News
Trust assets may be seized if the legal transaction is simulated
- 27/02/2017
A trust is an legal arrangement under which a settlor transfers one or more of their own assets, to a third party (trustee), who manages them on behalf of a beneficiary chosen by the settlor. Those assets are owned by the trustee but, being administered for the beneficiary, are separated from the personal or corporate assets of the trustee.
As recently explained by the Court of Cassation, with Judgment no. 8041 of 20th February, this mechanism entails that: (i) creditors of the settlor cannot succeed against trust assets, in that these are owned by the trustee; (ii) creditors of the trustee cannot succeed against trust assets, in that these are separated from the trustee’s assets.
The Court has then stated that this instrument cannot be used for defrauding creditors. Therefore, it has upheld the seizure of trust assets where the legal transaction is simulated, that is where the assets, instead of being managed by the trustee, are still administered by the settlor.
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