SETTLOR

He is the subject entrusting his assets to the Trustee and assigning them to a specific purpose by dictating the rules that the latter is bound to follow in the administration of the same. He can also appoint a protector.

BENEFICIARIES

They are those in whose interest the trust fund is administered and to whom it will ultimately be transferred, identified subjectively or as members of categories. Beneficiaries can also be added or removed. They can be recipient of both capital and income distributions from the trust.

TRUST FUND

It consists of the assets entrusted to the Trustee, who administers them in the interest of the beneficiaries. Any economically valuable asset can be settled into a trust ( movables, immovable, credits, etc. ).

TRUSTEEE

He administers the assets entrusted to him by the settlor in the interest of the beneficiaries. He acts within the limits and according to the powers granted him by the trust deed.

PROTECTOR

If foreseen, plays a key role in providing major guarantees for the safeguard of beneficiaries’ rights, while making sure that the settlor’s intentions transfused in the trust instrument are respected. He could be vested with a wide range of powers, among them, the power to veto trustee’s choices and to revoke the trustee and appoint a new one of his choice.

LETTER OF WISHES

They are a form of non-binding communication through which the settlor or a beneficiary could provide the trustee with specific information regarding their expectations on the management of the trust fund.

Can the governing law of the trust determine its residence?

No. The governing law of trusts can be determined freely in the trust deed and it will be possible to modify it if necessary. The residence of trusts is determined only by the residence of the trustee.

The main concerns for a settlor regard the “loss of control” on the assets placed in trust. It is important to state that?

– The protector plays an important role in guaranteeing that the beneficiaries’ rights will be respected, ensuring that the settlor’s intentions, as stated in the trust deed, will be followed. During his monitoring activity, the protector has access to any kind of information regarding the trust. He could also be vested with a wide range of powers, among which, a veto power on trustee’s decisions, and the power to revoke the current trustee and appoint a new one of his choice. These powers must always be balanced in order to avoid a complete substitution of the protector in the position of the trustee.

– Letters of wishes are a precious tool for the settlor, as they provide the opportunity to redirect the activities of the trustee by giving meaningful suggestions on the management of the trust; they can be amended in whichever moment, if the circumstances require it.

– Swiss trustees will be subject to stringent regulations (regarding the professional requiremets, their minimum capitalization levels, professional insurance, and risk management) established by FINMA, the Swiss Financial Market Supervisory Authority.

– It is compatible with the notion of the trust, that the settlor reserves to himself some powers; for example, he could be a beneficiary of the trust. Nonetheless, this can be risky, as reserving wide powers could compromise the validity of the trust. For instance, the best implementation of the settlor’s wishes, will take place through the combination of several factors: a tailor made trust deed, precise letters of wishes, and a constant monitoring activity carried out by the protector.

Which assets can be part of the trust fund?

Any asset subject to economic evaluation can be part of the trust fund (real estate, movables and chattels, credits, works of art, intellectual property, shares, etc.). Underlying companies are among such assets; nonetheless, the majority of jurisdictions has recently highlighted the importance of the economic substance compared to the formal structure. It will therefore be important to implement wealth-planning structures which have as a primary goal simplicity and effectiveness.

Which is the minimum amount required for the settlement of a trust?

A trust can come into place with a minimal amount.
Further additions can be made at any moment of the life of the trust; coming both from the settlor and third parties.

Is it possible to modify the beneficiaries of a trust?

The beneficiaries of a trust can be named expressly in the trust instrument, otherwise they can be identified through categories. Beneficiaries can be added or removed at any time during the life of the trust.

How does a trust end?

The dissolution of the trust will occur when its final term will be reached, or by anticipating such term through an amendment of the trust deed. A resettlement could represent a useful alternative, with which a part or the whole trust fund will be transferred to a new trust.