Trust Fund III.

Today, we bring you the third and final article in the series focused on the topic of trust funds. This article covers:

Duration of the Trust Fund

• Term: A trust fund can be established for a fixed term or indefinitely. If the trust deed does not specify the duration, the fund is considered established for an indefinite period. In practice, funds vary in length depending on their purpose and the nature of the assets.
  • Short-term funds: For example, for asset protection during risky business activities or temporary gifting of assets to children.
  • Long-term funds: Aimed at protecting and growing family wealth over several generations, often with a robust trust deed and rules for appointing trustees and beneficiaries.
• Limitations: Private funds established indefinitely have a limited duration since the beneficiary’s right to payment must arise within 100 years of the fund’s establishment.

Supervision of Trust Fund Management

• Control: The trustee is subject to supervision by the founder and beneficiaries, with the possibility of oversight by other persons (e.g., family members). These persons may request access to documents, accounting records, and may participate in legal proceedings.
• Judicial supervision: If someone with a legal interest (e.g., founder, beneficiary) detects irregularities, they can appeal to the court to order certain actions by the trustee or even remove the trustee.

Termination of the Trust Fund

• When it terminates: A trust fund ends when the term expires, the fund’s purpose is fulfilled, or by court decision. It can also terminate if all beneficiaries waive their rights to payment.
• End of management: After termination, the trustee distributes the remaining assets to the beneficiaries or the founder. If there are no beneficiaries or founder, the assets pass to the state. It is important to clarify in the trust deed who will be entitled to the assets upon termination.

Conclusion
This article focused on key aspects of the duration, supervision, and termination of trust funds. If you are interested in their use or need specific advice, experts at Kreston A&CE are ready to assist you.