The trust is a legal institution of Anglo-Saxon origin, conceived and developed by the English and common law traditions. It does not have a specific discipline in our legal system as Italy, participating in the 1985 Hague Convention, which dictated standard provisions on the law applicable to the trust, did not recognize the institution and did not even insert rules governing it in our law. Indoor. Therefore, the application of this institute in our civil law requires the reference to the discipline drawn up by a foreign country among those admitted by the Hague Convention.
What is the trust
According to the provisions of Article 2 of the Hague Convention. A trust is a legal transaction whose constitution comes from a unilateral act. A person called a settlor. Or settlor. Uses this deed. Which transfers a particular inheritance of which he is the owner to another. Called trustee.
Following this operation. The trustee enjoys all the settlor’s rights on that estate and manages. It as if he were its owner for a specific legitimate purpose. For the benefit of one or more subjects who benefit from it. However, it is not necessary to establish the bond to identify one or more beneficiaries, which can also identify by the trustee or may not even have any. Furthermore, their acceptance is not a requirement for the validity of the shop. Its constitution may not even communicate to them by the person instituting it.
The trust can make a bilateral transaction or a quadrilateral structure. In the first case, the prevailing jurisprudence admits that Article 2 of the Hague Convention suggests that the settlor can identify himself as a trustee. In this case, we speak of a “self-declared” trust. The second case occurs when the role of the protector is included in the relationship, consisting of a surveillance activity on the work of the trustee. On this point, the Convention appears neutral, prescribing nothing.
How the trust works: formal aspects
As we have already mentioned, the trust established with a unilateral deed requires a written form for proof. The type chose. Therefore it can be a public act or a private deed. The latter is an essential element for the deed’s validity and a declaration by the settlor expressing the will to establish a trust, as the simple will to transfer the assets to another person is insufficient. No other formalities require since the remaining content of the act can free determined according to the purpose to achieve in a single document.
Regarding the document’s uniqueness, we would like to clarify that this occurs only from a technical point of view as the same document contains two legal transactions. One was was regulating the transfer of the estate from the settlor to the trustee, and the other regulating the management and administration of that estate. When the latter’s rules determine in writing, the assets can transfer between Vivi or Mortis causa with deeds of disposal of the same also placed temporally at a different time concerning the moment of determination of the rules themselves.
The transferable assets
Another essential element for the trust’s validity, to avoid its nullity, is identifying the assets by transferring. Future or non-existing assets at the time of its constitution cannot be transferred to the trust. In this case, there would be a non-existent trust due to the lack of the essential element constituted by the assets.
As for the nature of the transferable assets, except for those whose alienation is prohibited by law. Therefore, movable and immovable assets, money, various rights, debt securities, financial instruments, shares, and others are transferable.
Advertising in the Italian legal system and trusts
Our legal system is interwoven with a series of rules that regulate advertising, especially regarding real estate movement. In particular, it prescribes the obligation of written form ad substantial for the alienation of registered real estate, movable property, and for the transfer of company shares. Such movements must necessarily be recorded in the public registers by the law.
In the case of a trust, its registration is essential for the trustee. The Hague Convention has admitted that the trustee may request the trustee’s registration in the real estate registers and the disposition deeds concerning the assets constituting the trust property. This is because, to make the ownership of the rights transferred to the trustee effective, it is necessary to mention its existence.
The role played by the settlor (the settlor)
As we have already mentioned, the settlor is the figure who gives life to the trust through the trust act. We are talking about a figure and not simply a subject as the settlor can well coincide with one or more subjects, natural or legal persons, both of whom can dispose of. With specific indications of the relationships and of the powers attributed to them and exercisable for the entire duration of the trust, the agreement of these puts in place the trust act. From that moment on, How to make a pdf, the settlor transfers all his real rights together with the assets to the trustee, leaving the management and exercise to the latter.
The hypothesis, based on the provisions of the Hague Convention, that the settlor still retains some power of control over the assets that are the object of the transferred assets is not excluded. The fundamental thing is that the figure of the trustee remains such and pursues the purpose defined in the articles of association in the interest of those who benefit from it. However, the powers of control must not be such as to cast doubt on the genuineness of the trust set up. A negotiating scheme in which these powers of the settlor coincide with the management continuation of the assets through such trustee, in reality, a trustee of convenience, would render the trust null and void due to improper maintenance of control powers.
