Trust Wealth

An inheritance procedure can drag on for years and even lead to litigation, and during this time, a business may cease to operate and a property may deteriorate significantly. In many cases, the owner wishes to deviate from the mandatory inheritance rules, or the owner’s assets are located in different countries. It is also common for the owner to have children from several relationships, or the owner would like to plan in advance how to care for his or her minor children or a relative who does not have an independent income.

The preservation and protection of existing assets is a general goal for all owners. The primary aspect of asset protection is to secure existing assets against third parties. Trust management is an excellent tool for achieving all these goals, and trust management is even an excellent alternative to a marriage contract. Trust management therefore helps to preserve and keep assets together, and is a much more flexible and predictable means of transferring assets than inheritance, which also provides anonymity in certain cases.

A trust relationship can be established in several ways, as the law offers the following options:

1. The first option is a trust relationship established by contract, which is a contract between the trustee and the settlor(s). In the agreement, the contracting parties establish the purpose of the trust, determine the asset(s) to be placed under trust, its value, designate the beneficiaries, etc. The trust relationship terminates after fifty years; this rule cannot be deviated from.

2. The other option is a trust relationship established by a unilateral legal transaction, which has two main types. One is when the trustee and the settlor are the same person, and the other is when the trust is established by will.

Trust can be commercial or non-commercial based on the person of the trustee. We speak of business-like asset management when a financial service company establishes multiple asset management relationships with different asset owners. There are specific personal and material conditions for establishing a business-like trust asset management company, the existence of which is also a prerequisite for registration with the Hungarian National Bank. The list of registered trust asset management companies can be found on the Hungarian National Bank’s own website.

In the case of non-business-like asset management, the asset owner entrusts the assets to be separated to a confidant. When this form is used, it is typical that the person of the asset owner and the asset manager is the same, or a family member or close friend is entrusted with the management of the assets. The asset manager can be both a natural person and a legal person. A non-business-like trust asset manager must have a clean record with respect to certain crimes specified by law. A trust management contract concluded by a non-commercial trust manager must be included in a private document countersigned by a lawyer or in a notarial deed. If the person of the settlor and the trustee is the same, the trust management is established by the settlor’s irrevocable unilateral declaration included in a public document. A non-commercial trust management relationship must be reported to the Hungarian National Bank and the trust management contract or the unilateral declaration included in a notarial deed or a private document countersigned by a lawyer must be attached. Non-commercial trust management relationships are registered by the Hungarian National Bank. In the case of the registration procedure of the Hungarian National Bank, the administrative deadline is sixty days. The registration procedure for trust management relationships is subject to a fee, the fee is HUF 30,000, which must be paid simultaneously with the initiation of the procedure.

If you would like to keep your assets and company safe, please contact us with confidence and request a consultation appointment at office@dobrocsi.com.