How to protect corporate and personal assets: 5 instruments


Trust stores / Monday, March 4th, 2019

Trust, trust stores and donation acts: here’s how to protect corporate and personal assets.

Until a few years ago the skills necessary for the accountant were limited to tax, administrative and accounting. Today’s companies have more evolved needs, such as:

  • develop expansion strategies and be more competitive on the market
  • measure the effectiveness of its operational processes
  • safeguard the company assets

Let us dwell on the last point. To meet this demand we can resort to different legal instruments , depending on the case. I immediately distinguish between “consolidated” methods ( equity funds, insurance policies ) and new approaches that are more in line with the current needs of companies ( family agreements, fiduciary stores, deeds of destination, trusts ) and I start from the latter given the their importance.

1) FAMILY PATTERNS

According to an estimate of the European Union, 30% of family businesses do not exceed the next generation pass. To avoid the risk of bankruptcy, Family Pacts can be used; a sort of “preventive succession plan” that ensures the balance and stability of the company in the future . To learn more, read my dedicated article .

2) TRUSTED STORES

It is an institution in which a trusting subject transfers to another (trustee) the property of an asset and binds it to transfer it back to the same promoter or to a third beneficiary.

ADVANTAGES

  • separation of assets: the tied assets and their fruits are not acceptable
  • it can be combined with other instruments: balance sheet, trusts, family pacts
  • it can be stipulated by anyone (even by cohabiting families)

DISADVANTAGES:

  • possibility of abuse by the trustee who can exercise the right differently than agreed. In case of violation of the agreement the trustee can not claim the transferred good / right but only to claim damages.

3) DESTINATION ACTS

They are the constraints that a person affixes to certain goods for a fixed duration and which generate interests separate from the remaining assets, for the benefit of persons or public administrations / bodies.

ADVANTAGES:

  • separation of assets: the tied assets and their fruits are not acceptable
  • stipulated by anyone

DISADVANTAGES :

  • the tied assets and their fruits can be used only for the purposes indicated in the deed
  • only real estate or movable property registered in public registers is the object
  • the 90-year limit and the obligation of a public deed.

4) TRUST

a land trust is one of the most important institutions to solve various problems, from the generational passages of goods and companies, to the assistance of weak subjects. It starts from the will of a disposable subject, who transfers his own property to a trustee, to manage them independently, in the interest of beneficiaries or for a purpose. The assets thus created are separated from the personal assets of the settlor, the trustee and the beneficiaries. The methods of transfer depend on the good; every situation must be evaluated by itself.

ADVANTAGES:

  • separation of assets: the tied assets and their fruits are not acceptable
  • amplitude of the assets involved (debt securities, bank accounts and sums of money, shares of family companies, shares of real estate companies, valuables and works of art, units of mutual funds, shares listed in Italy or abroad, properties, etc …)
  • potentially unlimited duration
  • confidentiality given by the release between the settlor and the trustee

5) PATRONIAL FUNDS

It is the instrument that ensures family protection of family assets from third party attacks. It is a sort of “policy” that protects the entrepreneur’s family from financial disruption of bad business management. It can consist of spouses in a joint or single way.

ADVANTAGES:

  • it is relatively ductile and economical
  • allows to protect and satisfy family needs (minimum vital)
  • duration bound to marriage but extensible to the age of the youngest child

DISADVANTAGES :

  • the conjugal bond . It is reserved for the legitimate family only, lapses in the event of the death of the spouse, separation / divorce and can not be applied to cohabitants.
  • the obligation of a public deed in the presence of two witnesses
  • limitation of the assets involved (real estate, registered furniture and tied bonds)

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