We answer the most frequently asked questions about trusts. If the answer to your question is not here, please contact us.

What is a trust?

There are three people (or sometimes groups of people) associated with every Trust.  If we understand what these people do, we can understand how a trust works:

One person sets up the Trust and puts the assets into it. This person is called the Founder

Another person will receive the assets one day – but not yet. They will get the assets at some time in the future. This person is called the Beneficiary

A third person looks after the assets in the meantime.  This person is called the Trustee 

During the life of the trust the assets are registered in the name of the Trustee (because the Trustee’s job is to look after them), but the assets don’t belong to the Trustee – they will belong to the beneficiaries one day. Interestingly, under Czech Law, during the duration of the trust, the assets don’t belong to anyone. This is one of the most important benefits of setting up a trust.

Here is a very simple example of a Trust:

Jan is a Grandfather.

He would like to give some money to his grandchildren. But he has a small problem.  Some of his grandchildren are very young, and in fact, some of them may not even have been born yet.

So in this example Jan is the Founder.  He gives the money, on Trust, to his friend Marek who becomes his Trustee.  When he does this, he will write, and give to Marek, Trust documents including a Trust Contract. These documents tell Marek what to do with the money

Marek now has the money, and could even put the money in his bank account (although obviously he shouldn’t spend it).  Bur even though the money is in his account, it’s not his money – it belongs to Jan’s grandchildren.  Of course, it would be much better for Marek to open a special account for this money so that he doesn’t confuse it with his own.

Marek has a duty as Jan’s Trustee to look after the money as best he can, and when the grandchildren are old enough, Marek should then give the money to them.

And that’s all a Trust is; it’s one person looking after money, which isn’t theirs, for some other people.

Of course many modern trusts are far more complicated than this, but at their heart you will always find this same relationship; one person looking after something, which isn’t theirs, for some other people.

In many countries Trusts have been recognised by the law for hundreds of years, but they have only had legal validity in the Czech Republic since Jan 1 2014.

This legal validity means that:

  • If Marek goes bankrupt the executor cannot access this money, even though it might be in an account in Marek’s name.
  • If Jan goes bankrupt, the money is protected. It is not his anymore (even though he still controls the trust)
  • If Jan dies, because the money is not his, it is not part of the inheritance process. His children and others have no claim against it
  • If Marek dies, the money will be passed on to a new Trustee.  It does not pass on to his relatives
  • The trust is treated as separate from Marek for tax purposes
  • The beneficiaries have powers to take Marek to court if he does not follow the Trust Deed or if he does not protect their interests

Why might I want a trust?

There are many many reasons why you might want a trust.  Trusts are very widely used abroad because they provide simple solutions to very complicated and difficult problems.  In New Zealand, as one example, there are 4.5 million people, and around 500,000 trusts. That’s more than one trust for every 10 people.  Trusts in New Zealand are almost as common as companies.

Here are some of the reasons you might want a trust.  If one of these reasons applies to you, then we strongly recommend that you contact us so we can assist you:

  • You have children from an earlier relationship (In this situation you NEED a trust)
  • You want to pass money to your grandchildren, but do not wish to give it to your children
  • You want to set aside money so your grandchildren can attend a good university
  • You are a businessperson who wants to protect your accumulated wealth against future business risks (eg:  Bankruptcy, claims by creditors, legal suits)
  • You are a businessperson who wants to protect your accumulated wealth against future personal financial risks (eg:  Divorce)
  • You want to leave money to your children, but for some reason do not feel comfortable simply giving them the money, perhaps:
    • One or more of your children is in a unhappy marriage and you don’t want your money to end up on the hands of a divorcing spouse
    • One or more of your children is financially unstable and/or has problems with a gambling or other addiction
  • You have built up a family business and you want to ensure that it survives through the generations.  You recognise that your children might not be the best people to manage the business, but you do want them to benefit as owners
  • You want freedom to decide how to distribute your money when you die.  You want to help ensure that the decisions you make cannot be contested and you want to protect yourself against undesirable effects of the Czech Republic’s ‘forced inheritance’ law
  • You want to avoid any future changes to inheritance taxes
  • You want to establish a fund, perhaps named after you, to provide a scholarship or similar prize, perhaps to your home village or to the secondary school you attended.
  • You are a group of people who share a common financial interest (A property investment, a racehorse, a weekend house),  You want a simple and low cost structure for managing this interest.

