Do the laws allow individuals to create trusts, private foundations, family companies, family partnerships or similar structures to hold, administer and regulate succession to private family wealth and, if so, which structures are most commonly or advantageously used?
French law allows or does not prevent individuals to create trusts, private foundations, family companies, family partnerships or similar structures to hold, administer and regulate succession. It is however unfortunate that trusts (and private foundations) set up by French resident since 11 May 2011 are subject to inheritance tax at the rate of 60% upon the death of the settlor regardless the degree of relationship between the settlor and the beneficiaries. The authors are however in the opinion that this provision is discriminatory.
The Italian Civil Code does not regulate the trust, (but trusts regulated by foreign laws can be recognised in Italy; see 21).
Italian foundations may be created to achieve purposes of social benefit, not to pursue the segregation and conservation of family wealth.
The Italian non-commercial partnership (società semplice) is widely used to hold assets including real estate. The partnership agreement can be structured in a very flexible way. The splitting of voting rights from profit participation rights may be achieved. Individuals other than family members may be prevented from acquiring an interest in the partnership and from being involved in the management of the assets.
The Israeli Succession law determines that there are only two ways to leave assets after the demise – by way of making a will or according to the law (intestate). Accordingly, although it is possible to establish trusts or companies, such structures do not necessarily override succession rights.
Although the Greek set of legal rules recognizes trusts and private foundations established abroad, there is no legislation available for their establishment in Greece.
The most similar structure to the trust is the Greek law “inheritance trust”, presented in question 17 above.
In regards to foundations, an individual in Greece may establish a Greek law foundation which may only serve a public charitable purpose [or be of interest to the public].
As such, the “inheritance trust” serves towards holding, administering and regulating succession to private family wealth, within a limited –nevertheless- scope.
German laws allow the creation of private foundations (“Familienstiftung”), family companies (“Familiengesellschaften i.F.v. Kapitalgesellschaften”) and family partnerships (“Familiengesellschaften i.F.v. Personengesellschaften”). Trusts as they are understood in common-law jurisdictions are not known to German law.
Family companies and family partnerships are very common as they are an adequate means to implement a family corporate governance. A particular advantage of private foundations is the possibility to shelter the assets from claims of creditors of the settlor or beneficiaries (see below question 23).
Belgian law allows the creation of control structures. The most frequently used control structure is a civil/family partnership, because it is low-cost, flexible and discrete. Civil/Family partnerships are often used for investment portfolios or art collections. Because of tax reasons, they are primarily used for movable assets.
British Virgin Islands
The BVI is the world’s leading international finance centre for company incorporations and BVI companies account for 45% of the international market share (according to a report by the IMF in 2004). It effectively emerged as an international finance centre in 1984 and there are now over 500,000 active companies on the register and many of these are set up as private holding companies (and are particularly popular in Asia).
Since 1984 the Territory has progressed from being a single product jurisdiction to a financial centre which is able to offer the full range of international products and services.
It was following the enactment of amendments to the BVI Trustee Act in 1993 that the BVI began to emerge as a popular jurisdiction for the establishment of trusts. The 1993 Act reformed BVI trust law in line with the laws of some of its main competitors to include in it clarification relating to conflict of laws provisions, those enabling protectors to be appointed and powers to be reserved to settlors, protectors and others; it also added provisions enabling non-charitable purpose trust to be established. Most importantly the statute abolished the requirement to the effect that all BVI trust deeds needed to be filed publicly since the latter had been a major deterrent to the creation of BVI trusts. The first specialist trust lawyer (co-author Chris McKenzie) arrived in the BVI in 1996, others soon followed and the number of BVI trusts began to steadily increase. Accordingly, within less than 10 years, the BVI became one of the world’s leading international trust centres.
In 2003 reforms which took effect in March 2004, mostly notably the Virgin Islands Special Trusts Act, 2003 (VISTA) has given the BVI major competitive advantage over many other jurisdictions and increasing global familiarity and acceptance of the reforms has fuelled - and will continue to fuel - the accelerating growth of BVI trust business. The VISTA legislation is unique in that it enables trusts to be established to hold shares in BVI companies (as holding companies for other assets such as shares in foreign companies and speculative investments) and, uniquely, offers a secure and appropriate way to hold commercial assets in a trust structure.
The appeal of the BVI as a trust jurisdiction was further augmented when innovative regulations enabling private trust companies (PTCs) to be established in the BVI were introduced in 2007.
BVI partnerships are often used within structures that manage and hold family wealth. The Partnership Act,1996 governs the formation and operation of BVI partnerships.
The laws of the BVI do not yet provide for the creation of civil law- type foundations.
BVI trusts and (to a less extent companies) are most commonly used for succession planning purposes.
The laws of the DIFC allow for the creation of trusts and shortly foundations (the DIFC equivalent in the Emirate of Abu Dhabi is the Abu Dhabi Global Market Freezone which has recently introduced similar trust and foundation laws). The DIFC Trust Law expressly provides that the common law of trusts, and principles of equity apply.
Under New Zealand law a person may create such similar structures (except private foundations) for holding and administering family wealth and for estate planning purposes. New Zealand is not a signatory to The Hague Convention on Trusts. Its courts are therefore not required to take into account the customary or legal requirements of foreign jurisdictions in relation to trusts.
Monegasque law allows individuals to create trusts and family companies.
As a civil law country, Monaco does not have a substantive trust law. However, Monaco enacted special legislation (Law No. 214 of 1936) designed to recognise trusts and allow certain foreigners who are resident in Monaco to take advantage of their national law which enables them to create trusts either during their lifetime or by Will. The use of trusts under Law 214 (both inter vivos and will trusts) is therefore reserved to those
persons whose national law provides for the possibility for settling one’s estate in a trust. Foreign residents who qualify may thus create a Monaco-based trust according to their national (foreign) law. For example, an English national, resident in Monaco, may establish an inter vivos trust or a will trust, pursuant to Monaco Law 214, governed by the English law.
Regarding Monegasque foundations, Law n°56 of 29 January 1922 allows the setup of foundations. However, Monegasque foundations can only be of public or charity interest, to the exclusion of private foundations.
The creation of single family offices is also a common practice in Monaco, although single family offices are not specifically regulated.
Finally, Law 1.439 enacted on 2 December 2016 governs the creation of multi-family offices. These structures are being increasingly used.