What is a trust and how does it work?
The trust is a wealth management tool that allows you to transfer the management of some or all of your assets to a trustee for a specified period of time. Long ignored by the big public in France, this mode of management introduced in 2007 was under the spotlight during the Bettencourt affair. Nastase will explain this 10-point practice to you so you can know a little more about the trust.
1. How does the Civil Code define the trust?
According to article 2011 of the Civil Code, the trust is the transaction by which one or more owners (constituents) transfer goods, rights or security interests, or a set of property, rights or security interests, present or future, to one or more trustees who, holding them separate from their personal assets, act for a specific purpose for the benefit of one or more beneficiaries.
2. What is management trust in practice?
Ms. Ellen Delzant, a lawyer at Schultze & Braun, says: ” The management trust allows the transfer of property to the trustee, with the ultimate responsibility for managing the property on behalf of the beneficiary or settlor during the life of the trust. the trust “. Note that the trustee’s powers of administration and disposition are defined by a contract based on article 2018-6 of the Civil Code.
3. How does the trust work?
The operation of the trust is simple. The property owner also referred to as a settlor temporarily transfers by contract, property to the trustee for the purpose of managing it with a specific purpose.
The trustee, while temporarily owning these assets, is limited by the purpose of the trust and the terms of the contract. In addition, he must separate these trust properties from his own assets.
The trust agreement must be in writing and must be registered with the Tax Department of the Trustee’s registered office. When it relates to immovables or immovable real rights, it must be established by authentic deed and published in mortgages.
4. Why make this temporary transfer of ownership to a trustee?
The trust allows the management of personal property for a specific purpose. For example, lease and manage a building, manage shares, even exercise the voting right of the settlor, to grow, for a return or capital gains, a portfolio of unlisted securities.
It should also be noted that the fiduciary in his conditions is discreet because of the “taste of secrecy” of these high-level professionals.
5. What are the reasons for using a management trust?
The trust has three distinct applications. It can be of interest for wealth transfers, especially in the context of gifts, either to manage assets or to guarantee debts.
6. What types of assets may be affected by trust?
For Ellen Delzant ” All property, rights, property, rights or security interests, present or future, provided they are determinable may be subject to a trust. In practice, they may be tangible or intangible assets, movable or immovable. ”
7. What precautions to take in the context of the management trust?
The main precaution is the drafting of the trust agreement. In particular, the clauses defining the purpose of the trust, the powers and duties of the trustee, and the terms and conditions of publication of the accounts.
8. What is the term of the trust agreement?
The maximum legal period is 99 years. The trust agreement terminates the term provided for by this agreement. The trust may also be canceled or terminated.
9. How does the trustee manage the property transferred under the trust?
Ellen Delzant explains the management of the trustee in these terms: ” The trustee must perform his mission fairly, in accordance with the powers entrusted to him in the contract with the settlor. This implies that he must ensure the preservation of the heritage, administer it, and possibly dispose of certain elements. “Note that the management of the trustee will result in a regular presentation of accounts.
10. How much does the management trust cost?
The trust incurs registration and land registration fees in the event of transfers of immovables or real estate rights. It is also necessary to count with the emoluments of the notary and the salary of the conservative of the mortgages. In addition, the settlor will have to pay annual management fees. These fees vary depending on the trustees.
The trust is, therefore, a legal instrument with multiple benefits. Its flexibility highlights many positive points both for asset management and for guaranteeing receivables.
We advise you to return to heritage weallth manager to better understand this way of managing your wealth.