The trust is a contract through which a person (the grantor) transfers all or part of his property to another person (the trustee), with the responsibility for the latter to act for the benefit of one or more beneficiaries.
What does the Trust mean?
The Anglo-American law is familiar with “trust” agreement; however, the French law wasn’t familiar with this until the law n °2007-211 dated February 19, 2007. It should be noted that the French law makes no reference to the Anglo-Saxon trust. During discussions in the Senate, one spoke about establishing a “French-style trust.” It was conceived as being completely different and independent from the Anglo-Saxon establishment, which essentially refers to Common Law.
Constituting a trust gives rise to a registration measure in a registry of trusts, maintained with the tax department. The tax authorities have an extended right of communication for a period of ten years after the end of the trust contract. A decree n ° 2010-219 dated March 2, 2010 relating to the automated processing of personal data known as the “National Register of Trusts”, intends to centralize the information related to the trust contracts, which are essential to facilitate the controls which allow to fight against tax evasion , money laundering and terrorist financing.
How to set up a trust?
Any person (natural or legal) can access a trust, as part of asset management.
The trust must be used for management and administration purposes of the transferred property or intended for the constitution of guarantees and security rights; but it cannot be applied in the field of transferring heritage, the transferred assets form a separate heritage, different from the personal heritage of the trustee. The involved parties are free to set the duration of the transaction (without exceeding 99 years) and the nature of their commitments.
The trust contract must be rounded off through a notarial act for validity, when it relates to a property dependent on a community, between spouses or when it concerns undivided property (Civil Code article 2012 paragraph 2). The trust contract must be registered within one month at the tax office of the trustee’s head office, and when it relates to real estate or real property rights, it must be published at the mortgage registry of the building’s location.
What are the advantages of a trust fund?
The trust may be of major interest in the presence of a so-called "vulnerable" person, by virtue of their age, disability, or illness, who would like to have their property managed by a trusted third party . The "grantor" of the trust can designate himself as the "beneficiary".
However, the trust can be treated as an additional tool to the mandate with posthumous effect that allows to entrust to the person of his choice during his lifetime with the mission of managing his inheritance , at his death, and this, without the agreement of potential heirs.
These two instruments can be part of a global wealth management strategy.
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