For many, the word “trust” is something incomprehensible, distant and alien, and only a few lawyers and businesspersons have a clear idea of what trusts really are.
Trust is a fiduciary asset management scheme. But any trust structure must be backed up by remedies against ill intentions.
Modern practice has are various different types of trusts that allow your achievement of absolutely diverse goals: to effectively manage property during the lifetime and after demise of the settlor, to accumulate funds for personal education, medical treatment, education of offspring, maintaining handicapped relatives, retirement funds, charity, etc. Therefore, there are family, hereditary, charitable, pension trusts, as well as various kinds of trusts for business usage and assets protection.
In the common law jurisdictions (the UK, the USA, Cyprus, India, Canada, etc.), trusts are an integral part of the routine of not only practicing lawyers, but also casual people who, with their assistance, can solve practical tasks and achieve absolutely pragmatic goals. In recent decades, trusts have achieved recognition in other European countries, which have traditionally viewed such asset management structure with caution. In this regard, some European countries have already effectively introduced institutions similar to a trust in their national law, or have joined the Trust Convention, which allows the use and recognition of foreign trusts. Thus, in France, Switzerland, Germany, Italy, the Czech Republic, Moldova and other countries, trusts or their analogues have already become a reality.
What is a trust?
Trust is a management scheme, in which property is transferred to the ownership of a trustee, who is obliged to manage it in the beneficiaries’ interests or for the achievement of a socially useful goal.
A peculiarity of trusts is that they are based on a particular fiduciary relationship between the settlor and the trustee, who is obliged to act exclusively in the beneficiaries’ favor. Otherwise, he or she may be called accountable. Moreover, the degree of such accountability is directly proportional to the level of the trustee’s professionalism. In other words, if the trustee is deemed a professional trustee rendering asset management services, then his/her responsibility will be the most severe.
- Professionalandeffectiveassetmanagement, whichallowsnotonlypreservation, butalsoexpansion ofthepropertytransferredtothetrust.
- Thesettlor’screditorshave norighttoclaimpropertytransferredtothetrust, sinceitformallybelongstothetrustee.
- Asset management is carried out in accordance with the trust declaration (agreement, will) in beneficiary’s favor, who can act as the settlor himself/herself, and his/her children, relatives and any other persons.
- Effective ways of protection against the trustee’s ill-willedactions provide for the opportunity to exercise control over his/her actions (for example, through other trustees, protectors or court).
VigoLex has bonded a unique team of lawyers who have not only theoretical training, but also practical experience in establishing and maintaining trusts in various jurisdictions. They know and understand the specifics of working with different types of trusts in accordance with the clients’ needs and desires.