Trust and generational transition

  • March, 2025
  • Blog

The potential of the trust

The trust institution has experienced a decline in recent decades growing international diffusion, also extending to the systems of civil law, despite its origin in the countries of common law. However, this expansion has been partly slowed down by an unjustified mistrust and a certain lack of skills between the operators in the sector and the jurisdictional authorities themselves. Many, in fact, they have not yet fully understood the potential of the trust, which stands out for its extreme flexibility and the ability to adapt to multiple contexts, ensuring solutions effective and safe for asset management. On the contrary, in some circles it is still mistakenly perceived as a mere tool for hide assets o evade taxes, a prejudice that does not reflect the regulatory reality.

In reality, the trust represents a legal and highly strategic solution for anyone wishing to optimize their estate planning. Thanks to its structure flexible and to the multiple fields of application, the trust is an essential tool not only for tax optimization , wealth protection, but also for the efficient asset management and the resolution of problems related to obsolete regulations. In fact, in several countries, the excessive rigidity of the laws does not allow entrepreneurs and individuals to manage their assets with the same freedom and security that the trust can guarantee.

Il trust, thanks to its adaptability and reduced bureaucracy which characterizes it, is configured as a legal and highly effective means to address and resolve the most common issues related to estate planning. With the right support from experts in the sector, the trust can become a powerful asset protection and management tool, ensuring continuity, confidentiality and security in the protection of personal and business assets.

The problem of generational transition

One of the areas in which the trust reveals all its positive effects is certainly the problem of generational change.

La death of a person, in addition to the inevitable emotional suffering, often brings with it a series of other problems, linked to the division of assets to the heirs, that the Codified regulations often not only do they not help to resolve the problem, but in many cases they make it worse.

As unfortunately often happens, especially when the hereditary heritage It's quite a big deal, managing to get everyone to agree heirs on division of the inheritance it is extremely difficult, also because of the bureaucracy and regulations often anchored to concepts and logics old. Many countries, for example, provide for a legitimate share, that is, they ensure by law to the direct heirs a share of the assets, effectively preventing the testator to freely choose who to leave one's belongings to, and not infrequently the procedures for the division of the inheritance They are slow, expensive and not very attentive to real will of the testator as well as to protection of assets forming part of the heritage.

For example, regulations often fail to take care of protecting theasset integrity of the deceased, especially when faced with alitigious inheritanceLet's take the hypothesis of a company which ends in succession following the death of its sole shareholder: if the children are not interested in continuing thefather's activity (as often happens) and they cannot find an agreement on the business management or division of shares, the inevitable solution will have to be that of liquidation of the company and the division of the proceeds in the form of liquid money. A solution that ensures equal treatment for heirs, but which involves the forced closure of an activity that might not have been the will of the deceased.

Or, think of a person who has had children from a first wife and who intends to remarry in his last years of life: he should carefully consider his choice because with the act of wedding  would completely change the succession discipline due to limitations imposed by the inheritance law of his country, with the risk of unleashing family feuds after his death.

These and many other problems can be remedied by a trust; in this sense, two concrete examples can help to understand the real potential of the institute.

The generational passage

The most common case in point on which a can act trust it is obviously the protection of a correct generational change. Lot of legal systems have a complex and detailed system of rules that govern the succession, that it be made for will or without, protecting the interests of the “direct” heirs (children and wife/husband). However, this system does not take into account some peculiar and particular aspects, which can instead be managed through a trust.

Let's imagine an abstract, but very common situation nowadays.

Il Mr. Tizio he has a son, Caio, which after an initial “failed” marriage, from whom two children were born, remarried a foreign girl much younger than him, and of whom Mr. Tizio does not have much respect or particular trust. Since Tizio is a wealthy businessmana huge assets, fears that his son's new wife is more interested in that . than to the son. Consequently, he fears that, with his death, the assets will indeed be inherited by the son, but since he is older than the new wife, he will most likely die first and the new wife will inherit at least half About of .; sums that Tizio would like, in the final analysis, to end up in the hands of grandchildren fruit of the first marriage. The legitimate shares, as we know, cannot be violated with a will, which means that, whatever the testamentary will of Tizio, in any case the new wife, upon the death of the son, will inherit half of the . of the latter.

A common and delicate situation that can be resolved precisely through the establishment of a trust.

That is, Tizio could confer a certain part of his . within the trust, choosing how trustee a trusted professional; subsequently, indicates the son as income beneficiary and the grandchildren as beneficiaries of the final estate of the trust.

