[Finance Wiz @Daniel] A guide to the 3 major wealth transfer tools and their features — how advance planning helps you achieve ideal asset distribution!
Finance2025-11-24
8 Mins Read
Wealth transfer has long been seen as the privilege of high‑net‑worth individuals. But think about it: young parents hoping to secure their children’s future, retirees wanting to provide lasting support for their spouse, or even single individuals wishing to care for their aging parents — these are all genuine needs for legacy planning.
That’s why it’s time to break the myth: wealth transfer is not reserved for the rich. Every family, regardless of the size of their assets, has something worth passing on — whether it’s an education fund for children, financial protection for loved ones, or even family values handed down through generations. Today, I, Daniel Lau, will walk you through three key wealth transfer tools, their pros and cons, and practical ways to build a legacy plan that works for your family.
Definition of wealth transfer
Wealth transfer refers to the planned process of passing accumulated assets — such as cash, property, and investments — to the next generation through tools like insurance, trusts, or wills. The goal is to ensure that wealth is passed on smoothly and effectively, while also meeting needs such as personal retirement and family expenses, and reducing potential disputes among heirs caused by unequal distribution.
Common tools for wealth transfer
1. Trust
What is a trust?
From a legal perspective, a trust is a fiduciary relationship established based on the principles of equity. According to the definition in Hong Kong's Trustee Ordinance, a trust is created when a Settlor transfers the Legal Title of assets to a Trustee. The Trustee then holds a fiduciary duty in equity to hold and manage these trust assets for the benefit of the Beneficiary. A trust can be likened to a safe: you place your assets inside and appoint a trusted custodian (the Trustee) to hold them and, following your instructions, distribute them to designated individuals (the Beneficiaries) under specific conditions.
Advantages of a trust
- Precise control over wealth transfer: A trust allows the Settlor to set specific distribution conditions — for example, children may only receive assets once they reach a certain age. This helps prevent sudden access to large sums that could lead to reckless spending or family disputes.
- Asset protection: Assets placed in a trust are legally separate from the Settlor’s personal property. This provides protection against debt risks, marital property division, and even legal claims.
- Privacy and long‑term management: Unlike a will, a trust does not require public probate procedures, safeguarding the family’s financial privacy. At the same time, a trust can exist over the long term, enabling cross‑generational wealth management.
Limitations of a trust
- High setup costs: Establishing a trust requires significant legal fees and trustee management charges. Lawyers are often involved in the process, making it more complex.
- High capital threshold: Traditional trusts are usually designed for clients with assets exceeding tens of millions of Hong Kong dollars, which may be unaffordable for the average person.
- Ongoing operating expenses: Beyond the one‑time fee paid when signing the trust deed, trusts also involve annual management fees and other ad‑hoc charges, such as amendment or asset withdrawal fees.
- Limited flexibility: Once the terms of a trust are set, they are very difficult to amend. In addition, the trustee’s authority may restrict how assets can be accessed or used.
- Legal and regulatory complexity: Cross‑border trusts, in particular, must comply with multiple jurisdictions, which further increases the difficulty of management.
Be ahead with WealthAhead
WealthAhead II Savings Insurance Series^ empowers you to grow your wealth with adaptability, allocate it with precision to match your vision, and pass it on with clarity and care — helping you stay one step ahead through every stage of life.
2. Will
What is a will?
A will is a legally valid document that allows a person of sound mind to clearly express their wishes regarding how their assets should be distributed after their passing, in accordance with Hong Kong's Wills Ordinance (Chapter 30). This embodies the principle of 'testamentary freedom', meaning you have the right to decide who inherits your property, subject to very few statutory exceptions.
Advantages of a will
- Clearly expresses your wishes: You remain the decision-maker regarding how your assets are distributed, helping prevent family disputes that may arise from assumptions.
- Avoids the rigid rules of intestacy: Without a will, your estate is distributed according to the Intestates' Estates Ordinance — which may not reflect your personal intentions.
- Appoints an executor: You can designate a trusted professional or family member to manage your estate, reducing the potential for conflict.
- Appoints a guardian for minor children: This ensures that if you are unable to care for your children, their welfare is entrusted to someone you personally choose.
- Improves efficiency in estate administration: In theory, a well-prepared will can streamline the probate process and potentially lead to faster asset distribution.
Limitations of a will
- Inability to bypass probate: Regardless of whether a will exists, an estate must generally go through the 'Grant of Probate' process in the High Court. This can be a lengthy procedure, potentially taking many months or even longer. During this time, assets may be frozen. If family members urgently need access to cash, they could face considerable difficulty. Furthermore, this process forms part of a public record, offering little privacy.
