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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