Legal assets protection

Institutes of legal assets protection

Trusts - Funds - Corporate structures Legal assets protection can be achieved through various institutes offered by EU legal systems or by other jurisdictions. The specific method depends on your priorities because there always have to be taken into account financial costs, guaranteed level of protection, possible level of anonymity of ownership and last but not least related inheritance, tax and bank factors. At the beginning we would like to highlight that entire anonymity of ownership at any circumstances is nowadays not possible, but there is still a number of tools which can help to achieve long-term assets protection, level of privacy or tax benefits. The most common institutes of assets protection are: Trusts Trust funds Corporate structures   1. Trust is an agreement between Settlor, Trustee and Beneficiary and as such does not have a legal capacity. Its primary cause is a property protection, that Settlor transfers onto the trust and at the same time sets the rules of administration with this property in the Letter of Wishes. Trustee (usually legal entity with relevant license) is bound by these instructions including the way of benefits payments from the property to the Beneficiary. There might be many Beneficiaries natural persons as well as legal entities. If the Settlor wants to make sure that Trustee obeys his rules, he can appoint the Protector, whose duty is to look after the activity of Trustee. Since the Trustee is the formal owner of the property (the real owner is the Beneficiary, the Trustee does not have any rights to the property and even can´t get any profit from his position only if the Trust Deed explicitly appoints so), the property cannot be affected by a distraint on the Settlor or by any similar action (trust cannot be attacked by creditors of the Settlor). International trust cannot be dissolved if the Settlor goes bankrupt or becomes insolvent. The property included in the trust is exempted from inheritance proceedings. Any disposition with the trust property must be in accordance with the Settlor´s wishes. Creation of the trust is an ideal long-term assets protection solution and passive property management. One of the biggest advantages of trusts is the anonymity of its Settlor and Beneficiary they are not listed in any public register and moreover the Beneficiary doesn´t even have to know the Settlor. The only person that can be found in public register as an official owner is the Trustee (including bank accounts). When establishing a trust one should take into account also tax aspects, e.g. directing the benefits from trust property to the Beneficiary with the most suitable tax environment, elimination inheritance tax and so on. 2. Similar to above is a trust fund in Czech Republic. It is based on excluding a part of the Settlor´s property while appointing a Trustee. The trust fund does not have a legal capacity and the Settlor remains anonym, only the Trustee can be found in public registers. From the tax view the trust fund is not more attractive than business companies (taxation is the same), but it offers a high level of ownership privacy and assets protection. On the other hand professionals in Czech Republic are sceptical towards this institute since many of its parts are not yet legally covered and there is an expectation that these trust funds will be more transparent in the future. 3. More flexible option is a corporate structure, which may be offered to investors used to operatively decide about the use of their assets. Share and property transfers, investments, change of a registered seat or jurisdiction, business decisions these steps are more easily done within the structure of business companies than through funds. Currently we can offer an extensive and sophisticated network of companies along with the use of various european jurisdictions, supranational forms of companies as well as offshore destinations. Consequential holding structure will always depend on particular needs of a client, but for demonstration we offer following model situations: Slovak citizen as a director and a shareholder of a limited liability company decides to exempt a part of a property owned by his company in order to protect it. He establishes a business company in Cyprus where he transfers this property by contract, while in Cyprus public register is available only information about the director, which is Cyprus legal entity, but the information about the founder is not available anywhere. Because of this in Slovak Land Register will be listed just the Cyprus company as the owner without the possibility to find out its shareholder. Of course the Slovak citizen can still fully dispose with the asset including the renting the property to Slovak business company without the risk of a distraint. A businessman needs to create a structure of companies, which will ensure him smooth entrepreneurial activities within European Union with the possibility to expand beyond its borders. In order to protect his assets in the form of shares he forms a company in Great Britain, which will be a parent company for two subsidiaries: one limited liability company in Czech Republic because of the low administration burden, the possibility to emit securities and better tax and bank environment than in Slovakia and the second company in St. Vincent and Grenadines for its strategic position regarding the financial flows and connection to jurisdictions outside the EU. If the businessman wants to intensify his activities in Slovakia, his Czech company can create a branch here, whose manager is limited by law to manage only this branch so the businessman doesn´t have to worry about interventions into his other entrepreneurial activities. Each alternative from above might be the most useful depending on particular goals of the client so the mentioned serves solely as an information framework, which can be completed and altered after detailed consultations. Of course we cannot dismiss the combination of above mentioned ways, on the contrary this diversification would provide the highest level of combined assets and privacy protection.  
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