What is a Trustee? Who should be my Trustee?

A trustee is a person you appoint to look after your trust.

The trustee holds the assets of your trust in his or her name (however, the law recognises the status of the Trust, so the trust’s assets are safe, even if your Trustee dies or goes bankrupt).

At the moment, Czech law says that a Trustee must be a natural person, although in the future it may be possible for companies to be trustees.  In most countries overseas, there are professional trustee companies which act somewhat like banks.  They act as your trustee in an impartial and secure way.  In the future we expect it will be possible to use professional trustee companies, and this is often a preferred choice.  However,  as we said, at the moment, it is not possible to use professional trustee companies, so your trustee needs to be one person, or ideally two or more people.

So you should think very carefully about who you wish to appoint as your Trustee.  In most cases the best choice is one, or ideally two people that you have a high level of confidence in and who you know will always act in your best interests.  As a general rule, we would suggest that trusted friends or professional advisers are a better choice than close relatives although both can make excellent trustees.

Under Czech law, it is also possible for you to be one of the Trustees of your own trust (You cannot be the only trustee).  However, in some cases we would advise against this, as it can make it easier for third parties to challenge the validity of your trust.

Your trustee or trustees will hold the assets of the trust in their own names and will be responsible for ensuring that the interests of the beneficiaries are protected and that your wishes are carried out.

Being a Trustee can sometimes be a complex and occasionally onerous job, and for this reason, it is possible, when you set up your trust, to provide for your trustees to be paid appropriately for their time and expenses.  Alternatively, we recommend that you appoint a professional trust administrator.  A professional administrator will leave the important decisions to your trustees, but will ensure that the day to day paperwork, administration, tax and accounting requirements are complied with. When you appoint a professional administrator, you do so also to protect your Trustees.  If the trust is managed and maintained correctly, then the likelihood that your Trustee will face legal problems in the future is largely eliminated.

It is possible for you to retain the power to fire trustees, replace trustees or to appoint new trustees.  So if, for some reason, a trustee is no longer performing satisfactorily,  then you can take steps to address the situation.

What are the different types of Trust?

Around the world, trusts are used in many different ways, and there are also many different types of trusts. However, in the Czech Republic, most trusts fall into three different categories:

Fixed Trusts

When you set up a fixed trust, you name your beneficiaries and specify exactly when in the future, and how much money, they should receive.

Fixed Trusts are used for a number of reasons. These include:

Life Interest Trusts

Life interest trusts are mainly used to protect the interests of your children from earlier relationships. They normally take effect only on your death.

Following your death, your trustee uses the money in the trust to look after your spouse for the rest of his/her life. When your spouse dies, the money then passes on to your children (not to your spouse’s new husband or wife).

Generation Skipping Trusts

You, as a grandparent set some money aside specifically for your grandchildren. This money can be used to pay for education etc., and will be paid in full to the grandchildren at the age you specify.

This trust allows you to ensure that your grandchildren benefit directly rather than via their parents (particularly important if, for example, the parents’ marriage is unstable). It also allows you to postpone payment of the money until the children have a little more ‘life experience’ (25 years old is a popular age).

Cottage Trusts

A cottage trust does exactly what the name suggests – it sets up a very simple structure to allow you to pass your cottage to your children, your grandchildren, and on to future generations, ensuring that everyone who wants to use it, can use it – while at the same time eliminating the potential for family conflict that otherwise almost inevitably results.

Discretionary Trusts

The majority of trusts we establish for clients are discretionary trusts.

This kind of trust is one in which the beneficiaries are not specifically named. Instead, you nominate ‘groups’ – children, grandchildren etc, but do not define any particular share as belonging to any particular person. Even though this looks uncertain, you actually make it clear to your Trustee in your ‘memorandum of wishes’ exactly what you want him or her to do with the money. The reason it is done this way is so that it’s impossible to say which money belongs to which person.

