Definition of a trust
Essentially, a trust in Switzerland is a legal agreement according to which the settlor of the trust transfers ownership (title) of international assets to another person – the trust manager (trustee), who, in turn, accepts the obligation to administer the assets in the interests of the founder and beneficiaries of the trust (persons receiving income from property transferred to the trust). The main feature of using this instrument is the termination of the corporate and institutional investors’ ownership rights (settler) to the property transferred to the trust wealth management. Consequently, the claims of creditors and third parties cannot be applied to the property transferred to the trust.
It is important to note that to ensure the whole legality of a trust in Switzerland, it is necessary to adhere to the basic rule: the trust can only protect against future creditors of the settlor and not against present and known ones. Otherwise, we may be talking about recognizing the trust as fictitious (sham), which will entail negative consequences for the private and institutional investors and the trust managers.
To open a Trust in Switzerland, remember that the most effective preventive tool for protecting a business from risks caused by “enterprising creditors” actions is a particular type of trust – a discretionary irrevocable trust.