Agreement on Processing of Personal Data CZ / EN

Trust fund

What is a trust fund

Trust fund is a special form of assets solution, where the grantor intentionally separates the assets from his overall property in order to be managed separately from the rest of his wealth. The trust fund is quite a specific legal institute, being useful for various purposes and providing vast amount of advantages.

In legal terms, the trust is nothing else but certain assets, managed by the trustee. Regardless of the fact that the trust fund can work like foundation to certain extent, apart from the foundation a trust fund is not a legal entity.

Setting up a trust fund

The trust fund is established by decision of the grantor. Such a decision, drafted in the form of notarial act, is a basis for incorporation of the trust fund – jointly with fund rules (Instruments of Incorporation), managing all the necessary arrangements of the fund.

The Instruments of Incorporation, drafted in the form of notarial act as well, shall especially, however not exclusively, contain the identification of trustee – the person managing the assets held in the fund after its creation. Furthermore, the purpose of the fund is described, the beneficiaries listed, the means of providing the performance to beneficiaries stipulated, as well as any other particulars of handling the assets and management of the fund.

It ought to be noted that trust fund usually settles the grantor’s assets management both inter vivos and mortis causa, or is established to effectively protect the family wealth. Therefore, it is wise and necessary to foresee and regulate all the matters related to properly functioning of the fund for the whole decades.

It is nearly impossible to successfully foresee all the future situations, therefore set up the exact rules. However, it is possible to stipulate the conducts, which shall take place in case the settlement-demanding situation emerges – properly drafted rules of conduct can deal with any problematic situation in the future.

The trust fund can either bear a private benefit purpose or public benefit (charitable) purpose. In case of private trust, the assets designated to enter into the trust fund usually are immovable property, shares of corporations or the whole corporations. As to the LLCs, it is necessary for the trustee to perform an effective management of the company in order to conserve, or better, increase the value of the fund.

The trust fund is represented by the trustee, who is entitled to manage the fund by the grantor. Therefore, the trustee bears a grave responsibility, however the rules and instructions are given to him by the grantor via the Instruments of Incorporation (fund rules).

The price of trust fund

As mentioned above, the trust fund is established upon a notarial act, therefore it is necessary to consider the relevant notarial fee, regarding the costs of establishment. The total price of setting up a trust fund reflects the complexity and time demands of drafting the Instruments of Incorporation. Extensively structured and highly personalised Instruments of Incorporation increase the price of the establishment proportionally. The costs are also affected by the value of the trust fund in the time of its establishment – the notarial fee is calculated in accordance with the fund’s value. We would be pleased to prepare the personalised price proposal for you, based on the information you provide.

After adoption of the new Civil Code of Czech Republic, the trust funds became a significant feature of Czech legal environment, given their capacity of simple and efficient assets protection. The trust funds enable an effective avoidance of various threats and difficulties, commonly emerging from entrepreneurship and competition.
However, in order to have the trust fund properly working, it is highly recommended to consult a skilled professional, as well as consider all eventualities and safety means to ensure the maximum benefit from the trust fund’s structure. You can find the aforesaid skilled professionals in our office – please do not hesitate to call us for a date of personal consultation.

Tetragrammaton a.s.

Žitná 562/10
120 00 Praha 2 – Nové Město

+420 777 025 554
+420 777 775 524

More questions?

Agreement on Processing of Personal Data CZ / EN