Asset protection through offshore trusts
All the solutions practiced at the operational level, in fact, present total compatibility with the current civil, fiscal and penal legislation.
In our legal system, there is a specific provision which states the principle of the so-called. “Generic liability of the debtor”, to which everyone is subjected as a legal entity, holder of both rights and duties (obligations).
The rule in question refers to all types of obligations, including those of an extra-contractual nature generated by the offenses committed with intent or simple fault.
It is a regime of responsibility that is certainly rigorous because it is characterized by an ultra activity that also affects future assets, not allowing the debtor to be able to economically recover and start again in his own activity (difficulty in accessing bank credit, etc.).
Time and basic planning strategy
Having ascertained the origin of the problem, it is easy to see how serious patrimonial protection, to be effectively effective, must be planned in advance, or when the interested party is still performing.
Unfortunately, experience shows that many, indeed, too many runs to invoke measures to protect their assets only when there is already an important debt position, perhaps consisting of debts already in the executive phase, with buildings already encumbered with court mortgages, or when the damage event has already occurred, because each device deed aimed at removing its assets at that point will be useless, revocable and, in some cases, criminally punishable.
With reference to the timeliness of the intervention, unfortunately, in Italy, we are still far behind the other European and Atlantic area partner countries.
For a backward cultural heritage, the concrete application of suitable and effective instruments of preventive capital protection is still lacking both in numbers and methods. Suffice it to consider that in our country there are still those who use the patrimonial fund with the conviction of being adequately protected from the actions of creditors.
Also for the same reason, then, we have the tendency to consider heritage in an indistinct way, functionally in charge of facing the multiple needs of life, both personal / family and professional.
Abroad (in particular in common law countries), instead, it is normal to make a clear distinction between personal assets and those destined to be put at risk in the economic activity of the subjects.
Careful management of one’s assets, therefore, cannot ignore the choice of the goods that one wishes to protect and preserve and then pass them on to their loved ones, from those who instead want to submit to the risks of their economic and/or professional activities, creating with suitable legal instruments – including international ones – a clear separation of the two profiles.
With the correct use of valid legal instruments, therefore, the separation between the entrepreneurial and professional sphere and the real estate and movable assets of the entrepreneur and/or anyone who needs such patrimonial safeguards, is absolute, as it is rarely attackable, provided it is carried out at appropriate times.
This result can be achieved in different ways, such as, for example, protecting oneself through fiduciary instruments or through legal structures which by their nature are designed to protect assets, such as cyprus offshore trust.
The Trust in general
It is an institution that does not belong to our system. It has its origins in the common law system and, in particular, was born in England, a country where its evolution took place over the centuries.
In our legal system, the trust has been recognized following the ratification of the 1985 Hague Convention (L. October 16, 1989, No. 364).
Lacking an internal regulation governing the institution, it is applied through an “import” mechanism of foreign law. Thus, when a trust is established, it must refer to a law of a country that recognizes it expressly as an institution and regulates its dynamics (eg English Law, New Zealand Law, San Marino Law.
Generally speaking, the structure of the trusts is as follows: a subject called a trustee, to whom the rights and powers of a real owner (legal owner) are attributed, manages a patrimony that has been transmitted to him by another person, called settlor (or settlor) in the interest and for the benefit of a subject (beneficiary) or for a pre-established purpose, provided that it is lawful and not contrary to public order.
These subjects can be supported by other third parties with the function of guarantee and/or supervision of the work of the trustee (ie protector or guardian) who may be a natural person or a legal person.
The tripartition of roles (settlor, trustee, and beneficiary), which must be well defined and autonomous according to English law, finds temperaments according to other regulatory laws that admit the validity of trusts in which the settlor is also trustee or beneficiary (self-declared trust).
As regards the object of the trust, this can be represented both by real estate, more frequently, by movable property, by the universality of furniture and by real rights of enjoyment and credit (especially shares).
There are no limits for determining the object of a trust, as long as it is aimed at achieving interests worthy of protection pursuant to art. 1322, second paragraph, cod. civ ..
What is a Trust
The answer is not unique because there are several concepts of trust. To understand them, we first need to understand the concept of legal ownership according to the common law regulations to which the tradition of the Trust belongs.
On a technical level, English property legislation describes the legal rights and ownership of assets, whether tangible or intangible. For example, we normally own our clothes or our books. When we have ownership of an asset we have full legal ownership, and we can freely enjoy or dispose of it.
Different orders recognize the possibility for a holder to have the availability of an asset under a “fiduciary obligation”. In this case, such a person normally holds the asset not for his own benefit or interest but for the benefit or interest of third parties, who take the name of beneficiaries.
In the law of the Trusts, the subject who in the context of a fiduciary relationship holds the legal title of an asset takes the name of Trustee while the subject in whose favor the asset is held, who has an interest in it, takes the name of the beneficiary.
In this situation two different ownerships are generated:
a) the Trustee will have the legal title on the asset (legal title); b) the Beneficiary will have an interest on the property (proprietary interest) formally called ” equitable title ” (so-called because it derives from the rules on equity ).
Thus, the distinction between legal property title and title of fairness, as well as the existence of the fiduciary obligation of the trustee to the beneficiary, representing the central element in the field of trusts. When there are more beneficiaries, some of them can also be trustees. The only limitation is that there cannot be a single beneficiary coinciding with the trustee, because in this case, this would, in fact, become full owner.
A definition according to the Italian jurist
Trusts are legal relationships established by a person, the settlor or settlor with deed between living or mortis causa (testamentary trust) if assets have been placed under the control of a trustee, the trustee in the interest of a beneficiary or for a specific purpose.
On the other hand, according to a civil law reading, the establishment of a Trust is a unilateral programmatic, receptive and refusal shop (except when the trustee corresponds with the settlor). According to the Italian civil law approach, it is also possible to identify a cause: «the program that justifies the constraint».
Trusts are therefore phenomena managers.
The trusts, however, are not considered subjects of law (institutions) except for tax purposes.
Characteristics of the Trust and main effects
The trust is characterized by the following characteristics:
• separation of assets: the assets of the trust constitute a distinct mass and are not part of the personal assets of the trustee ;
• title of the assets: the trust assets are registered in the name of the trustee or another person on behalf of the trustee ;
• attribution of powers and charges to the trustee: the trustee is invested with the power and burden of the obligation, of which he must account, to administer, manage or dispose of assets according to the terms of the trust and the particular rules imposed by the law.
As for the main effects, they include:
• Risk limitation, through the construction of autonomous legal spheres;
• Protection of the purpose of the asset allocation document;