Trust Fund
A trust fund (svěřenský fond) protects family assets and makes it easier to pass a business or real estate on to the next generation. I advise on whether it makes sense for your situation and how to set it up correctly.
Free consultation →What I will do for you
A trust fund is a powerful tool for protecting family assets, but it only pays off where its benefit outweighs the administrative and tax burden. I will help you assess whether it is right for you, and if so, guide you through the entire process of setting it up, from the statute to registration.
- ✓Assessing whether a trust fund makes sense for your assets
- ✓Preparing the trust fund statute for execution as a notarial deed
- ✓Selecting the trustee and setting their powers
- ✓Establishing the fund for the event of death, directly in a will
- ✓Registering the fund in the register of trust funds
- ✓Setting up the fund's basic tax obligations
A trust fund is not an offshore hideaway
Trust funds are sometimes presented in the media as a tool for concealing assets. The reality is different: a Czech trust fund must be registered both in the register of trust funds and in the register of beneficial owners, it is a separate taxpayer, and its trustee has specific statutory duties towards the state and the beneficiaries. The purpose of a fund is not to disappear from the authorities' view, but to separate assets from the founder's personal ownership and set clear rules for managing and passing them on to future generations.
What a trust fund is used for
A trust fund is created by setting aside assets from the founder's ownership (Section 1448 et seq. of the Civil Code). The assets cease to belong to the founder or the trustee and are managed separately, for the benefit of the beneficiaries according to the rules in the statute. In practice, this most often addresses two situations:
- ✓Protecting family assets: assets in the fund are not part of the spouses' marital property and generally cannot be seized in enforcement for debts the founder incurs after setting the assets aside, except where the founder set the assets aside specifically to escape existing creditors, such conduct can be challenged through a creditor's action to set aside the legal act.
- ✓Succession: the fund ensures continuity in managing a family business or real estate portfolio without the assets having to be split up among individual heirs after the founder's death, and it also protects beneficiaries who cannot yet, or do not know how to, manage the assets themselves, typically minor children or people with disabilities.
A fund can be set up during the founder's lifetime, or only through a testamentary disposition, that is, directly in a will, in which case it arises only upon the testator's death.
Only limited anonymity: the register of trust funds
Every trust fund must be registered in the register of trust funds and, at the same time, in the register of beneficial owners. Registration in the register of trust funds is handled by the trustee, the fund generally comes into existence on the day of this registration, except for a fund established in a will, which arises already on the testator's death and is registered afterwards.
Following previous amendments, the register of trust funds is now largely non-public: an ordinary user cannot look up the founder or the beneficiaries by name, searches are only possible by the fund's name, company ID, or case reference number. The tax administration, courts, law enforcement authorities and other public bodies, however, always have access to the data.
A trust fund therefore protects assets from ordinary public scrutiny, not from the state. Anyone expecting complete anonymity from the authorities through a fund will be disappointed, it is more a tool for managing and protecting assets than a concealment vehicle.
Who will handle your case
Ing. Mgr. Tomáš Beneš
Attorney registered with the Czech Bar Association, based in Prague.
Law degree from Charles University. I focus on business law, real estate and employment disputes. I handle every case personally, no assistants.
More about me →How we will work together
Describe your case
Fill in a short form or send me an e-mail. A few sentences about what happened and what you need to resolve are enough.
Send your documents
Attach the relevant documents (contracts, correspondence, notice of termination…). I accept everything securely online.
We'll discuss it by phone
I will study your case and call you within 48 hours with a proposal for the specific next steps, including the price.
You'll receive the solution by e-mail
You will receive the contract, filing or legal analysis by e-mail. Everything is done quickly and without unnecessary meetings.
How a trust fund is set up: the statute and the notarial deed
The fund's basic document is its statute, which sets out the purpose of the fund, the assets you place into it, the person or rules for determining the beneficiaries, and the trustee's powers. The statute must take the form of a public instrument, that is, a notarial deed (Section 1452 of the Civil Code), otherwise the founding act is invalid and the fund does not come into existence at all.
The notarial deed usually includes the fund's statute, an agreement with the trustee accepting the role, the trustee's affidavit, and the consents of persons entered in the register. The fund can also be established through a testamentary disposition, directly as part of a will, in which case it arises only on the testator's death and is subsequently entered in the register.
I will prepare the statute to match your intention precisely, whether it involves protecting a family business, real estate, or providing for a specific person, and arrange both the notarial execution and the subsequent registration.
The trustee: who manages the assets, and how
The trustee manages the assets in the fund separately from their own assets, with the diligence of a proper administrator and in accordance with the rules set out in the statute. They act in the interest of the beneficiaries, not in the interest of the founder or themselves, which is the main guarantee that the fund will work as intended.
The trustee can be the founder themselves, though with certain restrictions and only temporarily, a family member, or an independent professional, for example a lawyer or a bank. Choosing the trustee is one of the most important decisions when setting up a fund: I will help you weigh trusting a family member against the independence of a professional trustee, and set the statute so that their powers match your intentions.
Trust fund taxes in brief
A trust fund is a separate corporate income tax payer, its income is therefore taxed separately from the founder and the beneficiaries. The trustee must register the fund with the tax administration within 15 days of its creation and subsequently file tax returns for it within the same deadlines as other legal entities.
The specific tax consequences vary depending on the assets the fund holds and the distributions received by the beneficiaries, so I always handle the tax setup in cooperation with the client's tax advisor, or recommend one if the client does not yet have one.
Who a trust fund makes sense for, and who it does not
A trust fund is worthwhile especially where significant assets and a long-term horizon are involved:
- ✓families with a stake in a business or several properties who want to ensure a smooth succession
- ✓situations where you want to protect assets long-term from being split up among multiple heirs
- ✓providing for a vulnerable beneficiary, a minor child or a person with a disability, who cannot yet manage the assets themselves
Conversely, for ordinary assets of lower value a trust fund usually does not pay off, the notarial deed, trustee, bookkeeping and tax return represent costs and administration that outweigh the fund's benefit for a smaller estate. A standard will, or a gift agreement with conditions, tends to be the better solution there. I am happy to assess at the first consultation, realistically, whether a fund makes sense in your situation, or whether a simpler tool is enough.
Need advice?
Describe your case. You will get a concrete answer within 48 hours, completely free of charge.
Free consultation →