Il Trust
A trust is a legal instrument by which certain assets of a person’s estate (Settlor) are segregated to pursue specific interests or benefit of beneficiaries or for a specific and different purpose. The assets, once segregated, are managed by a person (Trustee) who acquires the ownership of them, with powers of administration and disposition which are exercised with discretion and diligence, according to the instructions received from the settlor in the deed of trust and according to the law governing the trust. Since it implies a legal segregation between the assets and the settlor, the trust is a “legal safe” since the Settlor no longer has ownership of the assets.
There is no one rigid form of trust, but many possible schemes that can be constructed according to the specific purpose the client need to achieve.
Characters of the Trust
- Settlor: The Settlor is the person who transfers his assets into the trust, through the deed of transfer, establishing the principles according to which the assets shall be managed.
- Beneficiaries: are identified by the Settlor and are the parties for whose interest the Trust is established.
- Trustee: can be identified also in a trust company, is the person which performs the functions of the administrator of the assets transferred in Trust. In case the asset transferred into the Trust is the share of a corporation, the Trustee will perform the role of investor/shareholder, i.e. it can routinely attends the shareholders’ meeting once a year to approve the financial statements and determine dividends. In addition, the Trustee routinely ensures, with discretion, compliance with the rules provided by the Settlor, according to the principles of the Trust deed.
- Guardian, normally chosen among professionals trusted by the Settlor, is the person to be consulted by the Trustee for extraordinary transactions. The Guardian or the Settlor have the power to substitute the Trustee. The Settlor and/or the Beneficiaries have the power to substitute the Guardian.
Other elements of the Trust
Generally the Trust has a term of several years (often some decades) as per Settlor disposition. Notwithstanding that, it is still possible to provide for some “timeframes” in which the early termination of the Trust may occur upon certain pre-determined events.
By the Letters of Whishes Settlor may provide expressed rules to which the Trustee may comply in the management of the assets. The Letter of Whishes may be modified as long as the Settlor is alive.
Only a fixed tax of € 200 is due upon the establishment deed of the Trust. Different taxation will be due for each deed of transfer, according to the type and the value of the asset transferred.
As long as the Trust is valid, no inheritance/donation tax will be due. Inheritance/donation tax will became due only when the assets in the Trust are finally assigned to the Beneficiaries.
Purposes
The Trust can allow the pursuit of different goals, including:
- the protection of immovable or movable assets, through the segregation (it can, for example, serve to separate personal and business assets);
- the protection of assets in the event of inheritance, through the allocation of assets to the heirs according to predetermined wills (e.g. to ensure that the beneficiary receives an income instead of the asset)
- discretion;
- the protection of underage or disabled persons;
- charity;
- in cases of business crisis; in order to satisfy creditors by the liquidation process of the business.