Useful Tips

Testament Trust

Pin
Send
Share
Send
Send


Irrevocable trusts, in which the Russians will be able to transfer their property, was proposed by the President of the Russian Federation, Vladimir Putin. In his opinion, the introduction of a trust institution in the Russian legal system will contribute to its harmonization with the best foreign legal systems.

“These are trusts, including the so-called irrevocable trusts: when a citizen transfers his property, in fact, to a management company and from that moment ceases to be the owner of this property,” the head of state explained at a meeting with members of the government.

In turn, Minister of Finance Anton Siluanov added that as part of the implementation of this proposal, legislation will be improved regarding the taxation of irrevocable trusts. The founders of the trust will be exempt from tax on retained earnings, who will receive the rights to dispose and manage the property of this trust.

In general, the government is confident that the introduction of an irrevocable trust in Russia will contribute to the creation of favorable conditions for business.

How do you comment on the phenomenon of transferring assets to a trust? How will this idea be implemented in the Russian Federation? Is this provided by our legislation?

A very interesting business form, especially such a variety as an irrevocable trust. Its essence lies in the fact that the owner (beneficiary) transfers his property (cash) to management for a certain period (at least 99 years) and for this period ceases to be the owner of this asset, but at the same time receives income from its use. Accordingly, the obligation to pay taxes is terminated. An irrevocable trust is interesting first of all to those who:
- has what to transmit
- wants to stay incognito
- has enough reason to believe that he knows whom he trusts.
The weak link in the application of the trust in Russia is the poor protection of the beneficiary from possible illegal schemes.
As for our current legislation, we can refer to Chapter 53 of the Civil Code of the Russian Federation, which governs "Asset management", mainly through the "management company", on the basis of a license from the Federal Service for Financial Markets of Russia (FFMS) in accordance with the law "On investment funds "(No. 156-FZ of 11.29.2001).

The trust is a unique tool inherent in the countries of the Anglo-Saxon legal family.
A trust is a contract under which the founder (owner of the property) transfers the property to the trustee who manages the property.
The recipient of income from the activities of the trust and (or) its property is the beneficiary.
The interests of the principal, the procedure for managing property, and the accounts of the administrator are usually expressed in the so-called letter of wishes.
Such a letter is a guide for the trustee, whose activities the protector can oversee.
We make a reservation that the concept of a trust does not exist in domestic law.
Trust management provided for in the Civil Code of the Russian Federation is a fundamentally different institution.
The main difference between a classic trust and a trust management agreement is that the property in the trust does not belong either to the founder (he loses ownership of it from the moment the property is transferred to the manager) or to the manager (he only manages this property and is the formal holder of the title to property), nor to the beneficiaries until the date of termination of the trust or the occurrence of the circumstance indicated in the letter of wishes or court ruling.
We can say that the trust is an independent owner, inextricably linked with its creator (founder of the trust) and beneficiaries.
In a number of countries, including Russia, property transferred to trust is not considered a separate type of property - property continues to be the property of the principal, to which its obligations may apply.
Transferring property to a trust is of interest to a business from several points of view.
First, by transferring assets to a trust, it is possible to achieve a reduction in taxation.
Secondly, and just as importantly, transferring assets to a trust formally breaks legal ties with transferred assets.
This is precisely the essence of the trust, when the founder, who transferred the property, loses all rights to it.
At the same time, the legal structure of the trust allows that the ultimate recipient of the income or property of the trust may be the founder himself or a formally independent, but actually controlled by the founder founder.
If we add to this fact the fact that the only document from which it follows, when, for what purposes the trust was created, who are its participants and what is entered into it in most foreign jurisdictions, we get a convenient design for storing and accumulation, as in a wallet, of any income and property.
Such a “wallet” is anonymous, and in the event of a conflict between the parties to the trust, the dispute will most likely be subject to consideration in a foreign court, which virtually eliminates the corruption factor.
The proposal of the Minister of Finance of the Russian Federation, Anton Siluanov, to introduce the concept of “irrevocable trusts” should be understood to a limited extent.
The minister did not mean introducing a new form of legal entity into civilian circulation, but proposed exempting from taxation the retained earnings of such trusts within the framework of legislation on deoffshorization of the economy.
Such a proposal could be caused by the fact that a significant part of the income of domestic business is transferred to such trusts for the safe storage of money, and not for tax evasion, and business needs time to reconfigure cash flows.

How do you comment on the phenomenon of transferring assets to a trust? How will this idea be implemented in the Russian Federation? Is this provided by our legislation?

