Top 10 national trust

Share with a friend:

French Constitutional Court finds public trust registry unconstitutional

On October 21, the French Constitutional Court issued a decision that could be a major step towards protecting privacy rights of private financial life. The Constitutional Court ruled that the French register of trusts, opened to the public on July 5, 2016, is contrary to the French constitution.

After access to the register of trusts became open to any Internet user, 89-year-old American woman, who is a resident of France. The appeal to the court followed after the data about her, as the beneficiary of the trust, became publicly available. On July 22, the court ruled to temporarily close access to the registry while the trial is ongoing.

The decision of the French Constitutional Court is seen by many as a major victory in protecting fundamental rights in tax law.

Open register of trusts in France - at the end of June!

Public Register of Trusts in France

The register of trusts in France appeared in December 2013. The reason for its introduction was the tightening of the fight against serious economic financial crimes both in Europe as a whole and in France. Around this time, the fight for financial transparency became the leitmotif of all European politics.

The Registry of Trusts in France was established to combat the use of trusts for tax evasion and money laundering purposes. Trustees must provide details of the trust to the French authorities if the settlor, trustee or beneficiary is a resident of France, or if the trust has property located in France. In case of violation of this requirement, the trustee faces a fine of 12.5% ​​of the market value of all assets of the trust, or at least €20,000.

Thus, the very existence of such a registry is an example of interference in the privacy of citizens. In turn, the open registry of trusts made public confidential information about how certain individuals disposed of their assets, which is a violation of the right to privacy.

Since French legislators have failed to sufficiently substantiate how interference with the private financial life of citizens contributes to the purpose of establishing a register, its existence appears to be an unlawful and disproportionate interference with privacy. It was to this decision that the Constitutional Court of France came, recognizing the open registry of trusts as unconstitutional.

However, this decision is ambiguous, as it remains not completely clear whether the availability of public access to the register of trusts or the very fact of the existence of this register is unconstitutional. However, reporting requirements for the registry continue to apply.

Nevis to launch Public Registry of Companies in 2017 - GOSSIP or REALITY

Details of unprecedented case

An 89-year-old US citizen who is a French tax resident has set up trusts in the US to transfer inheritance rights. Her lawyers filed a complaint challenging the legality of Decree 2016-567, dated May 10, with the French Council of State. In their opinion, this decree violates several laws at once, including Article 8 of the European Convention on Human Rights and Article 7 of the Charter of the European Union on Human Rights. The Minister of Finance and Public Accounts initially rejected the request, on the grounds that it was not so much a criticism of the register of trusts as a criticism of existing tax laws.

After that, lawyers changed tack and argued that several laws passed between 2013 and 2015 to combat tax evasion and other financial crimes violate the right to privacy, in accordance with Article 2 of the Declaration on the Rights of Man and Citizen (1789).

An elderly American woman said that the publication of personal data about the beneficiaries of trusts may constitute the disclosure of information that should remain secret until the moment of inheritance. The disclosure of this information, in turn, allows people around her to put pressure on her to redistribute her assets.

The key here is access to registry information even in the absence of a legitimate interest. Any Internet user could obtain information from the open register of trusts, without the need to substantiate the expediency of obtaining this information.

On July 22, the Council of State decided to suspend the operation of the register of trusts, and the Constitutional Court began an examination for compliance with the second paragraph of Article 1649 AB of the General Tax Code of the French Constitution. On October 21, this paragraph was declared inconsistent with the Constitution, in the published court decision No. 2016-591 QPC.

What are the implications of setting up a register of persons with significant control for foreign companies in the UK?

Implications for the EU

This case once again highlights the issue of privacy versus transparency. The creation of central registries containing personal financial information, as practice shows, can create significant problems for national legislators - in terms of both technical implementation and legislative.

The European Commission is already concerned that the case could be a major hindrance to a plan to create property registries across the continent. The precedent set in France may spread to other EU countries, as a result of which opponents of the creation of open central registries will receive additional arguments.

The decision of the French Constitutional Court may also influence discussions on amendments to the Fourth EU Anti-Money Laundering Directive (4AMLD). Article 31 of this Directive provides for the existence of a central national register of trusts, which contains information on all trusts that create tax consequences. Access to this information can only be obtained if there is a legitimate interest - in particular, in the fight against tax evasion, money laundering and other crimes. In turn, the existence of a legitimate interest can also be interpreted in different ways, so the question of restricting access to such registries remains open.

