【Family Trust for Managing Overseas Relatives’ Financial Needs】

Ms. Li is the owner of a private enterprise. Her daughter is married with children and has settled in Canada. Every year, Ms. Li needs to pay USD 30,000 for her grandson’s education.

She holds RMB 8 million in financial assets in China and faces the following issues:

• The personal annual foreign exchange purchase limit of USD 50,000 is insufficient to cover both the education expenses and occasional travel expenses to visit her family;

• She is concerned that directly transferring money to her daughter may result in the funds being used for her son-in-law’s household expenses, which would deviate from her original intention of supporting her grandson’s education;

• She hopes to grow part of the funds overseas, while retaining some within China.

Ms. Li set up a trust through a licensed cross-border institution and injected RMB 4 million in financial assets. The trust terms specify:

• The trustee will legally convert RMB to USD at a rate of USD 40,000 per year (without using Ms. Li’s personal exchange quota);

• USD 30,000 will be paid directly to her grandson’s school account (for education purposes only);

• USD 10,000 will be reserved as Ms. Li’s travel expenses for family visits;

• The remaining funds in China will be allocated to conservative wealth management products (annualized return of 3.5%);

• The exchanged USD funds overseas will be invested in USD-denominated bonds (annualized return of 2.5%).

When her grandson turns 18, the trust will cease education payments. The remaining funds will then be allocated as follows:

• 60% retained in China for Ms. Li’s retirement;

• 40% distributed to her daughter overseas.

By using a family trust, Ms. Li has achieved compliant cross-border asset management.

• Compliant cross-border fund transfers:
  Leveraging the qualifications of a licensed institution to legally bypass personal foreign exchange limits and fulfill overseas payment needs.

• Precise use of funds:
  Education expenses are paid directly to the school, avoiding misuse and ensuring that her original intent is honored.

• Dual-market asset growth:
  Domestic and overseas assets are allocated separately to diversify currency risk and improve overall returns.