In line with its policy to promulgate rules and regulations necessary for the development of the fiduciary business, the Bangko Sentral ng Pilipinas has recently approved the guideline allowing for the creation of the Personal Management Trust (PMT).
The PMT is a living trust arrangement that seeks to meet the estate planning and asset management needs of individuals. For a minimum amount of P100,000.00, an individual can open a PMT for the management and preservation of his funds/properties to answer for the current and/or future needs of the designated beneficiary/ies, including but not limited to education, retirement, and/or wealth accumulation. The designated beneficiary may be the trustor himself, his spouse, children and/or other third party beneficiary/ies. Nonetheless, an individual is required to state his purpose(s) for opening a PMT, as well as the distribution of his funds or assets to ensure that the PMT is consistent with the intent of the regulations.
The PMT is expected to address the clamor of the market, especially those who have no capacity, or who do not see the necessity of appointing third-party beneficiaries. Governor Amando M. Tetangco, Jr. said “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.” The PMT is seen as a more flexible tool in the management of an individual’s financial affairs, unlike the Living Trust Account (LTA) which has a strict requirement on third-party beneficiaries.
To provide a smooth transition, LTAs will be discontinued and all existing and valid LTAs will automatically be considered as PMT upon effectivity of the Circular.
The recently approved Guideline is among the series of trust reforms instituted by the BSP to promote a more responsive climate in the financial service industry particularly in the estate planning and/or asset management of trust entities.