Trust – the features

The business world generally pays too little attention to the nature of trusts, and the way they work. This may be because most people's knowledge of them is inadequate; and many regard them as strange and even as suspect, perhaps as the result of implausible media reports.

Every real estate buyer or seller knows for sure about the advantages of an escrow (trust) account; and of third-party attorney accounts, used to handle real estate purchase funds. It is the attorney who acts as trustee in these situations.

But, and everyone should be aware of this, any natural legal person (capital corporation or other body) can be appointed as the trustee or executor of a will. It is the client alone, i.e. the settlor, who decides which person he or she would like to place his or her confidence in.

Trust – the purpose

Our view is that setting up a trust is primarily a useful tool for specific purposes. From an exclusively technical standpoint, a trust can be used to control events to ensure the fulfilment of a benefit in return. This is because, usually, trusts have limited lifetimes.

Occasionally, it is necessary to configure a trust as, in effect, an institution of unlimited duration. This would be the case, for example, with a clearing house whose purpose is to implement cash management functions. As long as the clearing house exercises the function of a trustee, all cash management participants in turn function as settlors. In spite of this, these individuals do not fundamentally transfer trust property to the trustee, but instead they transfer to the trustee the responsibility of distributing earned benefits for the common good.

Sometimes, events themselves dictate the use of a trustee. The trustee then acts as the motor, the main impulse, if you will, that gives the entire project the impetus it needs. Thus, we the Schroeckel Unternehmensberatung have used trusts as a confidence building measure in the context of the contractual design and subsequent implementation of cooperation agree­ments. These were situations where the flow of funds depended on the progress of the cooperation work itself.

Trust – the essential requirements

The subject or content of a trust is of no significance, as far as we are concerned. What we take a very close look at, before we accept any trust-related project, are the trustee instructions. In the same way, we advise each and every settlor to make totally certain of the loyalty of any potential trustee in advance.


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