- The will can be challenged: Beneficiaries can still dispute the validity of a will on grounds such as the testator's lack of mental capacity or that they were unduly influenced. Such litigation is not only costly and time-consuming but can also lead to irreparable damage to family relationships.
- Lack of flexibility and control: A will is an instrument for posthumous distribution. Consider this: by the time one is in their eighties or nineties, their children may already be in their sixties. At that stage in life, the practical benefit of receiving an inheritance may be significantly diminished. That’s why many parents prefer to provide financial support to their children when it is needed most — such as when starting a business or getting married— rather than waiting until after they’re gone.
Be ahead with WealthAhead
WealthAhead II Savings Insurance Series^ empowers you to grow your wealth with adaptability, allocate it with precision to match your vision, and pass it on with clarity and care — helping you stay one step ahead through every stage of life.
3. Insurance products with 'trust-like' features
What is savings insurance with 'trust‑like' features?
This type of product combines savings and life protection, while incorporating mechanisms inspired by trusts to support legacy planning. Although it is not a trust in the strict legal sense, its design and functions draw heavily from core trust principles. It allows you to pre‑set payout conditions — such as when, how, and how much will be distributed to specific beneficiaries — thereby achieving the goal of ‘pre‑directing how assets are allocated.’ In other words, you can plan for your loved ones’ future without needing to commit vast sums of money or go through complex legal procedures.
Advantages of 'trust-like' insurance products
- Enable ongoing wealth accumulation: Certain savings insurance plans allow for a change of the life insured, enabling the policy to continue and its bonuses and policy value to accumulate further, promoting long-term wealth growth and sustained inheritance. For example, AXA’s WealthAhead II Savings Insurance series1 allows you to have unlimited changes of the insured2 and designation of contingent insured3, with coverage extending up to age 138 of the latest insured, effortlessly passing wealth to future generations.
- Ensure inherited assets are put to better use: Younger beneficiaries may quickly spend their inheritance if there is no proper planning, leaving your goodwill unfulfilled. Certain features of savings insurance, however, can ensure that your wealth is passed on according to your wishes and carefully designed plans. Taking AXA’s WealthAhead II Savings Insurance series1 as an example, it offers a Heritage Protector Option4, allowing you to pre-set succession event, designated age, contingent owner and interim owner4. This gives you comprehensive control over the policy handover timeline, ensuring smooth transition of policy ownership to a designated contingent owner. Furthermore, the plan provides comprehensive death benefit settlement options – you can choose a lump sum payment, payment by instalments, or hybrid payment — with deferral of death proceeds payout for up to 30 years5, allowing you to flexibly set the payment method according to your inheritance goals and the unique needs of your beneficiaries.
Additionally, some savings insurance plans go a step further, ensuring wealth inheritance isn't limited to posthumous arrangements. For instance, AXA’s WealthAhead II Savings Insurance series1 features a first-in-market6 Wealth Master Service7. This allows the policyholder to tailor withdrawal amount and period for up to 3 recipients (who can include the policyholder). This means you can start gradually transferring wealth to your loved ones during your lifetime, supporting them with funding for education, starting a business, or achieving other life goals when they need it most, truly putting the concept of 'timely care' into practice.
This flexible withdrawal arrangement transforms wealth inheritance from a passive 'post-death distribution' into an active 'lifetime planning' process, allowing your wealth to achieve its maximum impact for your family at the moments they need it most. - Lower threshold: trust‑level wealth distribution and legacy planning: Traditional trusts allow you to entrust assets to a trustee for management and distribute them to beneficiaries according to pre‑set conditions and timelines. However, conventional trusts often come with high capital requirements and involve complex setup and management processes that demand specialized legal and financial expertise — holding many families back from exploring this solution. To address this challenge, innovative solutions have emerged in the market. AXA’s WealthAhead II Savings Insurance series1 integrates trust‑like concepts, drawing on the flexibility and precision of trusts. This enables policyholders to achieve the same goal of ‘pre‑directing how assets are allocated’ in a simpler, more accessible way.
AXA’s WealthAhead II Savings Insurance Series1
AXA's WealthAhead II Savings Insurance series is an example that puts these concepts into practice. It incorporates the flexibility and precision of trusts within the framework of an insurance contract:
1. Wealth Master Service7: The core of this service allows you to tailor withdrawal amount and period for up to 3 recipients. You may, according to your wishes, preset the withdrawal start year, withdrawal period, withdrawal amount and payout sequence - individually for up to 3 recipients - allowing you to make comprehensive arrangements in advance for yourself and your loved ones, and ensuring cash‑flow support is delivered in the most optimal way.
2. Appointing an interim owner: If your designated contingent owner is still minor, you can pre-appoint an interim owner4. This role is similar to a trustee in a traditional trust. Should anything happen to the policy owner, or if the owner becomes mentally or physically incapacitated8, the interim owner would temporarily manage the funds until the contingent owner reaches a specified age or meets certain conditions, perfectly resolving the pain point of a 'contingent owner being too young to manage wealth'.
