Trust Fund

WHAT IS A TRUST FUND

A trust is a special form of property that the settlor has set aside from his estate in his will to be managed separately and independently. It is a very specific institute that brings many benefits and can be used for various purposes.

Formally, trusts are, to some extent, just property managed by a trustee. Although a trust fund fulfills certain characteristics of a foundation, it is an asset without legal personality. A trust fund is therefore not a legal entity, but rather a specific entity of its kind.

FORMATION OF THE TRUST FUND

A trust fund is created by the founder’s decision to establish a trust fund. This decision in the form of a notary record is the basis for the creation of the trust fund together with the so-called trust fund statute, which regulates all the fund’s requisites.

The statute, which must also be drawn up by a notary, specifies the person of the trustee who manages the fund’s assets after its creation. Furthermore, the purpose of the fund, intended persons (beneficiaries), method of payment to beneficiaries and other procedures regarding the handling of trust fund assets and fund management are described here.

At this point, it is necessary to realize that trust funds usually regulate the management of the founder’s property after his death or are created for the effective protection of family property. It is therefore crucial to regulate in the statute of the trust fund all issues related to the functioning of the fund for many decades.

It is often not easy to set precise rules for situations that may arise in the future. However, it is possible to adjust the procedures to deal with practically any possible situation in the future.

The purpose of a trust fund can be private or public benefit. In the case of a private purpose, real estate or other assets, as well as commercial companies or their shares, are usually set aside as assets. In the case of a limited liability company allocated to a trust fund, it is necessary for the trustee to carry out effective management to maintain or expanding the fund’s assets.

The trust fund is externally represented by a trustee, who is authorized to manage it by the founder of the trust fund. The trustee therefore has a great responsibility; however, the rules and instructions are determined by the founder through the statute of the trust fund.

PRICE OF THE TRUST FUND

As already mentioned, the trust fund is created on the basis of a notary record, which means that in terms of establishment costs, it is also necessary to consider the relevant notary fee. The total price for establishing a trust fund depends mainly on the complexity and scope of the work on the fund statute.

In the case of extensive and detailed statutes, the costs of establishing a trust are logically higher. Costs can also be influenced by the assets of the fund when it was established, as the amount of the notary fee also depends on this. We will prepare more information regarding the exact price based on your information.

After the adoption of the new Civil Code, trust funds have become a distinctive part of the domestic environment, as they enable relatively easy and quick asset protection. With the help of trust funds, it is possible to effectively avoid several pitfalls and inconveniences arising from business or competition.

However, for proper functioning, it is necessary to consult with an expert and consider all options and measures to fully achieve the desired purpose. And here you will find experts with experience in setting up trust funds.

TRUSTS AND INHERITANCE

A trust fund can be established both during the lifetime of its founder and at the time of his death, when it is a so-called testamentary trust fund or a trust fund in the event of death. In the case of its establishment during his lifetime, the property set aside in this way is completely outside the subsequent estate, as it was already separated from the founder’s property during his lifetime. In such a case, even after his death, the fund continues to exist, in an unchanged form, is managed and benefits flow from it to the beneficiaries.

As for the testamentary fund, there are still conjectures as to whether, in the case of its establishment, this fund is part of the estate or not until the time of the testator’s death. The legal order of the Czech Republic does not have an answer to this question at the moment. So far, the professional public is inclined to the opinion that the so-called inalienable heirs will be entitled to a share of the fund established in this way. In practice, in a situation where the legislation does not change in this direction, only settled jurisprudence can answer this question.

TRUST FUNDS AND EXECUTION

A trust fund can also be used as a form of asset protection against potential execution. The word “potential” should be emphasized here. A trust fund can protect property if it is placed in it while execution is not in sight. In such a case, the property is fully separated from the person of the founder and thus becomes inviolable.

However, if the founder would deposit property into the fund only in a situation where he is in real danger of execution, or even has it already conducted against him, it is practically certain that the court will retroactively invalidate such a transfer of property and it will thus become enforceable.

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