Lichtenstein Trust: Asset protection of the trust assets

Asset protection of trust assets in Liechtenstein

The Liechtenstein Trust is largely protected against creditor access to the trust assets (asset protection).

Expertise

Scope of the trust assets
Asset protection in the event of access by the trustee’s creditors
Asset protection in the event of access by the settlor’s creditors
Asset protection in the event of access by the beneficiary’s creditors
Asset protection in the event of access by creditors of the trust assets

Scope of the trust assets (trust property trust fund)

The trust assets include all assets (items and rights) designated for this purpose by the settlor or by law, including all capital gains and replacement items.

The inclusion of the assets in a list of assets is legally irrelevant for the qualification as trust assets. When a company is transferred, the trustee becomes the owner of the company – in the case of a public limited company, the shareholder.

Real property, patents and other rights entered in registers should be transferred to the name of the trustee.

Note: A trust note or a priority notice in the land register or register is permissible and advisable for reasons of good faith protection.

Several trustees are joint owners of the trust assets.

Asset protection in the event of access by the trustee’s creditors

The trust assets are completely excluded from enforcement and access under insolvency law by the trustee’s creditors. The trust assets are segregated in the event of the trustee’s bankruptcy and transferred to a successor trustee.

If segregation is not possible, the successor trustee’s claim for compensation shall take precedence over all other creditors of the trustee.

The creditors reserve the right to claim compensation from the trustee.

Asset protection in the event of access by the settlor’s creditors

The creditors of the settlor or his legal successors are limited in the assertion of their claims against the trust assets by the provisions of private international law, national and foreign inheritance law and gift law relating to avoidance. In Liechtenstein, the limitations of foundation law apply accordingly.

Note: Reference is made here to our detailed explanations on foundation law regarding creditor avoidance, recourse liability and claims to compulsory portions etc. The provisions of foundation law apply accordingly to the trust. (Short appeal periods, no enforceability of foreign judgements, etc.)

Asset protection in the event of access by the beneficiary’s creditors

The beneficiary’s creditors can only assert claims against the trust assets if the beneficiary is a discretionary beneficiary and has no direct legal claim against the trust assets.

The settlor can also specify in the trust deed which beneficiary may not be deprived of the trust assets (enforcement privilege).

Asset protection in the event of access by creditors of the trust assets

The trustee is personally liable without limitation and jointly and severally liable for the liabilities entered into by him at the expense of the trust assets insofar as the creditor claims are not covered by the trust assets.

Recourse of the trustee against the settlor and the beneficiary is generally not excluded. The trust assets are insolvent.

The trustee is not personally liable if he has informed the third party of his position as trustee and has not acted as the beneficial owner of the assets.

Our advice: As a trustee, expressly refer to your capacity as trustee when concluding legal transactions or contractually limit your liability to the trust assets.

Conclusion: The Liechtenstein Trust protects trust assets efficiently and comprehensively in practice. The Liechtenstein regulations are internationally recognised in law.

Do you have questions about asset protection? Our advisors will give you a free initial assessment of your concerns. For a non-binding enquiry, please contact us by phone or e-mail or use the contact form.