However, the settlor’s powers may be limited in the trust act by inserting specific duration clauses. Finally, remember that the settlor can coincide with the trust beneficiaries, and therefore, in this case, the trust will be “self-declared.”
The appointment of the trustee
A fundamental figure for the trustee’s validity, the trustee, is a subject with extensive powers. Before reviewing them, let us repeat what role he plays in the legal transaction we are dealing with. This subject invests with the administration and management of fundamental rights on the movable or immovable property under a settlor’s disposition to satisfy the latter’s will by benefiting one or more third parties. Its identification can carry out in three ways:
- according to the will of the settlor who acknowledges it in the deed of incorporation;
- in a separate deed in which the purpose of the trust by the settlor expressly mention;
- by court order.
The trustee expressly or tacitly accepts his appointment and, having given validity to the trust with the precise indication of the transferred assets. He undertakes to administer and manage it as a trustee in compliance with the provisions of the settlor identified in the trust deed.
What powers does the trustee have?
Legally, no precise definition of trustee or the powers attributed to it has been given. In practice, the emerging forms of trust are the most varied, and therefore the powers of the trustee must be assessed case by case based on the rules to which the person established it refers. However, we can identify some typical powers universally practiced by trustees:
- comply with and apply the provisions contained in the trust act, pursuing the purpose of the trust, in good faith;
- keep its assets separated from those subject to fiduciary property;
- entrust the assets of this property to a third party, if this operation meets the needs of better management of the assets, assuming responsibility for the acts performed by the latter;
- can assist by a technical professional in the management and administration of assets;
- implement and receive the necessary documents in the event of a judgment on the assets of the trust property.
However, it is good that the trustee’s powers indicated in the deed of incorporation and, if necessary, in a precise manner, also about any powers vested in the settlor.
Powers exceeding the ordinary administration and management of the trust property attributed to the trustee in some instances. These are powers that affect the negotiation structure itself, such as the possibility of modifying the legislation that has regulated the fiduciary relationship from the outset, modifying, maintaining, or appointing new beneficiaries, extending or reducing the duration of the trust. These powers must respond to the need to optimize the achievement of the fiduciary purpose.
The trustee and his responsibilities
In administering and managing fiduciary property, the trustee must apply the utmost diligence in the interest of the beneficiaries and under the responsibilities attributed to it. Simplifying the content, we list some activities that the trustee cannot avoid:
- safeguard the physical and economic integrity of the trust property, defending it with appropriate judicial and economic initiatives, to maintain or increase its value;
- collect and adequately use any data useful for asset management;
- account for the economic and financial movements affecting the inheritance assets to guarantee the appropriate reporting to the beneficiaries periodically.
The trustee is personally and indefinitely responsible and responds to third parties, as the sole owner of the trust property, castle wall arts for the deeds put in place that exceed the powers attributed to him in the trust deed. If these acts concern obligations inherent in the trust, it may claim against the same assets.
He is exonerated from any responsibility if clauses to that effect have been included in the trust deed or if he proves that he is not responsible for the powers attributed to him and put in place according to the law governing the trust. It is never responsible if the beneficiaries had given their consent to a particular operation or received instructions to act from the protector or judicial authority.
Delegation of the powers of the trustee and renunciation of the office
If the trust deed provides for it, the trustee can attribute to a specialized subject the faculty to perform certain acts for which the trustee does not have technical competence.
He can never delegate the total management of the assets, in which case there would change a renunciation behavior towards the assignment entrusted to him. In this case, it must notify the beneficiaries, who, by signaling the receipt of the communication, give effect to the waiver. If the deed of incorporation has not expressly provided for regulation in the absence of the trustee due to renunciation of the assignment, the trust agreement terminated.
The deed of delegation corresponds to an extraordinary power of attorney, adequate for a pre-established time or until the deed to perform completed.
Even if delegating, the trustee nevertheless remains responsible for the act put in place by the delegate.
