Trust
Studio Martelli & Partners is specialised in the creation of trusts.
Trusts are a legal institute borrowed from English law and they are atypical compared to the usual institutes of civil law and Italian legal practice. However, for reasons related to the need for confidentiality, English practice – and now also Italian practice – has started to use a system of fiduciary entrustment of assets through which the holder (Settlor of the Trust) transfers the assets (Trust Fund) to a person he/she trusts (Trustee) so that the latter can manage them in the interests of a Beneficiary. They are essentially based on so-called “equitable” bonds, where there is a total separation of property in the absolute sense of the term with regard to title (belonging to the Settlor) and legitimacy (belonging to the Trustee). The basic aim is the absolute separation of the assets transferred under trust, which are separated from the Settlor’s assets, who “divests himself” of his assets which will belong to the Trustee who will take over ownership of them.
The firm’s lawyers support the client during all the stages of planning and creation of a trust, guaranteeing enjoyment of the many benefits offered by this important legal institute.
Some further information on trusts is provided below.
Assets held in trust cannot be garnished or seized
Provided certain requirements are met, the assets transferred by the Settlor under trust cannot be garnished or seized. In fact, assets transferred in the Trust Fund cannot be garnished or seized as they are the property of the Trustee who is a third party compared to the recipient of the garnishment/seizure order. The Trustee’s ownership is not full: such assets still remain separate from the Trustee’s personal property.
Asset protection
This feature is due to the fact that the Settlor is clearly separated from his assets (he divests himself of full ownership) assigning legitimacy to manage the transferred assets to a third party – the Trustee – who has the power/duty to manage and administer the Trust assets with diligence and professionalism. The Settlor is no longer the owner of the assets transferred under trust.
Tax advantages of trusts
The assets transferred under trust no longer belong to the Settlor and as a result they are no longer counted as property/income. Moreover, the protection instruments that can be adopted abroad may enable legitimate savings on taxes which – if the trust has certain legal and organisational requirements – can be extremely high performing from a tax perspective.
The Trustee’s duties essentially consist in administering the trust property in accordance with the instructions given by the Settlor with regard to:
- diligence of the prudent man;
- personal relevance of the appointment;
- separation of assets;
- duty of loyalty (i.e. always operate so as not to seek personal benefit and always impartially looking after the interests of the beneficiaries, if there are more than one).
Powers of the Trustee
Correctly administer the trust according to the instructions contained in the deed of trust:
- so-called mandatory powers;
- so-called permissive powers (to achieve the purpose of the trust).
- the Deed of Trust and/or law applicable to Trust also specify the limits imposed on the Trustee.
- capacity to sue and be sued;
- capacity to appear before a notary or other person representing a public authority.