Trust Fund II.

Today we bring you the second part of a series of articles focusing on the topic of trusts. This time, our colleague Karel Rada discusses the establishment and practical use of a trust. This series was created in cooperation with Kreston A&CE Group.

Establishment of a Trust
Creation: A trust is created by registration in the trust register. The founder must decide on the trustee, the purpose of the trust (public benefit or private), the name of the trust, the beneficiaries, and the conditions for payments.
Trust Deed: The founder prepares a trust deed (in the form of a notarial deed), which contains the rules for managing the trust’s assets. The deed is immutable and must address situations such as the appointment of new trustees or substitute beneficiaries.

Accounting and Tax Aspects
A trust is an accounting entity and maintains standard accounting records. It is subject to corporate income tax, but some types of income may be exempt. Taxation applies to payments made to beneficiaries, who are subject to personal income tax, though there are exceptions (e.g., transfers of assets back to the founder or their close persons).

Practical Use
Family Holding: Trusts help preserve family wealth across generations and are used to manage family businesses and valuables.
Managing Business Risks: Assets can be protected from business risks by placing them in a trust, meaning they are shielded from events like company bankruptcy.
Public Benefit Trust: A trust can be used to preserve cultural heritage or support public activities, such as operating a museum or gallery.

Conclusion
Trusts are a flexible tool for managing family wealth, protecting business assets, and serving public benefit purposes. Thanks to their diverse possibilities, trusts are becoming an increasingly popular tool for effective asset planning and protection in the Czech Republic.

If you are interested in specific advice or establishing a trust, the experts at Kreston A&CE are available to assist you.