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  • Writer's pictureTeresa Lee

Annuity Trust helps Tax Relief?

Updated: Jul 11, 2023


Rockwills Annuity Trust is the solution for you and your family. When you have substantial income and intend to invest in properties to receive a steady stream of income for your family, you would want to pass down such benefits to them in a tax efficient manner.


Benefits of Annuity Trust


1) Lower Income Tax

- As you place properties and the rental income into Annuity Trust, the income will no longer be attributed to you, therefore lowering your income tax bracket.


2) Life Insurance

- Annuity Trust accepts unencumbered properties with rental income and providing long term income to your family, you may want to consider a life insurance to pay for the maintenance and upkeep of the properties. As a result, the rental income will not be used as premium payment, allowing your family to enjoy the entire rental income.


3) Protection from Creditors

- The Annuity Trust is designed to protect the properties and the rental income from your creditors as well as creditors of your beneficiaries.


4) More for your Family

- Annuity Trust passed the rental income to your beneficiaries (minors or family members having a lower tax bracket than you), they will get to enjoy more from the overall tax savings.


5) Trustworthy Protector

- Principal can appoint a trustworthy person to act as the protector in the Annuity Trust should the principal worrying whether the instructions is executed.


Find here a case study for your better understanding:


Settlor who has an existing chargeable income RM 400,000, plans to buy property which will generate return of RM 200,000 per year.

Here shows the comparison of tax payable after factoring in additional rental income RM 200,000 (between individual and with Annual Trust)


How to set up Annuity Trust?


Step 1 - To identify your beneficiaries

In order to maximize the benefits of Annuity Trust, your family members who have a lower tax bracket than you would benefit the most.


Step 2 - To place properties into the Annuity Trust

Purchasing properties without a mortgage facility and expect to earn a significant rental income, such properties are suitable to be purchased in the name of Rockwills Trustee Berhad as the Trustee of your Annuity Trust.


Step 3 - To strengthen life insurance policy

It is prudent to assign a life insurance policy into the Annuity Trust for it to be used for paying the maintenance and upkeep of the properties as and when needed.


Step 4 - To establish Distribution Instruction

Set up the distribution matric for your beneficiaries. Estate planner is a good hand for this matter.

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