Purpose of a Trust
Unlike the Anglo-American model, the trust in Liechtenstein law may be set up for an indefinite period. It can be used in the same way as a foundation, but permits more flexible arrangements as its purpose is not limited in any way, as is the case under foundation law. The trust is the legal relationship created by a trust agreement between the Settlor and the trustee whereby the Settlor assigns fixed or movable assets or rights to the trustee. The trustee is required to manage and use the assets entrusted to him in his own name pursuant to the directives drawn by the Settlor for the benefit of one or more third parties (beneficiaries).
Name and language
The name of the trust can be freely chosen in any language, but enquiries must first be made to the Liechtenstein Land and Public Register Office to establish whether the name is still available. Names of countries, places and national or international organizations are not allowed as part of the name.
The chosen name must always be accompanied by the word “Treuhänderschaft” or “Trust” in unabbreviated form.
No minimum founding capital is prescribed. The trust may, for example, be endowed with CHF 1,000.
The participants are:
- The settlor (founder) hereby the terms of the contractual relationship must be set out in writing (trust deed = act of constitution);
- The trustee or trustees (acceptance of the office in written form);
- The beneficiary or beneficiaries.
The formation of the trust is effected when the trust deed is signed by the Settlor and trustee or by a letter or declaration of trust. The optional entry in the Public Register (instead of depositing) does not have any constitutive effect. Liechtenstein law embodies no provisions preventing perpetuation.
Registration – depositing
At least one trustee must be a citizen of an EEA (European Economic Area) Member State and have his permanent place of residence in an EEA Member State (A state treaty with Liechtenstein can grant other persons of the respective treaty state the same rights). This sole member must also be authorized to pursue the inland profession of trustee according to the law on trustees. The same authorization applies to citizens of an EEA Member State resident in an EEA Member State (or persons having the same rights due to a state treaty) who possess evidence of a qualification according to art. 2 of the law on trustees. They have also to be in at least one year full-time employment in Liechtenstein of a trustee or a trust company and exercise their activities in the context of that employment relationship according to the first sentence in this clause. Nationals who are not citizens of an EEA Member State or who do not have the same rights according to a state treaty must have a Liechtenstein residence permit.
Therefore, Swiss nationals with a residence permit are treated in the same way as Liechtenstein citizens in respect of access to the profession of trustee, pursuant to the legislation of the cantons on the basis of reciprocal recognition of the laws.
Persons who want to practise as a licensed trustee must notify the Government of such intention. The Government will check if all conditions are met and will issue a confirmation and set up a list of all relevant persons. Changes of conditions have to be announced immediately to the Government.
Due to transitional provisions attorneys-at-law, legal agents and auditors who held a relevant license/admittance before enactment of the revised law in spring 2003, can continue practising.
Filing of accounts
Trusts subject to foreign trust laws too, may be set up in Liechtenstein, with a global reference in the trust deed controlling the internal legal relationship between the parties involved made subject to foreign law, but still as regards external relationship subject to Liechtenstein law as against third parties.
Termination – revocation
Where this is stipulated in the trust deed, a trust may be revoked:
- with the assent of all the beneficiaries, the Settlor and the trustee;
- by the Settlor;
In the absence of other provisions in the trust deed, the trustee is required to manage the trust for at least one administrative year. Otherwise, the trustee is authorized to terminate the trust with effect from the end of any calendar year by giving three months advance notice.
Amendment of the applicable law and transfer of the trust to another jurisdiction takes place by a decision of the trustees according to the regulations of the trust deed.
Asset Protection Trust (APT)
Creditors of the Settlor
The Settlor should settle the trust at a time when he has no creditors and does not infringe any statutory inheritance claims. The creditors may file claims for a maximum period of five years.
Heirs of the Settlor
Heirs may bring a claim within a maximum period of three years after the death of the Settlor if their statutory inheritance rights have been infringed.
Creditors of the beneficiaries
The creditors of the beneficiaries may only file claims on the trust assets by compulsory enforcement or bankruptcy proceedings to the extent that claims accrue personally and directly to the beneficiaries and to the extent that the trust deed does not specifically contain a provision on the inalienable nature of the benefits.
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