3. Long-term accumulation and currency flexibility: The plan offers the potential for attractive returns and provides a choice of up to 9 policy currency options9, allowing for strategic flexibility and switches based on individual needs10. WealthAhead II Savings Insurance Series1 supports long-term asset growth while retaining flexibility.
Crucially, all these arrangements are contained within a single savings insurance plan, with a starting threshold significantly lower than that of a traditional trust and a much simpler operation. This makes comprehensive wealth inheritance planning accessible not just to high-net-worth families, but affordable for any responsible and caring household.
Be ahead with WealthAhead
WealthAhead II Savings Insurance Series^ empowers you to grow your wealth with adaptability, allocate it with precision to match your vision, and pass it on with clarity and care — helping you stay one step ahead through every stage of life.
Limitations of savings insurance with trust‑like features
- Lower liquidity: Funds are usually locked in during the premium payment period, and early withdrawals may incur penalties or losses.
- Market risk: The investment returns of such insurance products can be affected by market fluctuations.
- Limitations on asset types: These products only cover assets within the policy itself. Other assets, such as property or stocks, require separate tools for inheritance planning.
From planning to execution: key action steps
Wealth inheritance planning isn’t just a distant legal procedure — it’s a family journey that calls for long-term strategy. Here are the concrete steps to help you move from concept to implementation:
Step 1: Clarify your inheritance goals and values
You may wish to ensure your children have access to quality education, paving their way to a brighter future. Alternatively, you might want to support them in starting a business or purchasing their first home — offering tangible help at a pivotal life stage. It could also be about safeguarding your spouse’s financial security in later years, helping them maintain their desired standard of living. Or perhaps your goal is to fulfil philanthropic aspirations and give back to society.
These priorities may evolve over time, but it’s essential that your chosen method of wealth transfer genuinely reflects what matters most to you. Having open and honest conversations with your family about these plans not only ensures your wishes are understood — it can also turn the inheritance process into a meaningful extension of your family’s values and legacy.
Step 2: Assessing asset size and liquidity
- Take inventory of all assets: List everything you own, including cash, real estate, stocks, bonds, insurance policies, and art pieces.
- Understand the current status of assets: Assess the value, liquidity, and potential tax implications of each asset.
Step 3: Choose the most suitable method of transfer – proactive planning or posthumous distribution
Once your goals are set, the next step is to choose the best way to achieve them. Traditionally, asset distribution has been regarded as a matter to be handled 'after one’s passing.' Modern wealth management, however, places greater emphasis on the importance of early planning. Why start planning wealth transfer as early as possible? First, because misfortune is unpredictable, advance planning ensures that assets are passed on according to the wishes of the asset holder. More importantly, early transfer allows loved ones to receive timely support when they need it most, ensuring that wealth is used to its fullest potential.
Step 4: Choose the right tool
Select wealth transfer tools based on your individual needs. For families with moderate asset levels, savings insurance products with trust‑like features may be a priority option. High‑net‑worth individuals, on the other hand, can consider using a combination of different tools to design a comprehensive wealth transfer plan.
Step 5: Regular review and adjustment
Family circumstances and the legal environment may change over time, making regular review and adjustment essential. Effective wealth transfer requires the integration of various assets and legal tools, including wills, insurance, MPF (Mandatory Provident Fund), and property rights. It is recommended that you periodically review and update all arrangements to ensure that every wealth transfer channel is aligned and coordinated. Preparing a clear asset inventory list will also help you and your professional consultants conduct a comprehensive evaluation and plan effectively.
Inheritance is timely love and support
Wealth transfer is not the privilege of high‑net‑worth individuals. Regardless of asset size, early planning can help you achieve your wealth transfer goals with greater confidence and peace of mind. Modern wealth planning emphasises proactive, timely, and forward-looking strategies. Rather than leaving your family to navigate complex legal procedures and potential disputes in the future, start today. By utilising more flexible and thoughtful tools, you can transform your intentions into tangible support for your family, and witness the support and security that a well-planned inheritance provides for your loved ones.
