Global Vietnam Lawyers would like to introduce our valued readers to an article by Mr. Tran Thanh Tung (Global Vietnam Lawyers) and Vo Tran Khuong titled “Wealth transfer in Vietnam: When legal tools lag behind real-world needs” published in The Saigon Times, 15-2026 (1.843) on April 09, 2026.

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A common feature among many Vietnamese entrepreneurs is that their wealth does not exist in the form of cash or financial portfolios. Instead, it is closely tied to equity or capital contributions in family businesses, real estate accumulated over many years, and personal reputation and business networks. Assets so closely linked to the founder are, by nature, difficult to transfer to the next generation. This article offers a perspective on wealth management for entrepreneurs and business families in Vietnam.

Many family businesses have faced crises due to failed generational transitions—whether because long-standing business relationships tied to the founder cannot be passed on, heirs are unprepared or unwilling to take over, the first generation fails to preserve and transfer wealth to the second, or assets become fragmented due to internal family disputes even within the first generation. In today’s wealth management, this is commonly referred to as “wealth succession risk.”

Trust fund – An ideal but challenging tool in Vietnam

From time to time, we see reports of ultra-wealthy entrepreneurs restructuring their assets by transferring company shares into funds or foundations. Many assume these are charitable arrangements. In most cases, however, they are not. Rather, such structures are established to pass wealth on to future generations.

Common law systems have developed a unique instrument for this purpose: trust fund—widely regarded as one of the most sophisticated legal tools for wealth management. When an entrepreneur intends to transfer assets to the next generation, they may establish a trust and transfer assets into it.

A typical trust structure consists of: Settlor – the person who establishes the trust; Trustee – the party entrusted with managing the assets; Beneficiary – the person entitled to benefit from the trust. As the settlor, the entrepreneur retains the authority to determine the terms of the Trust Deed, including how the trust’s assets are to be distributed among beneficiaries.

For example, if an entrepreneur wishes to transfer assets worth VND 100 billion to their descendants, they may establish a trust with that amount and allocate the trust assets as follows: (i). Each child, upon reaching the age of 18, will receive VND 10 billion. If the settlor has two children, a total of VND 20 billion will be distributed to them. The trust will retain VND 80 billion after this distribution. (ii). Each grandchild, upon turning 18, will receive VND 5 billion. Assuming there are six grandchildren, a further VND 30 billion will be distributed, leaving VND 50 billion remaining in the trust. (iii). Each great-grandchild will receive VND 2 billion. If there are 20 great-grandchildren, the total distribution will amount to VND 40 billion, with VND 10 billion remaining in the trust. (iv). And so on, the remaining assets of the trust—including returns generated from the initial fund—will continue to be distributed to the fourth, fifth, and subsequent generations until the trust is fully exhausted.

A trust may endure for hundreds of years, becoming a source of financial support for multiple generations within a family. It is therefore unsurprising that trusts have become a cornerstone of the wealth management industry in common law jurisdictions.

Vietnam: legal tools lag behind real-world needs

In Vietnam, there is growing interest among entrepreneurs in passing on their businesses and wealth to the next generation. However, significant legal constraints remain.

The most common method of transferring wealth is through a will—a widely used legal instrument, but one with notable limitations. First, heirs must be specifically designated in the will. This means that family members not yet born at the time the will is made are excluded from inheritance. If generations within a family are spaced 20–25 years apart, it is possible that the third or even fourth generation may not inherit from the original wealth holder. More importantly, a will does not address the governance challenges associated with managing inherited assets. Assets under a will are transferred after the testator passes away; however, at that point, they can no longer control how the heirs use the assets or protect the family wealth from being squandered or exposed to the heirs’ risky decisions.

The second approach is for the asset owner to transfer assets before death. However, early transfer means giving up control. There have been many unfortunate cases where parents transfer ownership of houses or land to their children, only to be neglected in old age, or even forced out of their own homes. Many business owners transfer shares to their children early to “prepare for succession,” but this results in conflicts in corporate governance, and assets becoming fragmented if the children encounter marital or financial problems.

Trust Insurance – when a life insurance policy becomes a “trust fund”

In a context where traditional trust funds are not yet widely used in Vietnam, some entrepreneurs have turned to an intermediate solution: structuring life insurance policies as a form of trust (Trust Insurance).

Life insurance policies and trust funds share certain similarities. Unlike ordinary contracts that terminate when one party is no longer alive, a life insurance policy remains in force even after the policyholder passes away. This means that once established, the funds accumulated within the insurance policy or the assets in the trust are legally separated from the policyholder or the settlor. In addition, a life insurance policy can last for hundreds of years—similar to the longevity of a trust. Most importantly, the policyholder or settlor can determine how the funds will be distributed.

Based on agreements with the insurance company, the policyholder can structure the policy to include multiple beneficiaries and contingent beneficiaries, determine how the proceeds are allocated to each, and design distribution mechanisms aligned with long-term objectives (for example, paying out benefits in installments rather than as a lump sum). This mechanism functions similarly to a trust: assets are transferred according to the founder’s intentions. A life insurance policy not only creates an immediate financial fund upon the founder’s passing, but can also provide ongoing financial support to family members over an extended period.

Insurance as a wealth succession structure

A common perspective is to view insurance as an expense. However, it can also be considered from another angle: insurance is a tool that allows the founder to continue determining how their assets are distributed even after they are no longer present.

For family business owners, a life insurance policy can become a wealth management tool—a part of the succession plan for their businesses and the long-term preservation of the family’s prosperity.

Family businesses in Vietnam are entering a large-scale first-generation transition phase. At this stage, the greatest risk does not lie in the market, but in the lack of a succession framework. While traditional trusts are not yet popular, life insurance policies—if properly designed—can serve as a practical alternative tool, helping to protect the family and transfer wealth across generations. Ultimately, the founder’s goal is not only to build a successful company, but to ensure that the family remains stable even in their absence. The greatest legacy is not wealth, but the lasting stability of the family lineage.