Family property matters

The fate of assets accumulated by previous generations may sometimes pose a great challenge to the heirs. Liquidating or cutting up certain assets is impossible for practical or conceptual considerations, whereas, in other cases, such a step would result in severe depreciation or market disadvantage, or, in certain instances, the expertise needed for managing the asset, such as an undertaking operating in a special area, may be missing. In such situations, fiduciary asset management may offer an effective solution.

In the context of a family, the assets are transferred in a way regulated in a detailed contract by the settlor to the asset manager, who manages and supervises them to the benefit of the beneficiaries. For assets placed into fiduciary asset management, it is good to know that they are completely separated from the asset manager’s own assets, and are also independent from the settlor’s, the asset manager’s and the beneficiaries’ creditors and legacies, as well as being protected also from claims for community property out of marital property or partnership property. Given that assets managed in fiduciary asset management are managed in a separate bank account and under a separate tax number, their safety is ensured in almost every respect. An asset management contract may be drawn up also for a case of death, by way of a testament, but the settlor may issue directions at any point in his/her life for his/her assets to be managed by others – certainly, in line with the terms defined by him/her. Fiduciary asset management guarantees safe continuity in respect of the assets; so, for example, you need not worry about lost profits or depreciated assets arising from painfully prolonged probate and succession procedures, as the case may be, when you opt for this solution.

From the aspect of taxation, fiduciary asset management provides a highly favourable opportunity as, by default, the delivery of the principal of managed assets falls under identical regulation in respect of duties payable as if they were obtained by the beneficiary directly from the settlor. Accordingly, if the beneficiary and the settlor are the same person, or if the beneficiary is the settlor’s spouse, direct descendent or ascendent, no gift duty is payable as a general rule. It is important to mention that the delivery of certain assets may result in an obligation for the asset manager to charge VAT. Disbursement of yields above the principal, at the same time, counts as revenue on the beneficiary’s side, and is taxable as dividends in case of natural persons.

A central element of asset management is that our activity as fiduciary asset managers is predominantly limited to the involvement of advisers holding relevant expertise and, if necessary, a management possessing the required expertise and experience. The scope of asset management and its nature of being active/passive are in all cases defined in view of an individual agreement with the settlor and the nature of the entrusted assets in order to ensure that the assets are managed in the best possible way and that the beneficiaries can enjoy their benefits for the longest possible time – in most cases, it means that the managed assets remain in the indirect ownership of the family or a specified family member, whereas it is the asset manager that provides operational management for the company or another legal entity that manages the assets.

The members of our family business hold years of experience in asset management, as well as a complete legal, financial and administrative background, and they involve experts, if necessary, to ensure worthy management and prosperity of the assets so that they preserve their unity and reputation to be passed on to the next generations.