of your assets first, then design the structure with your advisers.
How do I start in Labuan?
Tell us the family, the assets and the aim, by call or through the quote form. We reply with the questions that matter and a document list. Identity and source-of-funds checks follow, then structure design and drafting by a law firm, then signing and funding.
Who can help me start in Labuan?
We coordinate the process, and a trust company based in Labuan takes the trustee seat the Act requires. A law firm drafts the deed, and your own lawyer and tax adviser review it. The trustee company and the law firm are named in your documents before you sign.
What is a Labuan trust company?
It is a company based in Labuan that can act as trustee. The Act requires one of the trustees of every trust under it to be such a company. Your lawyer confirms which company suits your plans, and we tell you its name before you sign.
Does a Labuan trust last forever?
It can. Under the Act there is no fixed end date by default, so a trust may run indefinitely unless the deed sets a duration. If you want a limit, your lawyer writes it into the deed and explains how that limit sits with the law of the places where your assets are held.
Sources
- Laws of Malaysia: Labuan Trusts Act 1996 (Act 554), read 2026-11-05.