Basically, the trustee would have the purpose of guaranteeing Gaius a certain Monthly wage, granted from the sums contributed in trust, until his death; at the death of Gaius, however, the trust it would be closed and all the . still existing would be given in a single solution to the grandchildren, in a share of 50% for each.

In this way, Tizio has a structure capable of "overcoming" the limits and critical issues imposed by legitimate succession of the son, even without actually harming the code regulations, since that . awarded in trust would no longer be part of his personal heritage and so, simply, it would not have ended up in succession and would never have entered directly into the . of the son, with the consequences successors provided for by legitimate shares in favor of the new wife. Despite this, the son remains beneficiary of the trust, and therefore the right to enjoy the . of the father, nor the right to generational change towards his two grandchildren, who remain the “last” beneficiaries of the trust same.

In this specific case, it was therefore possible to obtain an optimization of the wealth management in terms of generational change, moreover on a long term that crosses two successions and three generations, through the use of a legal instrument such as the trust and not otherwise obtainable by any other legal instrument made available by theItalian legal system, protecting a legitimate interest of a subject but without harming the rights of others. Finally, without this operation in any way concealing fraudulent intentions towards the revenue authorities o private creditors.

Trust and Business Continuity

Another one case in point in which the trust offers a solid and effective protection tool, which is much more difficult to obtain with other legal instruments, it is the business continuity. In everyday life, not infrequently, especially in family-run businesses or for small and medium-sized craft businesses (who make the experience and uniqueness of their products the value added of the activity), the need emergesentrepreneur to ensure the possibility that thelabel created by him and carried forward throughout his life can continue to operate even after his death, ensuring that the quality of products persist in the future, even without his intervention, and that the Succession events resulting from his passing do not affect the company structure, that is, bringing it to one dismemberment or to his liquidation for the sole purpose of satisfying his heirs.

A concrete example of this situation could be the following.

Un entrepreneur, which we will call Dude, has been running a business for decades artisan enterprise, bringing it progressively growth and development and developing a strong network of contacts and customers, satisfied by the quality of products due to the great experience gained in the field. Being now about to go to board, like every small and medium Italian entrepreneur, would like to leave the continuation of the business to his two sons, who we will call Caio e Sempronius, in order to prevent the "empire" he created from being destined to crumble with his departure.

However, as often happens, neither of the two sons followed in their father's footsteps:

  • Caio He studied abroad and has been living outside Europe for a few years now, where he works as employee

  • Sempronius he followed a totally different educational and professional path

Neither of them has ever worked in thefather's company, nor does he intend to do so, nor would he have the skills to ensure the same quality of work. Furthermore, the two sons do not get along very well with each other and the father knows that, at the time of his death, in all likelihood the hereditary succession it will be “turbulent”.

The father is aware of the risk that:

  1. The children could sell or close thecompany

  2. They could proceed to liquidation of shares

  3. This eventuality would frustrate his wishes.

  4. It could cause damage to the employees, in particular to its main Mevio collaborator

Mevio is:

  • Part of the staff for some time

  • He contributed to the business development

  • It has IT and technological skills 

  • Has gained new loyal customers

Solution through trust:
Tizio could:

  1. Establish a trust

  2. To confer the 100% of company shares in the trust

  3. Nominate Mevio as trustee (quota manager and administrator)

  4. Designare Caius and Sempronius as beneficiaries

Advantages obtained:
✔ Business continuity guaranteed after death
✔ The shares constitute a separate estate
✔ Children cannot sell or liquidate the company
✔ Management entrusted to a competent subject (Mevius)
✔ Generational change in compliance with the legitimate shares
✔ The children receive the corporate profits (through donations)
✔ Reinvestments guaranteed for business growth

Problems solved:

  1. Generational change in compliance with the law

  2. Survival of the company

  3. Efficient extension Business

Conclusions

The examples cited in this article are just some of the applications of this particular institute and are intended to clarify how the figure of the trust it is not, as is too often believed, a mere tool for segregating a . or take away assets from potential creditors; instead it is a institute extremely flexible, capable of responding to an ever-increasing number of needs in a world, like today's, which places ever greater demands on the table opportunity, critical issues e Industrial that the slow and ordinary legislation is almost never able to cope.

If you find yourself in situations similar to those described in this article or want to evaluate theapplicability of the trust with regards to ideas and future projects whatever you have in mind, whether it's protect your assets or to explore business opportunity, do not hesitate to contact us by filling out the form you find on the site for a personalized advice.

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