A family trust may be established as a tax trust to minimize or defer tax liabilities. A tax trust may offer tax advantages to the settlor as well as to beneficiaries. A tax trust can be structured so that assets placed into the trust belong neither to the settlor nor the beneficiaries. This means that potentially neither the settlor nor the beneficiaries may be liable for taxes on those assets or taxes on income arising from those assets.

Hong Kong trusts, in particular, can offer substantial tax advantages as Hong Kong trust can be structured so that no income tax is payable in respect of income earned outside Hong Kong, capital gains or dividends.

The establishment and operation a tax trust however, requires experienced lawyers and trustee as the laws of many jurisdictions make specific provision of trusts with a view to limiting availability of tax planning strategies.