The position of the beneficiaries
The beneficiaries of the trust are the subjects who interface with the trustee as they expect him to fulfill his management duties. And the administration of the assets to their advantage. They, therefore, have the power to remove the mandate from the defaulting or abusive trustee of their powers. And the rules governing the trust. Revoking it or replacing it.
These have the right to exercise control over the activity carried out by the trustee. But within certain limits. They cannot compromise or ingest in the management. Of the assets that belong to the trustee independently. Unless this has been established in the constitution, instead they can intervene in advance on an act. Or disposition of the trustee that could cause damage. To the trust property by asking the judicial authority to provide. An injunction to prevent its fulfillment. In the same way, they can intervene when the trustee. Proves sluggish to carry out the acts necessary. To achieve the agreed purpose.
Any decision to end the trust left to the beneficiaries who all in agreement, freeing the trustee from any constraint deriving from it.
Tracing and constructive trust
On the position of the beneficiaries, it is worth saying a few words about the powers of tracing and constructive trust. These are forms of protection available to beneficiaries to safeguard the integrity of the trust assets.
The tracing use to remedy the improper conduct of the trustee. Or a third party who subtracts unlawful goods from the trust property. In this sense, the beneficiaries can demand that these assets reinstate by claiming a property right over them. You can use this tool even when the asset has not been stolen, but its original characteristics have been changed.
The alternative to tracing but similar to it is constructive trust. With it, the beneficiary who has identified third parties. To whom the trustee has alienated assets from the trust property. Can ask the judicial authority to bind them to the trust obligations, in other words. There would be a replacement of the trustee with such subjects. Who would find themselves committed. To acting according to the purposes pursued by the trust.
A result of these powers is the faculty of the beneficiaries mentioned. Above to obtain the transfer of the revenues from the assets sold to the trust property.
The characteristics of the beneficiaries
Depending on the negotiating scheme established with the trust act, different types of beneficiaries can be identified.
We remind you that the settlor identified these subjects who may have nominated them at the time of incorporation or may have indicated the qualities corresponding to the coverage of this role. In the latter case, therefore, whoever will have these characteristics will play the beneficiary’s role.
We can then distinguish the beneficiaries who receive a periodic profit from those who obtain revenue only when the trust expires.
Furthermore, the beneficiary’s status is not always definitive if the settlor has given the trustee the power to replace them in the trust act.
The protector or “guardian” of the trust property
We have already mentioned what the role of the protector consists of within the trust scheme. Its inclusion in this negotiating world becomes more. And more frequent in commercial trusts. Where more significant control over the trustee’s activity is necessary, often this figure identifies. Among the members of the settlor’s family or of people. With whom he shares values . The will of both subjects are similar and. Therefore interested in pursuing the same goals.
Its powers described in the trust act and can of an ordinary or extraordinary nature, among the first. We point out, for example the possibility of replacing the trustee. Or of providing for the drafting of a project. Brief History Of Amazon For the distribution of earnings. And assets among the beneficiaries. Among the extraordinary powers. We report as an example the transfer of the operating unit. To another location if it improves the expectations of the beneficiaries.
A relationship of subordination can also establish. Between the protector and the trustee if provided for in the deed of incorporation. The latter must comply, limited to certain aspects, with the consent of the former.
Termination of the trust
The Hague Convention expressly prescribes the identification of a duration of the trust. Leaving the task to the law chosen by the person constituting it. This is an element of validity of the shop itself and, therefore, fundamental. In particular, a maximum duration and a deadline must be established. The settlor determines the latter in the trust act. And its duration will depend. On the negotiating scheme and the aims pursued. Typically an annual duration of the trust established. Or the final term identifies upon the occurrence of a specific event.
The trust deed may also provide that the trust terminates before the final pre-established term. This can occur when the aim pursued has been achieved in advance. Or it is certainly considered. That it is no longer achievable. The subjects authorized to bring forward the final deadline are the trustee. Or the protector under the exercise of special powers.
Finally, the trust can terminate for reasons other than the expiry of the term. We list them below:
- specify the reasons established in the trust act;
- when the purpose fulfill or becomes impossible;
- if all beneficiaries so wish;
- when the trustee leaves the office and is not replaceable.
According to the trust deed provisions. In all cases of termination of the trust. The remaining assets liquid and distributed among the beneficiaries.