The trust is that legal tool which aims to separate goods from an individual’s asset with the purpose of pursuing specific interests in favour of beneficiaries by the entrusting of their management to an individual (trustee) or professional company (trust company). The trust has Anglo-Saxon origins and it was legitimised within the Italian territory after the ratification of Hague Convention in 1985.
Trust main characteristic is the splitting of the concept of property. In fact, trust legal property belongs to the trustee who is the only titular of its related rights (always in favour of beneficiaries or with a determined purpose) but, at the same time, trust goods do not belong to the personal asset of the trustee and neither to the settlor.
In some cases, a trust protector might be appointed and entitled with the following powers:
- Appointing or Revoking the trustee;
- Controlling over operations carried out by the trustee;
- Giving instructions to the trustee;
- Approval of decision made by the trustee.
The settlor is the one who decides to create the Trust. Once the trust has been created, the settlor achieves his asset separation transmitting his/her goods (estate assets, movable goods, material or immaterial goods) to the Trust. Then, the real owner of the aforementioned goods is the Trustee which ménage them according to the instructions in relation to the final purpose.
Usually, trust is established to the protection of estate assets. Doing so, trust will exercise a real asset protection because trust goods cannot be attacked by creditors. Then, it appears clear why trust is being frequently used to separate personal and company assets or to protect individuals’ assets form hazardous professional activities (doctors, lawyers, et cetera).
One more motivation for setting up a trust agreement is the asset protection in the context of the succession. In fact, a trust might be used to protect the asset during its transmission to heirs or by its wastage by incompetent subjects.
One the last element about the trust is about his capacity to determine a financial advantage to the settlor. However, Italian law affirmed that if fiscal advantages were the only reason for setting up the trust it will be considered illegitimate with a subsequent fine for the settlor.
VGS Lawyers have a consolidated experience in trust management. At VGS we work closely to the client in order to tailor the best trust agreement according to their needs.