Introduction
The trust is an Anglo-Saxon institution that is widely used in Italy due to its usefulness in various areas.
The trust is a great aid for the correct management of the generational transfer of assets, but not only that. The instrument can be used for asset separation and for the achievement of specific purposes or in favour of certain beneficiaries.
Finally, thanks to the correct use of trusts, the interested parties can benefit from tax breaks, such as the reduction of taxes for property transfers, the general reduction of taxes, as well as the high level of privacy offered by the institution.
Foreign citizens can use this instrument to purchase and manage real estate or other types of assets (for example works of art) in Italy, with undeniable advantages. Before discussing these advantages, however, it is useful to have a brief overview of the trust, in order to summarise in a simple way the elements most relevant to understanding the more specific issues related to trusts, which will be discussed later.
What is a trust in brief
A trust is a legal institution of Anglo-Saxon origin whereby the settlor separates some assets from his/her patrimony and assigns them to the pursuit of specific interests in favour of certain beneficiaries or to achieve a specific purpose. With the separation of assets, which can occur by deed inter vivos (act or contracts between living beings) or upon death, the ownership and management of the assets is transferred to another person (trustee or manager).
The parties to the trust
The parties to the trust are:
- settlor: the person who establishes the trust and assigns certain assets to it
- trustee: the person to whom the settlor entrusts the assets. The trustee becomes the owner of the assets and has the power to administer and dispose of them. The trustee acts according to the regulations chosen by the parties to govern the trust and the instructions provided by the settlor. In addition, the trustee has an obligation to report on his actions to the settlor, the beneficiary and the guardian
- beneficiary: the person who receives the assets or income of the trust
- protector (or guardian): the person who supervises the trustee’s actions
The object of the trust
The following can form the object of the trust:
- real estate
- registered personal property
- unregistered personal property
- credits
Asset segregation
The main effect of a trust is that of segregation of assets, as the assets conferred in trust form a separate patrimony with respect to the personal patrimonies of the settlor and the trustee.
In this way the separate assets cannot be attacked by the creditors of these subjects.
It should also be noted that the ownership of the trust assets and rights is attributed to the trustee, who administers it in the interest of the beneficiary or beneficiaries, or to pursue the purposes identified by the settlor.
The law applicable to the trust
The trust is not regulated by Italian law, but with Italy’s ratification of the Hague Convention of 1 July 1985, it is a legitimate private law instrument.
Precisely because there is no specific regulation within the Italian State, the settlor can choose the law applicable to the trust from among those of foreign legal systems which, on the contrary, have an ad hoc regulation of the trust.
This has a great advantage, because the applicable law can be identified on a case-by-case basis, taking into account the specific needs. At the same time, however, this choice is a crucial moment that must be considered very carefully, taking into account all the elements inherent to the specific case.
This choice is even more important if we consider that, if it is not made, the law of the state with which the trust has the closest connections will be applied; a law that may not be the most suitable for the case in question.
The Legal Nook 