Note
The following is an extract entitled “Domestic Trust in a nutshell”. For the sake of good order, it should also be pointed out that the following revised and translated short article is intended solely to present the factual and legal situation in 2014 at that time. For an in-depth overview, please refer to the Master’s thesis: “Familienfideikommiss und Trust; Der Binnentrust als Vehikel der privatnützigen Vermögensperpetuierung in Anlehnung an das altrechtliche Familienfideikommiss der Schweiz”, published by Tectum Verlag in 2014.
Summary and conclusion
With the domestic trust and the choice of Liechtenstein trust law as the international point of departure, there is a suitable instrument for the private-benefit asset perpetuation. In Swiss legal opinion, the foundation has been known since the enactment of the Swiss Civil Code as an instrument for charitable or cultural purposes as well as for employee benefits. Thus, the inland trust similar to an entailed commission lends itself to being introduced in Switzerland as a successor vehicle in place of the Liechtenstein family foundation.
Swiss substantive law implementation of the trust provisions must be rejected (as a possible alternative to implantation), as the history of trust law shows that recourse to a large body of case law and the corresponding crisis-tested approach is absolutely fundamental to this common law construct. In [1]the words of Peter Böckli, the trust as a vehicle can only really flourish as a colourful and complicated orchid[2] in an Anglo-Saxon greenhouse. Switzerland can only benefit from this large body of case law and Swiss autonomous enforcement is not to be recommended.
A study published in 2012 shows that additional opportunities for the Swiss financial center in the area of private banking are possible in the amount of CHF 2.5 billion. This is particularly true in two areas. In the UHNW area, additional income is to be generated by improving the range of services on offer and through more dedicated support models. In the area of wealth planning, on the other hand, higher client loyalty is to be achieved primarily through comprehensive financial planning. Increased advisory competence in the areas of succession planning, inheritance and securing the (previous) standard of living is to complement the portfolio.[3] In my opinion, this can only be achieved by using interdisciplinary support teams within the framework of family office solutions.
As one of eight possible fields of action for realising these additional opportunities in private banking,[4] the working group has set up a working group to promote suitable structures and structures.[5] Following approval by the HTÜ, however, these vessels[6] with the inland trust already exist. Customer loyalty in particular can be strengthened by assuming the role of a trustee or protector. The value chain can be exploited and economies of scale can be increased. An inland trust similar to an entailed commission can even renew the ideas of a traditional legal vessel.
The goals also mentioned by Peter Sprecher, which are to speak for a new vehicle of the private-benefit asset perpetuation,[7] such as the increase of the attractiveness of the economic and financial centre as well as the avoidance of (further) capital outflows[8] can be realised in this way, without having to create a new legal entity under substantive law.
The ideas of the Family Entailed Trust, which[9] are still a legal and factual reality in Switzerland today, particularly in the agricultural sector and also in the commercial sector (including family companies, family foundations under Liechtenstein law and business foundations), can thus be further promoted by the use of an internal trust similar to an Entailed Trust. In addition, the separation of family ties means that further individualizations can also flow into the structure of the domestic trust.
After all, with the domestic trust as a vehicle for the private-benefit perpetuation of assets, not only family structures, but also third parties detached from these structures, must be provided with all instruments within the framework of estate planning and asset protection “in order to promote cultural, social or scientific purposes, to benefit descendants in emergency situations or even to secure the continued existence of a company – the life’s work.”[10]
Footnotes
[1] For these understandable reasons, Nedim Peter Vogt also describes the substantive law implementation of the trust regulation in the Liechtenstein PGR as failed, see Vogt, Perspektiven in Jakob, 168 Fn. 8.
[2] Böckli, Der anglsächsische Trust – Zivilrecht und Steuerrecht, GesKR 2007, 209 (219), Peter Böckli ebda. describes the trust as a strange legal entity, which is not a contract, not a trust and [also] not a foundation.
[3] SBAg/BCG, Banking in Transition – Future Prospects for Banks in Switzerland. Joint study on the Swiss banking centre (2011) 9.
[4] Formed from the SBA and the SFA, which renamed itself the Swiss Funds & Asset Management Association (SFAMA) in July 2013.
[5] http://www.swissbanking.org/mobile/medienmitteilung-20121206 (queried on 13 April 2014).
[6] As a proposal de lege ferenda, the ZGB is to be supplemented with a temporary regulation which will enable the still existing family entailed estates under old law to move into the future as an internal trust similar to an entailed estate. Thus, 107 years after the enactment of the ZGB, it would be possible to solve the existing problem of inherited burdens and to clarify an open question from the legislative process; see also Hoffmann, Sten. Bull. No. 60 of 7 December 1905, 1234. On the possible solutions of retaining the existing family entailment commission, see Pahud de Mortanges, Gegenwartslösungen für ein historisches Rechtsinstitut: Das Familienfideikommiss in Gauch/Schmid/Steinauer/Tercier/Werro (ed.), Familie und Recht (1995) 499 (511 ff).
[7] Thomas Sprecher wants to introduce the term private fund into the discussion as a proposal, but this is not advisable due to its proximity to collective investment schemes.
[8] See on Thomas Sprecher‘s proposal for the creation of a private fund Sprecher, Does Switzerland need a new vehicle for private-benefit asset preservation? in Jakob (Hrsg), Perspektiven des Stiftungsrechts in der Schweiz und in Europa, Schriften zum Stiftungsrecht (Helbing Lichtenhahn) (2010) 181 (183), however, when listing the elements of a Swiss private fund it becomes clear that Thomas Sprecher would like to introduce a maintenance foundation based on Liechtenstein and Austrian law, see Sprecher, Vehikel in Jakob, 190 ff. see also suggestions Kalss, Privatstiftung in Jakob.
[9] Cf. Baur, Unternehmensbindungen in Böckli/Eichenberger/Hinderling/Tschudi, 525.
[10] Holliger-Hagmann, Tools for Estate Planning, Swiss Bank 2001-7, 60 (60).