Discretionary trusts are used in a wide range of ways. Here are some examples:

Asset Protection and Family Trusts

These trusts protect your family and your family assets from attack. If assets are in your trust, they are no longer yours – instead they belong to the trust. That means that bankruptcy executors, creditors, ex-spouses, law suits etc cannot access these assets.

These trusts should be standard for anyone who owns their own business and for anyone else who is in a risky occupation. The trust protects your family assets (especially your house) from any risks arising from your business. Even if your business fails, your house and other family assets will be protected.

The second benefit of these trusts is that they allow you to control who receives what from you, both while you are alive and also long after you have died. They can be used to solve inheritance problems as well as to protect the interests of children from previous relationships.

Business Succession Trusts

These are slightly more complex structures that allow you to separate the control of your business from the ownership. This is a great structure to use when you want to pass a business on to your children, but when you are not sure your children are ready to take control of the management of the business.

Business Holding Trusts

Trusts can also be used as a structure for owning family companies. This can have some tax benefits and also means that the family as a whole owns the business rather than any specific person. (Note that this does not in any way restrict or limit your ability to control and manage your business as you wish).

Dynasty Trusts

A dynasty trust is a special kind of discretionary trust that is designed especially to manage accumulated family wealth and business assets so that they are preserved and can be passed downwards, not just to one, but to many subsequent generations.
Some of the names are familiar; Rothschild, Murdoch, Agnelli, Getty, Rockefeller. Others are less well-known. But you don’t need to be as wealthy as the Rothschilds to set up a dynasty trust. It’s enough that you have created business wealth during your lifetime that’s substantial enough to make it worth protecting for future generations.

Purpose Trusts

You can use purpose trusts to benefit a school, a sports club, a village or something similar. You give some money to your trustee. Your trustee invests the money and then uses it for the purpose you specify. Purpose trusts don’t normally have beneficiaries.

Your purpose trust can carry your name; “The Jan Novak Athletics Scholarship Trust”. This ensures your memory will long outlive you.

Examples of the purposes to which these trusts can be put include school or village sports prizes, academic scholarships, and care for historical monuments.

Do I lose control?


It has long been established law in trust jurisdictions around the world that for a trust to be valid there must be ‘certainty of intention’.  If, as is likely, the Czech courts also adopt this requirement, then it will mean that when you put your assets into your trust, the transaction needs to be ‘real’. You must really want to give the assets to the trust for the benefit of the beneficiaries.  You must not want to keep the assets for yourself.

So when you transfer your assets into your trust, your Trustee has to assume not just legal ownership of your trust’s assets, but also effective and real control over them.

If you attempt to set up a trust where you, as Founder, retain full control over your assets, then there is a high likelihood that the courts will say that your trust is not really a trust at all – and is therefore invalid – making your assets vulnerable to attack from third parties.

So does that mean I will lose control of my assets?


In practice, if you choose a good trustee, they will always be guided by your wishes and instructions.  In most cases we will encourage you to write a ‘Memorandum of wishes’ in which you tell your trustee exactly what you expect of him.  Remember also, that if for some reason your trustee decides to ignore your instructions then you have power to replace with them with someone else who will not.

In addition, there are a number of other strategies available if you wish to further protect your ability to ensure the Trust is managed in accordance with your wishes.  We would be happy to discuss these with you if you wish.  Just contact us.

Is this safe?

When you place your money in the hands of your trustee, it is as secure as that person is.

If your Trustee makes foolish decisions, or steals from you, then – even though you might have legal, and even criminal remedies available to you – you will lose money.

On the other hand, if you appoint someone you trust as your Trustee, then your money is actually MUCH SAFER than it would have been if you had kept it in your own name.

It’s safer because it’s better protected from bankruptcy and from matrimonial and other legal claims.

When you set up a trust, it’s as if you are building a fence around your assets.  A good fence will keep the things inside (the sheep/your money) from escaping – and it will also stop things from the outside from coming in (the wolf/your creditors).

What do we do with the money?