Product Highlights of the WealthAhead II Savings Insurance Series1
- Supports wealth accumulation with competitive potential returns
- 'Trust-like'11 wealth distribution and dual legacy pathways—direct your wealth’s future:
- [First-in-market6 ] Wealth Master Service7: Arrange wealth allocation early in a 'trust-like'11 form, tailor withdrawal amount and period for up to 3 recipients, providing income streams for you and your loved ones;
- Heritage Protector Option4: Pre-set succession event, designated age, contingent owner and interim owner4 for full control on the policy handover. If your children have not yet reached adulthood, you may also let the interim owner4 to manage the policy - With up to 9 policy currency options9, you can enjoy flexible currency conversions10 — seamlessly tailored to your personal needs
Source
1. Trustee Ordinance (Cap. 29). Hong Kong e‑Legislation, https://www.elegislation.gov.hk/hk/cap29?xpid=ID_1438402940004_001
2. “Trust Solutions.” Hong Kong Fiduciary Association Limited, https://traditional.trusthongkong.com/solution/trust
3. “Trust Services FAQ – Bank of Communications Trustee Limited.” Bank of Communications Trustee Limited, https://www.bocomtrust.com.hk/BankCommSite/shtml/trust/tw/2600761/2602069/list.shtml?channelId=2600761
4. Wills Ordinance (Cap. 30). Hong Kong Legal Information Institute (HKLII), https://www.hklii.hk/tc/legis/ord/30
Terms and conditions
^WealthAhead II Savings Insurance Series includes WealthAhead II Savings Insurance – Prime and WealthAhead II Savings Insurance – Supreme.
1. Terms and conditions apply. For the terms, conditions and exclusions of the product, please refer to the relevant product brochure and policy contract of WealthAhead II Savings Insurance Series (including the WealthAhead II Savings Insurance – Prime and WealthAhead II Savings Insurance – Supreme).
2. From the 1st policy anniversary onwards, the Change of Insured Option can be exercised an unlimited number of times. Written application for the exercise of the Change of Insured Option should be made by you and such application is subject to the administrative rules, underwriting requirements and approval of the Company.
3. The designation of contingent insured and the application for replacement of the insured are subject to the approval of AXA at its absolute discretion and must fulfill certain conditions. For details, please refer to the relevant product brochure and policy contract.
4. The designation of the contingent owner or interim owner and the application for taking up the policy ownership are subject to the approval of AXA at its absolute discretion and must fulfill certain conditions. The interim owner is only applicable to policies issued in Hong Kong. For details, please refer to the relevant product brochure and policy contract.
5.You may specify the death benefit settlement start age of each beneficiary, provided that such age shall not exceed the age of the relevant beneficiary at the date of designation by more than 30 years.
6. The information refers to the service of periodic withdrawal with up to 3 recipients of withdrawal payments. The information refers to Hong Kong market only and is based on a comparison of periodic withdrawal arrangements offered by insurers for Long-Term Businesses as defined by the Insurance Authority in the Register of Authorised Insurers in Hong Kong as of July 2025.
7. Wealth Master Service is an administrative service arrangement offered by the Company and not a plan feature of WealthAhead II Savings Insurance Series. Any application for the service is subject to the Company’s approval at its sole and absolute discretion, any applicable laws, regulations and guidelines and the administrative rules of the Company from time to time (including but not limited to the relationship and age requirements of the withdrawal recipients.) For details, please refer to the relevant product brochure.
8. Mental incapacitation refers to the condition of a (a) mental disorder or (b) mental handicap of the person concerned. For details of this term, please refer to the definition of “Mental Incapacitation Event” in the policy contract. Physical incapacitation refers to the loss of capacity for independent living of the person concerned as evidenced by the permanent inability to perform at least three of the activities of daily living. Please refer to the definition of “Loss of Capacity for Independent Living” and “Activities of Daily Living” in the policy contract for details. The above-mentioned conditions must be certified by a registered medical practitioner (as defined in the policy contract).
9. 9 policy currencies includes Renminbi (RMB), United States Dollar (USD), British Pound (GBP), Euro (EUR), Canadian Dollar (CAD), Australian Dollar (AUD), Singapore Dollar (SGD) , Hong Kong Dollar (HKD) and Macau Pataca (MOP) (MOP is only for policies issued in Macau).
10. From the 3rd policy anniversary onwards, you may apply to exercise the Currency Conversion Option within 30 days from each policy anniversary. There is no upper limit on the number of times this option can be exercised, provided that only one application can be made within one policy year. For details, please refer to the relevant product brochure.
11. "Trust-like” indicates that the design concept of WealthAhead II Savings Insurance Series (including the WealthAhead II Savings Insurance – Prime and WealthAhead II Savings Insurance – Supreme) draws from the flexibility and precision of trust, but does not imply it is equivalent to a trust product.
No warranty or responsibility is assumed by AXA Hong Kong and our related or holding companies regarding non-infringement, security, accuracy, completeness, adequacy, reasonableness, fitness for a purpose or free from computer viruses in connection with the information and materials provided. AXA Hong Kong and our related companies and holding companies do not accept any liability for any loss, damage, cost or other expense, whether wholly or partially, directly or indirectly, arising from any error, inaccuracy or omission of the information and materials to the extent that such liability is not excluded by law.
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