Lichtenstein Trust | Trust Deed | Trust Agreement | Letter of Wishes

The trust deed (trust agreement) governs the rights and obligations of the settlor, the trustee and the beneficiaries of the trust and sets out supplementary provisions of the settlor.

Expertise

• Trust deed Form and content requirements
• Revocation Withdrawal
• Supervision Control
• Retained earnings Duration of non-profit status
• Letter of wishes

Trust deed Trust agreement Form and content requirements

Under Liechtenstein trust law, the trust agreement must always be in writing. It may also be drawn up in a foreign language. The trust relationship must be expressly designated as a fiduciary relationship or trusteeship (EXPRESS TRUST). The trust deed must contain the declaration of intent to establish a trust, the detailed designation and description of the trust property, the beneficiaries of the trust and the purpose of the trust. In addition, the utilisation of the trust assets in the event of termination must be regulated.

In questions of interpretation, the will of the settlor takes precedence over the statutory provisions.

The trust deed must also contain information on the name and domicile of the settlor and trustee, the name of the trust, the date of establishment and the duration of the trust. The position, rights and powers of the trust participants settlor, trustee, beneficiary and any other participants must be clearly described.

Revocation Withdrawal  

Withdrawal or revocation by the settlor is only possible on condition that a corresponding reservation is provided for in the trust agreement or that this is permitted under Liechtenstein inheritance law, gift law and contract law.  Insofar as foreign law is applicable, the provisions of that law shall apply.

Practical tip: Revocable, amendable trust agreements often result in the trust being categorised as a “transparent trust” abroad, with the tax consequence of tax being passed on to the settlor. In this respect, it would be harmless to transfer the right to revoke or amend to a third party and at the same time make it subject to the approval of the advisory board (protector, etc.).

Supervision Control

For the supervision and control of the trustee and for any other purpose, the trust deed may provide for or name additional bodies such as an advisory board, protector, etc.

Retained earnings Duration Charitable trust

In contrast to Anglo-American trust law, it is possible under Liechtenstein trust law to accumulate the profits of the trust (accumulation) and to set up a trust permanently (rule against perpetuities)

Furthermore, it is possible in Liechtenstein to set up a purpose trust without beneficiaries, but only for the realisation of a specific purpose (purpose trust or charitable trust).

Letter of wishes

The letter of wishes is a declaration of intent by the settlor that further specifies the exercise of discretion by the trustee. The letter of wishes is not binding.