Trust funds are trust property, a peculiar structure of relations, in which property owned by the founder of the organization is transferred to the disposal of the trustee. In this case, the beneficiary receives income.
Trust funds are property values that are transferred from one person to another. For the transfer of ownership , a specialized contract is signed - a trust agreement. The parties to the agreement are the founder of the fund, the manager and one or several beneficiaries at once. The trust fund in Russia, as in any other country, is considered to be a full-fledged legal entity.
Distribution of roles and functions: founder and manager
The structure of trust funds provides for a blocked account, which is subordinate to the manager. There are certain commercial terms of partnership between the parties. The founder has every right to choose a manager. This can be a notary public, and a lawyer, and the head of the bank, and any other person with an appropriate level of qualification. In accordance with generally accepted standards, the manager assumes responsibility for managing the capital of investors. The manager does not act as the owner of the property, but he bears full responsibility for any damage or loss, various kinds of omissions related to the property of investors for the management period.
If the founder of the fund reveals a desire to make over-risk investments that do not correspond to the risk sharing structure, he has every right to do so. The only “but” is that in this situation, the responsibility from the manager is completely removed. These freedoms are regulated to the smallest detail by a trust agreement. The following peculiarity is characteristic of a blocked account: money can be deposited into it in any way possible, but upon activation of certain conditions, a material resource should be paid only for the realization of a certain purpose.
The target audience
There is a specialized trust fund for children, and there are trusts for large companies and their leaders, associations for individuals who have some savings. In this situation, the fund can act as a reliable tool to ensure the safety of property with low taxation and decent profits. Communities are focused on owners of various types of real estate, on owners of securities and offshore organizations. It is worth saying that this category of “institutions” provides comprehensive anonymity to beneficiaries. Funds that are transferred to trust management are not available to creditors and are not subject to taxation.
Trust Objectives
A trust fund in the USA, in Ukraine, in Russia can be created for different purposes:
- As a means of ensuring the security of assets, since not only creditors, but also other third parties can not file claims on property entrusted to the trust.
- Trust funds are an alternative to a standard will. This is due to the possibility of the existence of several beneficiaries at the same time, as well as trust managers. In the future, the property will be distributed between the beneficiaries, but only after the death of the founder.
- Trusts can be of national importance. For example, NATO trust funds were created solely to help Ukraine.
Institute disadvantages
Despite a fairly wide list of advantages of such funds, they have certain disadvantages. We can say about a partial loss of control over the property, which is entrusted to the manager. But there is a second side to the coin that completely covers this fact. In accordance with the agreement, the founder cannot terminate the agreement unilaterally. This fact significantly increases the level of protection of property from attacks by creditors. There is no specialized law in domestic legislation to which the activities of such organizations are subordinate. The fund can be called property with capital indivisible type. This category of legal entities has a unique tax status, according to which any income is not taxed.
The subtleties of the existence of the fund
Trust funds are associations belonging to the category of companies with indivisible capital. Separate property with the status of a legal entity is used for various purposes, from capital accumulation to ending with the overlapping of expenses of various ranks (education, treatment, training, etc.). The purpose of the existence of the fund is implemented by a specialized body called the Fund Council. Beneficiaries can be legal entities and individuals, non-residents, members of one or more families, the founders themselves. The fund has the characteristics of an ordinary company and has some extraordinary structural solutions. The education structure provides the founder with control over the assets without violating the privacy policy.
Trust structure: grantors, beneficiaries, trusts
The Trust Fund in Ukraine, as in any other country, provides for a grantor or donor. This is the person who establishes the foundation and donates its property to it. It can be cash, stocks, bonds, any securities. It is the grantor who sets the specifics of the work of the fund. There is always a recipient - the person for whom it was created. In the future, the work of the fund will be carried out in a format in which the beneficiary will receive certain benefits from the work of the organization established by the founder. The role of a manager (trust) can be played by one person or the whole company. Several trusted advisors are allowed. The manager works for a fixed salary. In some situations, trusts do not hire trusts, but rather an authorized investor with high qualifications who can manage assets as efficiently as possible.
Probable problems and their solution
Creating a trust is today a very popular area, allowing you to save money and reduce costs by avoiding taxes. Within almost every state there is a legal framework (with the exception of Russia) that regulates the activities of this category of organizations. In some states, eternal trust funds are widely practiced, while in others they are strictly prohibited. Some governments are concerned that people may receive large fortunes that they have not earned. Before opening a fund, experts recommend consulting a specialist.