Trusts vs. Funds - PBWM.RU

Trusts and funds are among the mechanisms most commonly used for full-scale wealth structuring. With their help, you can ensure the protection of your capital, as well as a smooth and controlled transfer of wealth from one generation to another. Both trusts and foundations have their own distinct characteristics. Therefore, it is critically important for the owner of wealth who would like to use them to understand their features very well in order to be able to choose the structure that best suits his or her needs.

Key differences

In short, a trust is a legal transaction between a settler and a trustee. The Settlor transfers the assets to the trustee, who manages them solely for the benefit of the third party beneficiaries. Legally, these assets belong to the trustee, but in fact - to the beneficiaries. Since the trust is not a legal entity, the legal rights to the assets of the trust are wholly transferred to the trustee (trustee), who is fully responsible for its management.

Russian families should be aware that the Anglo-Saxon concept of a trust is unknown to Russian law. Given the vast uncertainties surrounding the payment of taxes associated with the use of trusts, it has become common practice in Russia to create a scheme in which the trust owns assets through a properly structured and managed company whose shares are owned by the trust.

The Fund is a legal entity in which the concept of "shareholder" is replaced by the concept of "purpose" (family, charitable). First of all, the fund has no shareholders. Instead of serving someone, it serves something, namely the purpose for which it is created. A foundation cannot exist without a good purpose, just as a corporation cannot exist if it does not have at least one shareholder. The Fund becomes the exclusive owner of the assets. Charitable foundations in Europe are widespread. As for family foundations, their creation is not so welcome and, if they are allowed at all, they most often have to operate in an unfavorable tax regime.

Despite the existence of fundamental differences, both trusts and foundations can have a fairly flexible structure. They are allowed to be revocable and irrevocable, discretionary or non-discretionary. The structure of the created trust or fund depends to a large extent on the goals pursued by the families that own significant assets. At the same time, a fund or trust should never be viewed as a standard product that can simply be “taken off the shelf”.

Choice of jurisdiction

As history shows, assets can be kept out of the reach of even the most powerful political forces if they are carefully and well structured, and vice versa - if they are not, they can slip out of the hands of their owner in the blink of an eye. The issue of protection brings us to the obvious question of how easy it is for a beneficiary's personal creditors (i.e., detractors, such as ex-spouses, government, business partners) to take possession of his assets placed in a trust or fund.

It is natural that the courts of different countries dealing with such issues may make different decisions, although in their justification they often have to rely on the same national law relating to funds or trusts. And it is obvious that u1074 the high degree of asset protection guaranteed by the legislation of, say, the Cook Islands, may be useless if a foreign court does not recognize it as applicable for one reason or another. Maintaining the high degree of asset protection guaranteed by the laws of the Cook Islands in our example would require avoiding the risk of litigation against a local trust or foundation in a court of some other jurisdiction.

The surest way to achieve this goal is to ensure that all of the assets placed in the trust, or the part requiring the highest degree of protection, are located exclusively in the Cook Islands. For example, cash in a bank account in that country. And of course, it is very important how the real trust or fund is structured and managed. If the owner of the estate reserves the right to cancel or amend the terms of the trust transaction, or if the relevant asset management is not carried out by the trustee or the board of the fund, but by the settlor personally, then it can be very difficult to provide adequate protection.

Both foundations and trusts are able to guarantee the same high level of security, provided they are properly structured. Moreover, reliable protection often requires the use of irrevocable and discretionary structures.

Most jurisdictions in which foundations and trusts can be created compete with each other in terms of the level of protection guaranteed by national laws. However, in the final choice, in addition to the analysis of legislation, it is very important for wealthy families to study some other issues. Among them, the strength, stability and security of the local banking system, which will also become very important elements of protection.

Popular Geography

Trusts can be found in almost all common law countries. Jurisdictions most commonly used in this regard include the United Kingdom, the Bahamas, New Zealand, the Cook Islands, Jersey and Singapore. As for Liechtenstein, this is one of the rare examples of a country with civil law that allows the creation of trusts. In comparison, there is no specific law in Switzerland that allows the creation of Swiss trusts, but local law allows the administration of trusts in Switzerland by local trusts in accordance with foreign law.

