What is a Trust

The trust, a ductile and dynamic instrument, lends itself to multiple applications
overcoming the rigid and formal characters of traditional civil law instruments

The trust is an institution of Anglo-Saxon origin that became relevant in Italy following the transposition, by Law No. 364 of October 16, 1989, of the Hague Convention (dated July 1, 1985) on the law applicable to trusts and their recognition (the "Convention").

According to Article 2 of the Convention, trusts are defined as "legal relationships established by a person, the settlor - by an act between living persons or mortis causa - where property has been placed under the control of a trustee in the interest of a beneficiary or for a specified purpose."

The Trust in the Italian Legal System

Since no domestic legislation has yet been adopted in Italy to fully regulate the institution, any trusts established by Italian residents, having as their object assets located in the territory of the state and in favor of Italian beneficiaries (so-called "internal trusts") must be regulated and operate in compliance with the provisions of the Convention as well as the foreign law governing the trust that has been chosen by the settlor. In the fiscal sphere, the institution was first regulated by Law No. 296 of December 27, 2006.

Consider, however, that Article 15 of the Hague Convention is without prejudice to the application of the mandatory rules of the system that cannot be violated through the establishment of the trust and with respect to which its typical effects are not produced. In particular, provisions relating to (i) protection of minors and incapacitated persons, (ii) personal and property effects of marriage, (iii) wills and devolution of succession property, particularly in matters of legitimacy, and (iv) protection of creditors in cases of insolvency, among others, cannot be derogated from.

The Fund's Assets in Trust

Movable and immovable property, registered movable property, money, corporate interests and other rights, including fruits and utilities derived from the property and rights included in the trust itself, may be attached to the trust.

By signing the deed of trust or by subsequent deeds of transfer, the settlor transfers ownership of certain assets to the trustee, who is to manage, administer and distribute them in accordance with the provisions contained in the deed of trust and in compliance with the provisions of the applicable law.

As a result of this transfer, the assets in trust will be, for the entire duration of the trust, separate and distinct from the personal assets of the settlor, but also from the personal assets of the person acting as trustee and from the personal assets of the beneficiaries.

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