A trust fund comes from a completely different legal framework (Anglo-Saxon common law) and the Czech Republic is one of only a few EU countries that accepts this legal concept. Although in the Czech Republic the trust fund has no tradition and lacks any detailed statutory regulation, around the world trusts are a common legal institute.
The trust fund is a method of asset management allowing you to protect and/or restructure assets against unfavorable or unpredictable circumstances by setting them to one side. A trust fund is therefore ideal for resolving some of life' s inevitable changes as well as for fulfilling specific objectives and plans.
A trust fund may be established for cases of death – with the assets transferred to the trust fund after the death of its founder (testator), as well as to help out during the course of its founder´s life - enabling better control over the fund administration and correction of how it operates. From an economic point of view, the trust fund may be established for private or public purposes – allowing to assets to be earmarked and set aside for virtually any kind of purpose.
The assets in a trust fund are not owned either by the fund administrator, nor by the fund founder or indeed the fund beneficiary.
Trust funds therefore:
- Allow for the anonymization of assets, the protection of assets against execution or other dangers;
- Provide for the immunity of the fund property in the case of execution imposed on the property of their founders, administrators or beneficiaries;
- Are not legal entities;
- Have no owners! (They can also be used in place of anonymous shares, or the anonymization of limited liability companies);
- May also be established for private purposes;
- Provide security for defined persons;
- Are designed for the permanent administration of the deposited assets;
- Prevent the negative consequences of inheritance proceedings.
You started out in the 1990s, worked hard and now you manage a successful profit-making company. Did you ever think about to whom and how you will hand it over?
A trust fund enables you to monitor the company's operation after its handover to your child. A trust fund is a perfect solution in situations when you are handing your company down to your offspring, but only on condition they conduct themselves appropriately - no idleness, alcoholism or gambling. It is also a good way to ensure that your children take due care of all your needs in your old age.
Doing business in a high-risk sector? So far everything has worked out OK, but nothings last forever...
A trust fund allows you to safely shield the family assets against the risks that business brings. Through it, unlike the narrowing of marital community of property, you achieve real shielding from external risks. You just need to set aside real estate and other valuable property into a trust fund and appoint persons authorized for its use. Once done, you need no longer be afraid of losing your assets when entering into a risky transaction.
Do you want to allocate your children some of your earnings to give them a good start in adult life?
You can allocate a certain amount of money into a special account within the trust fund, specifying how this amount may be used. Thus you can prevent your children from frittering money away and provide them with funds for specific purposes (studies, house, etc.) or under specific conditions (reaching adult age, graduation etc.).