Civil law countries are the most suitable location for foundations, although not all relevant jurisdictions allow or encourage the establishment of such structures intended to house family capital. The most popular jurisdictions for setting up funds include Liechtenstein, Panama and the Netherlands Antilles.

The cost of control

The question of control is very ambiguous when it comes to fiduciary structures such as foundations or trusts. Judging by the decisions taken by the courts, if the founder retains too much control over the trust, this becomes the reason for its nullity. While common law foundations do not have the same amount of precedent, recent court decisions clearly demonstrate that similar principles apply. The decisive difference is that in the practice of foundations, as a rule, the foundation remains in existence at the end of the case, and only a separate transaction, according to which certain property was acquired by the foundation, suffers from nullity.

In fact, the old dilemma between keeping control (the owner of the fortune over his foundation or trust) and keeping the assets most often has to be resolved through compromise. It is hardly possible to ensure 100% control and 100% asset protection at the same time.

Although the jurisdictions themselves and professionals in this market are showing extraordinary ingenuity in cutting this Gordian knot, placing a variety of "airbags", most universal solutions that would allow achieving all the goals with the help of any one structure have a number of disadvantages.

In fact, effective structuring of wealth usually requires dividing it into different asset classes over which the owner will retain varying degrees of control. In addition, this will always require a certain level of trust in the trustee.

Most jurisdictions are taking steps to provide a certain minimum level of control over trusts and foundations. All things considered, foundations are generally more suitable for this because, as separate legal entities, they generally do not become void, unlike trusts, if the settlor retains control.

A question of costs

There is an opinion that trusts are generally more expensive than funds. One of the reasons for this is that the trustee has a higher degree of liability, legally he is the owner of the assets of the trust, and in addition, there is no separate legal entity to provide limited liability. In most cases, the creation of both structures requires almost the same amount of work and in certain circumstances involves the same risks.

The work of a conscientious manager, both as a trustee and as a member of the board of the fund, is likely to be remunerated approximately the same. This payment will reasonably take into account the premium covering the risks of professional liability, and its size must be calculated based on the value of the assets transferred to management.

Mobility of structure

How easy is it for a trust or foundation to be transferred to another jurisdiction and why should we consider it? Are you sure that the coming decades will not bring any shocks that could destroy the political and economic stability of the territory, which once served as a safe haven for capital? You will have to arrange for the transfer of a foundation or trust to a new jurisdiction in the event that local laws no longer adequately protect assets, or if this protection disappears altogether. And here trusts are more mobile.

A trust can be transferred quite simply by changing the provisions on the law applicable to it. This, if provided for by the relevant constituent documents, can be carried out unilaterally by the trust on the basis of the contingency clauses that are included in the original document of incorporation.

Changing the location of a foundation may be more difficult as it requires the terms of the foundation's founding document to be synchronized in its former and new jurisdictions. Family life cannot be planned in advance. In the same way, one cannot plan an ideal structure for the distribution of wealth. There will always be new requirements and circumstances after the process of forming this structure is completed. However, as a responsible owner of wealth in today's world, you must first be clear about your own desires and priorities. You will have professionals at your disposal to help you increase your fortune, as well as decide on the choice of structure in accordance with your goals and needs.

5 essential professionals

Structuring assets in a fiduciary relationship is not an easy task. Once you have made your choice between a trust and a foundation, you will need the help of professionals. In total, you will need five different specialists, including:

• Manager in the broadest sense of the word. A person you trust and who in practice will manage your structure. You can't get by without it. It should not be you, but a professional trustee.
• A specialist who will oversee the work of this manager and serve as a kind of bridge between you and the next generation of heirs after the structure is created. This person could be your favorite aunt, but ideally it would be a professional protector independent of your trustee.
• Professionals in various jurisdictions who will advise you on legal and tax matters.
• A trustworthy, competent and impartial partner who will help you not only preserve your wealth, but also increase it.

  ---

  Learn more

  • 
    Painted cabinet ideas for small kitchens
  • 
    Pet hair vacuums best rated
  • 
    Great paint ideas
  • 
    Ivy for trellis
  • 
    Rooftop garden ideas pictures
  • 
    Walk in bathroom shower designs
  • 
    Wall decor for dining area
  • 
    Hanging plant for shade
  • 
    Is lemongrass easy to grow
  • 
    Winter hanging basket plants
  • 
    Small shade loving shrub