Trusts in the Czech Republic

The concept of a trust was introduced into the Czech legal system in 2014; however, unlike the situation in other countries, it is not a commonly used legal instrument in the Czech Republic. This is rather disappointing because a trust really is a very effective and safe legal instrument that can be used to settle property matters within a family.

The original owner or owners of property (the settlor or settlors) waive their legal title to the property by transferring it to the trust; however, the property itself or the revenues from it are administered according to the rules set by the settlors when the trust was created. Also, the revenues from the trust property belong to the settlors or persons entrusted by the settlors (the beneficiaries). Property transferred to a trust can take the form of assets that exist already or future assets (e.g. revenues from patents or copyrights). If the situation changes significantly, the trust can be revoked.

Setting up a trust is a reasonable choice of vehicle for managing family assets if relationships within the family in question are complicated. This can include situations when the settlors have grown-up children from a previous marriage, or they wish to pass assets on to their grandchildren (skipping their children), or they wish to pass assets on to their children but not to their current spouses, etc. Another reason for setting up a trust is the protection of the assets from business risks. A no less important reason is the tax advantage that the trust property can claim during the settlement.

A trust is created by a trust deed that must be written down by a notary. The trust is administered by a trust administrator; this person does not have to be a professional, given the extent of the administrator's powers and duties, this is desirable.