In a recent decision, the Singapore High Court has dismissed a father's claim that a trust set up for his son was a sham to avoid paying additional buyer's stamp duty (ABSD) https://www.straitstimes.com/singapore/courts-crime/court-rejects-father-s-claim-that-house-held-in-trust-for-son-was-a-ploy-to-avoid-absd
The key issue is whether the trust was genuinely intended to benefit the beneficiary , or if it was merely a sham to avoid paying additional buyer's stamp duty (ABSD) for owning multiple properties.
Most would have been left wondering why would someone go to the extend of claiming that their intent was tax avoidance in court and whether there is a case to begin with; after-all the said property isn't even in their name, and tax avoidance isn't something that anyone would really want to be shouting out loud (especially in court).
In Land Law, the concept of ownership and interests in property can be complex. Two key terms often discussed are equitable interest and legal interest. Each represents a different aspect of ownership and rights in a property:
1. Legal Interest: Legal interest refers to the formal and recognised ownership of a property. It is the interest that is registered with the relevant government authority, usually a land registry. Legal interest is also known as the "legal title" or "legal estate." The person or entity holding the legal interest is considered the legal owner of the property and has the right to possess, use, and transfer the property according to the law. Legal interest is commonly evidenced by a title deed, which serves as proof of ownership.
2. Equitable Interest: Equitable interest refers to a recognized interest in a property that arises out of an agreement or contract, even if it is not officially registered with the land registry. It is a beneficial right that the law recognises but does not constitute full legal ownership. Equitable interests typically arise in various situations, such as when a property is subject to a trust or when parties have entered into a contract for the sale of land. Though not having legal title, the holder of an equitable interest may have certain rights, such as the right to enforce the terms of a contract or the right to receive a share of the property's proceeds if sold.
Theoretically speaking and in layman terms, you could be the sole owner on the property title deed and it could still be disputed in certain circumstances.
It is important to note that equitable interests is legally recognised, albeit not carry the same level of protection as legal interests. However, equitable interests are protected by equity under common law and may be enforced in specific circumstances through court orders or equitable remedies.
It is imperative to fully understand the concept of such interest in order to properly plan and safeguard your estates to potentially prevent such conflicts/dispute from arising.
If you are considering to structure your property to safeguard your estate and in relation to estate planning , you may GET IN TOUCH with us and we can advice further on the best possible course of action.
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