A trust fund is a legal instrument that has been used in the Czech Republic since 2014 in connection with the protection and administration of property and inheritance. Are you currently dealing with a question about property and inheritance? Are you a businessman or businesswoman and want to ensure that your business is taken care of in all circumstances? Would you like to pass on your wealth to your children in the future, you want it already secured but the children are still too young? A trust fund may be the right solution.
Three parties are required in order to establish a trust fund: the grantor, the trustee, and the beneficiary. The grantor puts a certain amount of assets into the trust, which at that point becomes anonymous and belongs to no one. The trustee is a person chosen by the founder to look after the assets during the period without an owner. The beneficiary is then the person who inherits the property after a given period. In most cases, this occurs at the point at which they meet a certain condition that the original owner, i.e. the settlor, has set out in the instrument of establishment. The heir must therefore fulfil and complete the given consideration in order to obtain possession of the property. For example, a father puts certain real estate into a trust that he wants to pass on to his son, but the son will only receive it if he graduates from college.
Trust funds have two possible purposes, namely private or public benefit. There are several types and these are: personal, family, business, investment and charitable. What is the whole process of trusts? There are three phases of the beginning of a trust. Establishment occurs when the trust is signed by a notary public, acceptance of custody by the trustee results in the establishment of the trust, and then registration of the trust creates the trust. Once the trust is established, changes can still be made. This can be done by anyone who does not require consideration or by the beneficiary himself. However, these persons do not acquire the function or rights of the grantor. The second possible change is if the court itself so determines, based on an assessment that the consideration is unattainable. It may decide to make certain changes or to dissolve the trust outright. This is one of the options for terminating the trust. The other way is to fulfil the purpose, which in the example mentioned would be to obtain a degree from a university. The other two ways are the fulfilment of the exit condition in the trust’s statutes or the expiry of the time limit set out in the founding document.
In the Czech Republic this legal instrument is not as popular and used as it is in the world. On the contrary, it is very popular in the United States, the United Kingdom, Switzerland, Luxembourg and Singapore. Of course, it always depends on a lot of circumstances and the legal system in a given country also plays a big role. Trusts can be an advantageous tool for many life situations. They act as asset protection, security for inheritance, there is the flexibility of managing assets, everything is legally protected and discreet. It also allows the founder to insure that in the event of his incapacity or sudden death, his assets will continue to be cared for. If you work with us, we can help secure your assets according to your preferences.