A flexible structure. Clear rules, defined responsibilities.
TRUST.
A trust is a legal arrangement in which assets are entrusted to a trustee, who administers them for the benefit of one or more beneficiaries or to fulfil a specific purpose.
Separating assets, managing them responsibly,
How a trust works
Trusts in Italy
Trusts have their origins in the common law tradition and have been recognised in Italy through the Hague Convention of 1 July 1985, ratified by Italy under Law No. 364 of 16 October 1989, which entered into force on 1 January 1992.
The Convention does not establish a separate body of Italian trust law. Instead, it sets out the rules for determining the law applicable to trusts and recognising their effects within the Italian legal system. A trust is a legal arrangement established by a person, known as the settlor, either during their lifetime or upon death. Under this arrangement, certain assets or rights are placed under the control of a trustee, who administers them for the benefit of one or more beneficiaries or to fulfil a specific purpose.
The arrangement is based on several essential principles:
- Assets placed in trust form a separate fund and do not become part of the trustee's personal estate.
- Legal title to the assets is held in the name of the trustee or another person acting on the trustee's behalf.
- The trustee has the power and duty to administer, manage or dispose of the assets in accordance with the trust deed and the applicable law.
- The trustee must keep records of decisions and account for the administration of the trust.
Legal ownership of the assets therefore carries clearly defined responsibilities. The trustee does not administer the assets for personal benefit, but to fulfil the purposes established by the trust.
How does a trust work?
From intention to implementation. A trust begins with a clearly defined plan. The settlor identifies the objectives, the people involved and the assets to be placed in trust.
These elements are set out in the trust deed, which establishes:
- The purpose and duration of the trust;
- The trustee and their duties;
- The beneficiaries;
- The appointment of a trust protector, where applicable;
- The governing law;
- The rules for administering and distributing the trust assets.
The parties involved
Settlor
The person who establishes the trust, identifies the assets to be placed in it and transfers them to the trustee
Trustee
Holds legal title to the assets and is responsible for administering them in accordance with the trust deed, in the interests of the beneficiaries or for a specific purpose
Beneficiaries
The individuals or entities for whose benefit the trust assets are administered and who may receive distributions in accordance with the trust's terms
Trust protector
A person or organisation appointed to oversee certain aspects of the trustee's activities and exercise the supervisory, intervention or approval powers granted under the trust deed
Co-trustee
A trustee who shares the appointment and its associated responsibilities with one or more other trustees, in accordance with the trust's provisions
Segregation of trust assets
A separate fund dedicated to a specific purpose.
Assets placed in trust form a separate fund, distinct from the trustee's personal assets. This means that:
- They are administered in accordance with the purposes and rules established in the trust deed.
- They remain separate from the trustee's personal assets.
- They do not form part of the beneficiaries' personal estates until distributed to them in accordance with the trust's terms.
- They must be identified, administered and accounted for separately.
- The trustee has both the power and the duty to administer them for the benefit of the beneficiaries or to fulfil the trust's stated purpose.
The segregation of trust assets does not automatically guarantee their protection. The validity and legal effects of a trust depend on its proper establishment, the transfer of assets, its intended purposes and the applicable legal framework.
Asset types
What assets can be placed in trust?
A trust may hold different types of assets and rights, including:
- shares and other interests in companies
- movable and immovable property
- cash and financial instruments
- receivables and other legal rights
- works of art and collections
Benefits
The versatility of trusts
Trusts can be structured to address a wide range of personal, family and business needs. They may be used to:
- support succession planning and the transfer of wealth between generations;
- provide continuity for businesses;
- administer financial assets, property and company interests;
- protect the interests of vulnerable individuals;
- preserve and manage art collections;
- support charitable projects and purposes;
- establish arrangements for specific security purposes;
- address particular needs arising in insolvency proceedings.
Their flexibility allows the purposes, rules and duration of a trust to be tailored to the circumstances, while keeping the people involved and the intended objectives at the centre of each arrangement.
The trustee is responsible for giving effect to the arrangements established in the trust deed.
This involves administering the assets, making decisions within the scope of the trustee's powers, keeping trust assets separate and acting for the benefit of the beneficiaries or to fulfil the trust's stated purpose.
All activities must be properly documented and accounted for. The role therefore requires legal expertise, administrative competence, independence and a commitment to continuity over time.
FAQ
FAQ about trusts
A trust is a legal arrangement in which assets are placed under the control of a trustee, who administers them for the benefit of one or more beneficiaries or to fulfil a defined purpose.
A trust may hold property, movable assets, financial assets, company shareholdings, works of art and other assets or rights. Whether and how particular assets can be transferred into trust must be assessed in light of the specific arrangement and the applicable law.
The duration of a trust is established in the trust deed, taking into account its intended purposes and the requirements of the governing law. A trust may come to an end on a specified date or when a particular event defined in the trust deed occurs.
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