What is a trust in Germany?
What is a trust in Germany?
A trust is a fiduciary relationship in which one party, known as a trustor, gives another party, the trustee, the right to hold title to property or assets for the benefit of a third party, the beneficiary. In finance, a trust can also be a type of closed-end fund built as a public limited company.
Do trusts exist in Germany?
Trusts are generally not recognised in Germany as Germany did not ratify the HCCH Convention on the Law Applicable to Trusts and on their Recognition 1985. Therefore, German property law does not recognise the transfer of assets located in Germany to a trust.
What is difference between will and trust?
A will is a legal document that spells out how you want your affairs handled and assets distributed after you die. A trust is a fiduciary relationship in which a trustor gives a trustee the right to hold title to property or assets for the benefit of a third party.
Is trust money safe?
One of the primary benefits of having a trust is that the assets held within it are protected from legal claims. With the possible exception of retirement savings, any assets that you have are subject to seizure by courts and creditors. However, assets held in trust are legally protected.
Does Germany recognize us trusts?
Germany is a civil law jurisdiction that does not recognize common law trusts. From a German perspective, it is hard to understand that ownership in strict law may rest with the trustees, while ownership in equity rests with the beneficiaries.
What are real estate investment trusts in Germany?
Real Estate Investment Trusts in Germany. Real estate investment trusts (REIT) are vehicles dedicated to investments in the real estate market, which can also include mortgages investments. They are created in such a manner that they will provide the highest return on investment (in the form of dividends) to its shareholders.
Why is there a trust law in Germany?
Trust Law in Germany. Trusts can be incorporated in Germany in order to protect the assets of individuals who are considered high-net worth persons.
Can a trust be used for asset protection?
Asset Protection. Several restrictions in German private law should be considered when a trust is used for assets protection purposes. According to German forced heirship rules, spouses and direct descendants, or in their absence, parents, have a claim for a compulsory share of a decedent’s estate.
When was real estate REIT introduced in Germany?
The REITs were introduced on the German market in 2007, when the local authorities enforced the Act for the Creation of German Real Estate Stock Corporations with Publicly Listed Shares. The Act became effective starting with 1st of January 2007.
