A Trust is an equitable obbligation, binding a person or an entity (identified as the Trustee) in order to deal with property (identified as the Trust property) owned by the Trustee in his capacity as a separate funds, distinct from the Trustee own private property, for the benefit of persons (identified as the beneficiaries).
The concept of equity was developed in the 12th century at the time of the crusades. The Court of Chancery decided it was “equitable” that a person (the Trustee) be compelled to use the Trust property for the benefit of a Beneficiary. This recognised a split between legal and beneficial ownership: the legal owner was referred to as a “trustee” (“entrusted” with the property) and the beneficial owner was the “beneficiary”. This concept exists in domestic laws, both in civil law and in common law systems, and in international law.
In order to be able to create a valid Trust three certainties must be in place: intention – subject matter & objects:
A. Settlor: in order to create a trust must be sui juris, therefore over 18 – sound mind and not bankrupt. The Settlor establishes the trust by transferring property to the Trustee and setting out the terms upon which they must manage and dispose of that property. Once the trust has been created the Settlor role disappears and he no longer retains ownership or power to manage the assets;
B. Trustee: hold the legal interest in the trust property and are required to manage and dispose of that property in accordance with the prevision contained in the trust instrument and with the general fiduciary duties imposed upon them by law. Also the Trustee must act always for the best interest of the beneficiaries, avoid self-dealing, conflict of interest, hold property separate from his own one and be loyal to the beneficiaries.
C. Beneficiary: persons or class of persons identified during the set up of the Trust and outlined in the Trust instrument. The Trustee is under the fiduciary duties and administration duties to manage the Trust property in the best manner and accordingly to the terms of the Trust instrument for the benefit of the beneficiary as they see fit. The Beneficiary, depending on the type of Trust, could have a vested interest or not in relation to the Trust property;
D. Protector: an individual who is appointed under a trust instrument terms to exercise certain powers in relation to the Trust and in most cases to help & oversee the operates of the Trustee in the management of the Trust Property according to the Settlor wishes. The Protector, in many cases, also retain a power of veto over certain actions undertaken by the Trustee.
A. The Hague Convention and choice of applicable governing law: The trust, within the Italian legal system, has received express legislative recognition with Law no. 364 of 16 October 1989 which officially ratified the Hague Convention of 1 July 1985. The choice of the governing law (foreign) of the Trust must be made in light of the purposes it pursues and the interests it aims to protect.
B. The Hague Convention and national law: for the purposes of recognizing the conventional Trust, it must not conflict with mandatory and fundamental rules of the national law: (by way of example)
C. Civil Effectiveness: the instrument of the Trust is use for the segregation of assets;
D. Tax Effectiveness: