The central bank is allowing the creation of a Personal Management Trust (PMT) that will addresses calls from persons who have no capacity or who do not see the necessity of appointing third-party beneficiaries in trust arrangement.
In a statement on Thursday, the Bangko Sentral ng Pilipinas (BSP) said it has approved the guideline for the creation of a PMT in line with the policy to promulgate rules and regulations for the development of the fiduciary business.
PMT is a trust arrangement to meet estate planning and asset management needs of individuals.
For a minimum of P100,000, an individual can open a PMT die managing and preserving funds or properties and answer for the current and future needs of designated beneficiaries, including education, retirement, and wealth accumulation.
The beneficiary may be the trustor himself, his spouse, children and other third party beneficiary.
An individual is required to state his purpose for opening a PMT, as well as the distribution of his funds or assets to ensure that the trust management is consistent with the intent of the regulation.
“The PMT is a welcome addition to the wide array of trust products offered in the market, and is deemed very timely considering that there is a rising prevalence of one-person household in Asia, including the Philippines,” BSP Governor Amando Tetangco Jr. said.
The PMT is a more flexible tool in managing an individual’s financial affairs, unlike the the Living Trust Account (LTA) which has strict requirements on third-party beneficiaries.
For a smooth transition toward PMT, the LTA will be discontinued automatically be considered as PMT upon once the BSP circular is implemented.
The guideline is among a series of trust reforms to promote a more responsive climate in the financial service industry particularly in the estate planning and asset management of trust entities.