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To create a Trust, the Settlor transfers legal ownership of assets and rights to the Trustee who must act solely in the best interests of the beneficiary when dealing with the trust property.

Asset or legal rights may be contributed from time to time during the life of the Trust by the Settlor to the Trust fund. When the assets are transferred to the trust, these constitute a separate fund and are not part of the Trustee’s own estate. The Trust thus allows to separate from the personal sphere of the settlor any goods or set of goods, to which it gives a certain destination.

The following are examples of kind of assets that can be segregated in trusts:

  • Liquidity
  • Real Estate
  • Registered Movable Asset
  • Valuables and Collectibles
  • Business Interests
  • Financial Asset
  • Credits and property Rights
  • Intellectual Property
  • Securities

With regards to wealth structuring services, Capital Trustees focuses on family governance, asset protection and estate planning, areas in which the trust responds well to the need for effective protection and flexibility in order to regulate the steps and changes that occur within family contexts. Such needs can be met through different models of trusts, such as:

Revocable trusts
A type of trust in which the settlor reserves the right to revoke the trust after its establishment, obtaining the restitution of the assets contributed.

Irrevocable trusts
In irrevocable trusts, the settlor permanently deprives himself of the assets transferred to the trust in favour of beneficiaries – determined or determinable – or of an identified objective. In principle, the settlor has no rights or obligations in relation to the trust assets.

Fixed interest trusts
This is a type of trust in which the share of income and/or capital to which each beneficiary
is entitled is established in advance. The trustee must therefore respect this attribution
when distributing the assets.

Discretionary trusts
This form of trust requires the trustee to administer the assets in the interest of one or more
beneficiaries not previously identified but only identifiable on the basis of criteria indicated
by the settlor, or in the interest of fully identified beneficiaries but in respect of which the
trustee may choose at its discretion whether, when and how much to distribute

In order to increase its effectiveness, trusts can also be combined with other legal instruments, and it can be set up in the interest of beneficiaries or for the pursuit of a purpose, be it private or commercial. Common purposes are:

Family protection

Family trusts are established to protect family members and properties in order to preserve the integrity of a heritage or a collection to be handed down, or even to regulate relationships of unmarried couple and to ensure the maintenance of natural children. In the presence of de facto couples, not always protected by the legal system of origin, a family trust allows for the formalization of the wishes of the family members vis-à-vis inheritance. In addition, if a family crisis occurs, a trust can be useful to ensure over time the fulfilment of obligations taken by one spouse towards the other as well as their children.

Generational handover

By its very nature, a trust can serve a purpose by binding the trust fund to its fulfilment; it can be very effective – more so than other legal instruments such as, for example, wills – in governing the generational transfer of wealth. In cases of business transfer,

 it is useful to facilitate both the continuity in the management of the business during the transition phase, and the choice of the successor appointed to lead the company, regardless of the shareholding held.

Where the generational handover involves a variety of assets and multiple beneficiaries and therefore requires a “reasoned” segregation of assets, a trust is the ideal tool to obtain an orderly transfer. Trusts thus can ensure the preservation of the assets within the family of origin and the preservation of the same for the benefit of future generations.

Protection of vulnerable individuals

These are irrevocable trusts set up for the benefit of vulnerable persons (e.g. disabled, minors) in order to properly manage the assets contributed to protect and support their living needs.

Asset protection

This type of irrevocable trust is designed to reduce the risk of successful claims on the settlor’s assets by future creditors. It is particularly suitable for categories of persons, such as professionals, executives and entrepreneurs, potentially called in case of litigation to deal with their personal assets to other people’s claims for damages.

Business liquidation

The ownership of certain assets is transferred to a trust as collateral for financial obligations entered into with third parties. In a commercial context, the use of the trust can be aimed at the positive management of business crises, in support of negotiating solutions, debt restructuring agreements and liquidation procedures. A trust, for example, can guarantee the third party’s contribution to an arrangement with creditors, in which the settlor, on his own initiative, segregates a mass of assets into a trust for the specific purpose of reassuring creditors, facilitating the acceptance of the agreed plan.

Management of voting mechanisms

The trust can be a valid alternative to the shareholders’ agreements, allowing the achievement of similar goals but with real effectiveness and not merely obligatory. Voting trusts can also resolve conflicts of interest (blind trusts), prevent hostile takeovers, and encourage corporate reorganizations.

Charitable plans

A specific type of purpose trust, characterized by having as its purpose the support of non-profit activities such as education, cultural dissemination, environmental protection, the fight against poverty or religious proselytism. A trust used to collect donations or otherwise established for charitable purposes, offers potential donors the advantages of the certainty of

segregation and destination of the contributions. Compared to the foundation, the trust is a more flexible instrument, does not require a high minimum of capital or a public process for its establishment.

Pre-immigration

In anticipation of a transfer of residence to a foreign country, the impact of the new tax regime can be made more efficient by the transfer of part of its assets to trusts. For example, the establishment of an irrevocable and discretionary trust (prior to their transfer to Switzerland) means that the settlor will permanently dispose of the assets contributed to the trust and, therefore, that these assets are irrelevant for the purposes of the property tax to which the settlor will be subject.

Upon request, Capital Trustees can also perform the office of Protector in Trusts administered by third parties.

Capital Trustees is a point of reference for the management of vehicles suitable for the segregation of investments and property. Family and corporate assets could be jeopardised by abrupt and destabilizing factors.

Some are easily identifiable; such as family disagreements, divorces or creditor’s claims. Other could at first appear less evident, but not less insidious, and could come up in these frameworks:

  • Entrepreneurial businesses directly managed
  • Taking personal guarantees
  • Lack of adequate professional insurance
  • Lack of generational transfer plans, especially within family businesses
  • Lack of control over the assets, with the risk of depreciation and fragmentation of the assets
  • Unexpected death of the owner of such assets

Capital Trustees works on the detection of risk factors in order to achieve the highest level of asset protection, especially through the segregation of the same provided by Trusts.

In order to organize wealth by giving it a purpose, it is important to set strict rules that can guarantee its protection from identified risks, preserving its value over time and possibly gradually increasing it. Strengthened by its experience, gained over decades of activity, Capital Trustees is able to assist its clients who wish to protect themselves and their families, in order to plan solutions capable of shielding their assets in case of adversities.

In doing so, the firm will analyse the specific needs of each client, offering him tailor-made and fiscally compliant solutions with the aim to achieve the highest level of:

  • Protection
  • Confidentiality
  • Continuity
  • Flexibility
  • Governance
  • Compliance

These goals may involve a broad variety of assets, different in nature and shape, that will need specific attention in order to be integrated in a reasoned plan. The most common will nonetheless be real estate and corporate assets, which might be held through the following:

  • Real estate asset management vehicles, which can provide multiple advantages for the acquisition, holding and transfer of property, facilitating the accumulation of investments, the management of contracts, licenses, permits, etc
  • Different corporate forms that can be dedicated to the administration and monitoring of financial investments (e.g. investment portfolios) or used to hold participations.

Finally succession is another important part of wealth planning and it can be achieved through the use of multiple tools that, beforehand and duly combined, allow to ensure an adequate financial coverage to the heirs, optimizing the tax burden, regulating modalities and timing for a proper assignments of assets, also for governance issues in family businesses. Capital Trustees is alongside families and their professionals in analysing risks and limitations, identifying possible ways forward and implementing solutions.