Trusts and Fiduciary Mandates: Complete Guide to Wealth Protection

In an economic environment characterised by regulatory uncertainty, professional risks, and growing family complexity, wealth protection may be relevant for entrepreneurs, professionals, and affluent families. Fiduciary instruments are one possible option and should be compared with corporate, insurance and succession solutions on the facts of each case.

Leading Fiduciary Companies

Fiduciary companies differ in authorisation, organisation, financial strength, services, fees and controls. Selection requires documentary due diligence, comparison of terms and assessment of operational and counterparty risks with the appropriate professionals.

Available Fiduciary Instruments

1. Fiduciary Administration Mandate

The fiduciary mandate is the basic instrument that allows registering assets in the fiduciary company's name while retaining full economic ownership. Key advantages:

• Relative confidentiality: The fiduciary may appear in some public records, while authorities, intermediaries and entities subject to anti-money-laundering and beneficial-owner duties may still access the underlying information
• Administrative continuity: Instructions can facilitate some operations but do not replace notarial, corporate, succession or registration formalities required by law
• Coordination: Administration of assets legally eligible for the mandate, subject to their specific title, custody and disclosure requirements

2. Italian and International Trusts

A trust is a legal relationship that may be recognised in Italy under the Hague Convention. Its effects depend on the governing law, deed, assets transferred and the trustee's genuine autonomy. Points to assess include:

• Separate fund: Segregation may operate where the trust is valid, recognisable and genuinely implemented; remedies protecting creditors, heirs and third parties may still apply
• Dedicated rules: The deed may regulate management, distributions and duration within the governing law and applicable mandatory rules
• Possible purposes: Generational succession, support for vulnerable persons and management of certain risks, subject to legal and tax review

Most Commonly Used Types of Trust in Italy

3. Fiduciary Registration of Corporate Shareholdings

For entrepreneurs with shareholdings in multiple companies, fiduciary registration offers:

• Governance shielding: Exercise of voting rights through the fiduciary company according to instructions
• Shareholders' agreement management: Coordination among multiple shareholders with confidentiality on individual arrangements
• Operational continuity: A mandate may facilitate coordination, but transfers, succession and corporate disclosure remain subject to applicable legal and registration duties

When Should You Use Fiduciary Instruments?

Fiduciary instruments are appropriate in specific situations:

• Complex estates: Real estate, shareholdings, overseas assets, art collections
• Blended families: Second marriages, children from different unions, partnerships
• High-risk professions: Doctors, lawyers, accountants, entrepreneurs with personal liability
• Governance needs: Control of family holding companies, family pacts
• Protection of vulnerable persons: Minors, the elderly, persons with disabilities

The Structuring Process

1. Needs analysis: In-depth consultation to understand objectives, asset and family composition, and specific risks
2. Structure design: Choice of instrument (mandate, trust, combination), definition of rules, identification of roles (trustee, protector, beneficiaries)
3. Deed drafting: Involvement of specialised notaries and lawyers for formalisation
4. Implementation: Transfer of assets, fiduciary registration, opening of dedicated accounts
5. Ongoing management: Administration, reporting, tax compliance, advisory to beneficiaries

Sources and scope

Background documents retain their stated period. Examples and analysis are illustrative, not forecasts or personal recommendations.

• Notariato — studio 219-2019/C, pubblicato 11 giugno 2021
• Consiglio Nazionale del Notariato — successioni

Questions and answers

What is a trust and how does it work in Italy?

A trust is a legal institution of Anglo-Saxon origin, recognised in Italy under the Hague Convention of 1985 (ratified by Law 364/1989, effective in Italy from 1992). It allows assets to be transferred to a trustee who manages them in the interest of designated beneficiaries. The assets form a separate estate, segregated from both the settlor's and the trustee's personal wealth.

What is the difference between a trust and a fiduciary mandate?

Under a fiduciary mandate, the fiduciary holds formal title and acts under the mandate; ownership, powers and tax treatment depend on the contract and assets. In a trust, the trustee administers assets under the governing law and deed. Segregation, enforceability and creditor remedies depend on validity and genuine implementation, so neither instrument is universally superior.

How much does it cost to establish a trust?

There is no universal price: legal and tax advice, any notary, trustee, custody, transfers, registrations and ongoing compliance depend on the assets, governing law and complexity. A written quotation and case-specific cost-benefit assessment are required before proceeding.

Is a trust a tool for tax avoidance?

No. Tax treatment varies with the structure, residence, beneficiaries and transactions. A sham, interposed, abusive or asset-concealing trust may be disregarded or challenged, with civil, tax and, where the legal conditions are met, criminal consequences. Independent legal and tax advice is essential.

Educational content, not a personal investment recommendation or financial, tax or legal advice. Simulations depend on the stated assumptions and invested capital can be lost. Author: Alessandro Vigni, financial adviser authorised in Italy to offer financial services away from business premises, OCF register no. 633610.