Trust: what is it
and what are its uses?
What is a Trust?
The term “trust” identifies the legal relationship created by a person, the settlor, who — through an inter vivos deed or by will — decides to allocate specific assets to the pursuit of a legally protected purpose or for the benefit of one or more designated beneficiaries.
Such assets, defined as the trust fund, are entrusted to and placed under the control of a natural or legal person, the trustee, who acts in accordance with the powers and within the limits set out by the settlor in the trust deed and by the governing law, and under the supervision of another party, the protector, if appointed. The settlor may establish detailed rules for the administration of the trust fund, which remains segregated and protected from the personal and financial events of the settlor, the trustee, and the beneficiaries.
From a tax perspective, the 2007 Finance Act introduced, for the first time in the Italian legal system, specific provisions governing trusts in relation to direct and indirect taxation, which over the years have been subject to various interpretations and clarifications by the tax authorities.
Today, trusts in Italy are subject to a clear and regulated tax framework.
Uses of the Trust
In Italian law, thanks to its flexibility and adaptability to a wide range of needs, the trust instrument can be widely used for various purposes (fiduciary asset management, generational transfer of family assets and businesses, allocation of assets for charitable purposes, asset protection, etc.) that would not be achievable through the traditional legal instruments provided for under the Italian Civil Code.
for succession planning
for managing a peaceful and dignified retirement
as an alternative to matrimonial property agreements
for mortgage management
for managing certain relationships with public entities
for personal asset protection
for managing property relations within de facto families
in situations of relationship breakdown
for managing insolvency or bankruptcy proceedings
for the protection of vulnerable and/or disabled persons (so-called “After Us” Trust)
for planning generational business succession
for employee protection
for the management of art collections