In the existing legal field of the Russian Federation there is no concept of a trust as such. Some will object and directly point to the term “trust management” (Ch. 53 of the Civil Code of the Russian Federation). Indeed, the word "trust" in translation from English is trust. But in the analysis of Russian and foreign analogues of the legal construction of a trust between them, there is an abyss.
The trust originates in Anglo-Saxon law, while Russia is based on continental law. Therefore, the introduction of the institution of the trust in its original intended form will be a real revolution for Russian law. A combination of many branches of law with a new “alien body” will be required. And you have to combine a lot. The simple and understandable right to own, use and dispose of property will have to be examined under the prism of “common and at the same time nobody”, since trust property does not belong to anyone in full.
Few people remember the “Russian Seleng House” in the 90s. But this was the first trust managing exclusively money.
Now the law does not allow trust management exclusively in cash, except in cases provided for by law (mutual funds and banks). In addition, the Civil Code of the Russian Federation provides that the trustee makes transactions with the property transferred to trust management on his own behalf, indicating that he acts as such manager (Article 1012 of the Civil Code of the Russian Federation). The direct obligation to indicate your status as a trustee deprives such a design of an important feature - anonymity.
In Russia, property transferred to trust management is not considered a separate type of property - property continues to be the property of the principal, to which its obligations may apply and may be enforced.
The object of the trust may be any property, including intellectual property. Under trust management, the property remains in the ownership of the same person, while under the trust agreement, the property formally (“as it were”) becomes the property of the manager.
A trust is an independent owner, inextricably linked with its creator (founder of the trust) and beneficiaries.
A trust will give a real gift to those who need to hide or withdraw their property from the blow of creditors and the greedy second half of a divorce and division of property. The first sign and a vivid example can be considered the divorce and division of property of the Potanins, when Natalia Potanina found out that her husband is one of the richest people in Russia, in fact, naked, like a falcon. For all his assets are in trust. This means that he does not belong to him, which excludes the division of such property in accordance with family law.
Currently, the institution of trust in the Russian judicial system is almost unknown. There is no judicial practice. Therefore, the court reluctantly operates with the concepts of “beneficiary” and “trust property”. Laws in Russia do not yet cover all the nuances of the property of the beneficiaries, and the courts almost never deal with the ultimate owners of the property of the trust. At the moment, filing a lawsuit on the division of the property of the trust (usually foreign) is doomed to complete failure, since it is impossible to prove the ownership of this property to the debtor.
The global advantage of the trust is guaranteed protection against claims of creditors, protection against the risks of loss of property even in bankruptcy.
Given Russian realities, the trust can be widely used. Ensuring the safety of property, anonymity of the trust, withdrawal of assets, the possibility of tax evasion,
Money laundering or concealment is also a trust. For Russian business, the mechanism is very
relevant. Unless, of course, the legislator does not adjust the ideas of the Anglo-Saxons in his own style.

What is a testament trust

Testament trust is a legal and fiduciary relationship created by explicit instructions at the behest of the deceased. A testament trust takes effect after the death of a person and is usually used when someone wants to leave the assets to the beneficiary, but does not want the beneficiary to receive these assets until a certain time. Testamentary trust is irrevocable after the death of the testator.

Also called trust trust.

PERMISSION "Testament Trust"

Trust is a legal document that provides guidance on how the property of the trustee should be managed or held for his or her beneficiaries. Trust usually involves three sides:

  • The grantor or proxy - who creates the trust
  • Trustee - trustee of trust property
  • Recipient (s) - who receives the benefits of property held in trust

A trustee transferring ownership of assets to trust may protect his assets and reduce property tax liabilities of his beneficiaries. The two main types of trusts that can be established by a trustee are Trust Trust and Testamentary Trust. Living trust takes effect during the life of the principal. On the other hand, testamentary trust takes effect after the death of the trustee.

Testament trust is established by the last will and testament of the testator, who calls trust his beneficiary. Testament trust is a provision made in a will that instructs the contractor to create trust. So, despite the fact that the testator creates the will while he is alive, trust does not come into play until his death. After death, a will must go through a will to determine its authenticity before a testament trust can be created. After creating trust, the contractor follows the instructions in the will to transfer the property to a testament trust.

After establishing a testamentary trust, the trustee appointed by the testator will manage the assets and property until the trustee expires, and the recipient will gain control over them. The trust expires in the period provided for in its terms of the agreement when a specific event occurred. An event can be defined as a recipient who has reached a certain age or a recipient who has graduated from college. When an event occurs, the trustee transfers ownership of the assets to the beneficiary. From the death of the principal until the expiration of the will, the will of the will periodically checks that the trust is properly managed and accompanied by a letter.

Typically, testamentary trust is created to provide children with disabilities and / or minor children until they are old enough to take care of themselves. Trust can delegate that the child receive a certain amount of money annually until he reaches a certain age. A testament trust may also indicate that the child is paid a lump sum when he turns 25. In some cases, the beneficiary does not receive the property under trust until he or she marries.

The trustee may choose someone to act as the trustee for the testamentary trust. However, the designated trustee is not required to assume this role and may reject the request. If this happens, the court may appoint a guardian or relatives or friends of the beneficiaries who can participate as a trustee for the testamentary trust.

Pin
Send
Share
Send
Send