Liechtenstein Trusts

Liechtenstein is the only civil law jurisdiction which has largely adopted Anglo Saxon trust legislation (contained in the PGR Code). A major difference being, unlike the common law trust, there is no limitation on the time for which income can be accumulated and no rule against perpetuities.

A Liechtenstein Trust is set up by a written agreement (Trust Deed) between the settlor and the trustee(s).  The Trust Deed does not have to contain the names of beneficiaries. If the Trust Deed is deposited with the Registrar of Trusts, it will not be publicly available, and later instruments (e.g. naming beneficiaries) will not have to be revealed. If the Trust Deed is not deposited within 12 months, the following details of the trust must be placed on the public register,

  • A description of the trust
  • The date of formation
  • The duration of the trust
  • The name (or trade name) and address of the trustee

A registration fee is payable on registration. The settlor can make such provision as he wishes for the beneficiaries and include such other trusts and powers as he thinks desirable.  The Deed however must not bind the trustee to the settlor’s continuing directions, or the trust will be treated as an ordinary contract. The trustee must keep the trust property separate from his other assets. 

Some of the characteristics of Liechtenstein Trusts are as follows:

  • A trustee can be an individual or a corporation; one trustee must be a Liechtenstein-resident individual with appropriate professional qualifications
  • Trustees have a duty of care towards the settlor and the trust property 
  • Trustees who carry on business as such must keep an inventory of their trusteeships and must keep each trust's assets separate from other assets
  • if trust assets are deposited with banks they must again be kept in separate designated accounts

Further;

  • Trustees are liable for breach of trust to the full extent of their assets
  • Joint trustees must normally act jointly and are jointly liable The Court has ultimate jurisdiction, even if the Trust Deed specifies alternative supervision.
  • The trustee must keep proper accounting records Liechtenstein being a civil law jurisdiction, trust assets may be vulnerable to forced heir ship provisions.
  • The trustee's creditors have no access to the trust assets The settlor’s creditors have access to trust property only under certain defined circumstances, one of which is under law of succession
  • The beneficiaries' creditors have access to the trust assets only if the beneficiary has a vested interest and if the trust deed does not prevent him alienating his interest Trust documents, including the Trust Deed, can be in any language

Taxation

Since the end of the Second World War, Liechtenstein's low taxes have contributed to outstanding economic growth and it has become increasingly important as a financial centre. Companies are formed in Liechtenstein under the Law on Persons and Companies 1926, also known as the PGR Code. Trust Enterprises are formed under the Law Concerning the Trust Enterprise 1928. There are several forms of corporate, trust and quasi-trust vehicle some of which are unique to Liechtenstein. The most commonly used are the company limited by shares, the limited liability company, the Establishment (Anstalt), the Foundation (Stiftung), the Trust Enterprise and the Trust.

The Liechtenstein Financial Services Industry

The financial services industry is regulated by the FMA Financial Market Authority <country-region Liechtenstein, which commenced operating on 1st January 2005. It is an integrated supervisory body incorporating the Financial Services Authority, the Due Diligence Unit and the Insurance Division of the Office of Economic Affairs.