Brief overview of real estate trust in Italy

Introduction

A real estate trust is a legal instrument that deals with real estate assets.

With a real estate trust, a person, known as the settlor, transfers ownership of one or more properties to a trustee, who manages them in the interests of one or more beneficiaries, in accordance with the purposes set out in a trust deed.

The fact that the trust concerns real estate does not change what is stated for trusts in general (https://antonellolawfirm.com/2025/04/08/il-trust-in-breve/), with regard to their introduction into our legal system, which took place thanks to the Hague Convention of 1985, ratified by Italy in 1989.

The real estate trust is a very interesting instrument because it is now increasingly used for the protection and management of real estate assets that make up the assets of those who use it, also in light of recent tax trends.

This instrument can therefore prove to be a great ally in protecting, administering and transferring real estate assets efficiently, thanks to its flexibility and ability to respond to complex needs.

What is a real estate trust for?

A real estate trust can be used for many purposes, including:

1. Asset planning

A real estate trust allows you to separate real estate from the personal assets of the settlor, ensuring independent and structured management.

2. Asset protection

Precisely because the assets transferred to the real estate trust are separated from the settlor’s remaining assets, within the limits of the law, they are protected from external attacks.

3. Inheritance

It is an effective tool for planning the generational transfer of real estate, reducing or avoiding the risk of inheritance disputes and ensuring that the settlor’s wishes are respected in the management of the assets.

4. Management of ‘income-generating’ real estate

In the case of leased or ‘income-generating’ properties, simple and orderly administration of income and management of ordinary and extraordinary maintenance can be provided for.

How a real estate trust works

The typical structure of a real estate trust does not differ from that of a trust in general and involves the following parties:

Settlor: transfers the real estate assets to the trust.
Trustee: manages the property in accordance with the instructions contained in the trust deed.
Beneficiaries: receive the economic benefits deriving from the management or future distribution of the assets.
Guardian (optional): supervises the trustee’s actions.

In general, the elements typically included in the trust deed are:

the property transferred;
the rules of management;
the duration of the trust;
the rights of the beneficiaries;
the methods of termination and devolution of the assets.

In addition to the above, it is advisable to include specific clauses on a case-by-case basis so that the deed is as consistent as possible with the needs of the parties involved.

Advantages of real estate trusts

In addition to the above regarding planning, asset protection and property management, both in the succession phase and in the case of income-generating properties, we can list some other very interesting advantages of trusts:

flexibility: trust is an extremely customisable instrument: the settlor can define very detailed rules for the management and allocation of the assets;
confidentiality: the provisions contained in the trust can be kept confidential, within the limits imposed by law;
management continuity: the management of the assets is not affected by events in the settlor’s life.

It is easy to see how a real estate trust can be a valuable ally, and for this reason, and to make the most of the potential it offers, it is always advisable to carry out a specific analysis of your needs and an in-depth study of the optimal organisation of the deed.

Tax aspects of real estate trusts

The tax treatment of real estate trusts in Italy is complex and depends on the type of trust (self-declared, with specific or unspecified beneficiaries). Here we discuss this in a very concise and general manner, with the aim of drawing attention to this fundamental aspect. The taxes we have to deal with when it comes to real estate trusts are:

Registration, mortgage and cadastral taxes: payable when the property is transferred to the trust.
Income taxes: the trustee is liable for IRPEF or IRES, depending on the structure of the trust.
Inheritance and gift tax: applicable to the final devolution to the beneficiaries.

Again, it should be emphasised that, given the different ways in which these areas can interrelate, it is essential to carry out a prior tax assessment on a case-by-case basis.