This section deals with the so called “Private Express Trust”. A trust may be revocable or irrevocable, modifiable or unalterable.
Purpose of a Trust
Unlike the Anglo-American model, the trust in Liechtenstein law may be set up for an indefinite period. It can be used in the same way as a foundation, but permits more flexible arrangements as its purpose is not limited in any way, as is the case under foundation law. The trust is the legal relationship created by a trust agreement between the Settlor and the trustee whereby the Settlor assigns fixed or movable assets or rights to the trustee. The trustee is required to manage and use the assets entrusted to him in his own name pursuant to the directives drawn by the Settlor for the benefit of one or more third parties (beneficiaries).
Name and Language
The name of the trust can be freely chosen in any language, but enquiries must first be made to the Liechtenstein Land and Public Register Office to establish whether the name is still available. Names of countries, places and national or international organizations are not allowed as part of the name.
The chosen name must always be accompanied by the word “Treuhänderschaft” or “Trust” in unabbreviated form.
No minimum founding capital is prescribed. The trust may, for example, be endowed with CHF 1,000.
The participants are:
– the Settlor (founder) hereby the terms of the contractual relationship must be set out in writing (trust deed = act of constitution)
– the trustee or trustees (acceptance of the office in written form)
– the beneficiary or beneficiaries
The formation of the trust is effected when the trust deed is signed by the Settlor and trustee or by a letter or declaration of trust. The optional entry in the Public Register (instead of depositing) does not have any constitutive effect. Liechtenstein law embodies no provisions preventing perpetuation.
Registration – Depositing
Where an entry in the Public Register is desired, the following information must be given: date of formation, designation of the trust, duration (limited or unlimited), name and address of the trustees. As an alternative to registration, the possibility of depositing the trust deed with the Land and Public Register Office exists. A deposited trust does not then exist in any register accessible to the public and inspection of information provided is possible only if evidence of a justified interest can be produced.
The trustee or trustees is/are the body responsible for the trust and hold and manage the assets of the trust in their own name and are personally liable to the Settlor and the beneficiaries with their entire assets. The trustees may be any natural or legal person, regard-less of their place of residence, registered office or nationality.
At least one trustee must be a citizen of an EEA (European Economic Area) Member State and have his permanent place of residence in an EEA Member State (A state treaty with Liechtenstein can grant other persons of the respective treaty state the same rights). This sole member must also be authorized to pursue the inland profession of trustee according to the law on trustees. The same authorization applies to citizens of an EEA Member State resident in an EEA Member State (or persons having the same rights due to a state treaty) who possess evidence of a qualification according to art. 2 of the law on trustees. They have also to be in at least one year full-time employment in Liechtenstein of a trustee or a trust company and exercise their activities in the context of that employment relationship according to the first sentence in this clause. Nationals who are not citizens of an EEA Member State or who do not have the same rights according to a state treaty must have a Liechtenstein residence permit.
Therefore, Swiss nationals with a residence permit are treated in the same way as Liechtenstein citizens in respect of access to the profession of trustee, pursuant to the legislation of the cantons on the basis of reciprocal recognition of the laws.
Persons who want to practise as a licensed trustee must notify the Government of such intention. The Government will check if all conditions are met and will issue a confirmation and set up a list of all relevant persons. Changes of conditions have to be announced immediately to the Government.
Due to transitional provisions attorneys-at-law, legal agents and auditors who held a relevant licence/admittance before enactment of the revised law in spring 2003, can continue practising.
The beneficiaries may require the trust provisions to be performed and enforced by the courts if the trust deed does not leave the execution of benefits or the nature of the benefits to the discretion of the trustee. The Settlor himself may be the beneficiary or even the sole beneficiary. If no references to the beneficiary are known, the supposition will be that the Settlor is the beneficiary. The statutory inheritance ranking then applies.
The trustee is required to keep records of the assets forming the trust property and to adjust them annually. The trustee must be in a position to provide information on the financial status of the trust.
Filing of Accounts
No balance sheet has to be submitted to the Liechtenstein tax authorities.
To safeguard compliance with the provisions of the trust deed by the trustee, statutory auditors a protector or custodian may be appointed.
The appointment of a local representative is not necessary.
The trust deed must explicitly state that the Trust is subject to Liechtenstein law.
Trusts subject to foreign trust laws too, may be set up in Liechtenstein, with a global reference in the trust deed controlling the internal legal relationship between the parties involved made subject to foreign law, but still as regards external relationship subject to Liechtenstein law as against third parties.
Termination – Revocation
By virtue of the principle of freedom of the individual to make personal arrangements, the Settlor may freely stipulate in the trust deed the reasons or conditions for termination of the trust, e.g. by designating authorized persons, on the occurrence of an event which constitutes a condition, when the entire trust assets have been used for the intended purpose and are no longer available or in the event of other performance of the material purpose of the trust or else upon expiry of a specified period.
Where this is stipulated in the trust deed, a trust may be revoked:
– with the assent of all the beneficiaries, the Settlor and the trustee
– by the Settlor
In the absence of other provisions in the trust deed, the trustee is required to manage the trust for at least one administrative year. Otherwise the trustee is authorized to terminate the trust with effect from the end of any calendar year by giving three months advance notice.
Amendment of the applicable law and transfer to another jurisdiction:
Amendment of the applicable law and transfer of the trust to another jurisdiction takes place by a decision of the trustees according to the regulations of the trust deed.
Liechtenstein has not concluded any double taxation agreement
Trusts must pay a capital tax on the net trust assets. This is levied at the rate of 0.1 %, subject to a minimum of CHF 1,000 and is payable annually in advance.
Payments to beneficiaries domiciled abroad are not liable for any tax in Liechtenstein.
Asset Protection Trust (A.P.T.)
Liechtenstein legislation makes the following main provisions:
Creditors of the Settlor:
The Settlor should settle the trust at a time when he has no creditors and does not infringe any statutory inheritance claims.
The creditors may file claims for a maximum period of five years.
Heirs of the Settlor:
Heirs may bring a claim within a maximum period of three years after the death of the Settlor if their statutory inheritance rights have been infringed.
Creditors of the beneficiaries:
The creditors of the beneficiaries may only file claims on the trust assets by compulsory enforcement or bankruptcy proceedings to the extent that claims accrue personally and directly to the beneficiaries and to the extent that the trust deed does not specifically contain a provision on the inalienable nature of the benefits.