Consultation on New Trust Law in Switzerland

Background

With the ratification by Switzerland of the Hague Trust Convention on 1 July 2007, the Swiss already recognises trusts set up abroad, but there are no specific rules regarding their own trusts.

The Federal Council was instructed in recent years to provide the legal framework for a Swiss Trust to help boost Switzerland as a Wealth Planning jurisdiction and has now published a draft Bill aimed at introducing trusts into Swiss law for consultation.  This is intended to enable trusts to be used both to structure private assets and for commercial transactions.

Trust Features

Under the Bill, the Swiss trust is intended to offer a high degree of flexibility and it will include the following features:

  • It will consist of a settlement of assets in favour of Beneficiaries managed by a Trustee. The trust instrument can specify the Beneficiaries either by name or by a particular relationship with the Settlor or with another person, or by any other criteria capable of establishing the identity of the Beneficiary at the time of any distribution.
  • It is possible to set up a trust during lifetime or on death. The maximum period for a trust will be 100 years, but it can be revoked before that period expires.
  • The Trustees will have a duty to identify the Beneficiaries for anti-money laundering purposes. The Trustee cannot be the sole Beneficiary.
  • It is intended that the trust assets and liabilities constitute a separate fund from the Trustee’s own estate and the Trust assets are not part of the Trustee’s matrimonial property or their estate on death.
  • In addition to the power of revocation (referred to above) the Settlor’s other powers include the power to grant or withhold his consent to certain acts of the Trustee and replace the Trustee or appoint his successor.
  • The trust instrument may grant one or more persons as a protector which cannot also be a Trustee.

The Federal Council opened the consultation on the preliminary draft of the Swiss trust law on 12 January 2022. This will run to 30 April 2022, after which it will be discussed in Parliament.

For any advice and assistance relating to this or any other Wealth Planning matter, please contact Robert Drysdale or another member of our Wealth Planning team.

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Written by Elizabeth Sam, Conveyancing Paralegal in the Real Estate team at Rooks Rider Solicitors….