Nothing.  Those decisions are yours, not ours.

The assets of the trust, including any real estate and investments, will be registered in the name of, and ‘owned’ by your Trustee. However, in practice the Trustee will always respect your wishes regarding investment of the trust funds.

So it will be your and your Trustee’s decision as to what happens to the money.  In most cases when you set up your trust your money will remain in exactly the same place – the same bank or the same real estate – as it was before.  The only thing that will change is the name on the account or in the land register.

In most countries, including the Czech Republic, there is a legal requirement on the Trustee to ensure that the assets of the Trust are invested ‘prudently’.  If your Trustee fails to do this then he could be sued by your beneficiaries.  For this reason, if you plan do do anything ‘odd’ with the money, you should contact us so that we can ensure that you and your Trustee are appropriately protected.

Alternatively, you may want to have the assets of the trust professionally managed by a reputable asset manager.  If you are interested in this, please contact us, and we will put you in contact with business partners who can assist you.

Can a trust own a business?

Yes, it is possible for your Trustee to own a business on behalf of your Trust. In some cases there may be tax benefits from doing this.

When a trust owns a business, it acts as the shareholder of the company, not the manager.  This means that you can continue to manage and operate your business exactly as previously.

This is also a great strategy for business succession.  Using a trust, you can separate ownership from control of a business.  Sometimes your children are not the best people to control the business you have spent a lifetime building.  A trust can be an excellent way to ensure that children, and subsequent generations continue to receive 100% of the income your business generates while at the same time ensuring it is professionally managed for the long term.

What happens if I change my mind?

It has long been established law in trust jurisdictions around the world that for a trust to be valid there must be ‘certainty of intention’. If, as is likely, the Czech courts adopt this requirement, then it means that when you put your assets into your trust, that transaction needs to be ‘real’. You must really want to give the assets to the trust for the benefit of the beneficiaries. The gift must be real and genuine.

However, in these uncertain times, it’s also obviously sensible to prepare for the unexpected. There are a number of strategies available which can allow you the flexibility to ‘unwind’ part or all of your trust:

First, while we firmly believe that you should set up your trust with the intention of passing your assets on to your beneficiaries, it IS POSSIBLE to structure the trust so that you can get some or even all your money back if your situation changes or you change your mind.

Second, it possible for you to change the terms of your trust. When you set up your trust, there are two important documents. The first is the Trust Statute. This is a brief ‘founding document’ for your trust and is almost impossible to change. The other founding document is the Trust Contract which contains many of the details of your trust. If the contract has been well drafted it will be possible to change it. This means that you will be able to change many aspects of your trust at any time during your lifetime. So, if the ability to change your trust is important to you, make sure you have professional help when the documents are prepared.

What are the disadvantages of forming a Trust?

Setting up a trust is not as straightforward as setting up a company.  Each trust needs to be tailored specifically to your needs.

Because of this, the costs of setting up and maintaining a trust can be higher than setting up a company.

To set up a valid trust it is also advisable to make the trust as legally defensible as is possible.  Based on experience abroad this means that appropriate steps need to be taken to ensure the trust’s assets clearly belong to the trust, and not to the Founder.  It’s also important to ensure that control can be seen to be in the hands of the trustee – yet without diluting the Founder’s ability to ensure that the trust is managed as he or she wishes.

These disadvantages sometimes mean that working with trusts is not as easy, and not as flexible as working with companies.  Not impossible – just slightly more difficult.

It’s possible to achieve almost anything using trusts, and the many advantages of using Trusts far outweigh these drawbacks.  However but it is absolutely critical that everything is structured correctly.

Should I be the trustee of my own trust?

Under Czech law it is possible for you to be a trustee of your own trust but you cannot be the sole trustee. In other words, if you are a trustee, there needs to be at least one other trustee.

Depending on your objectives, it may also be a bad idea to appoint yourself as a trustee of your own trust. This is because if you are a trustee, it might undermine the integrity of your trust and leaves you open to potential challenge from creditors and other claimants. They could argue in court that – because you are a trustee of your own trust – you never fully gave up control of the trust assets, and that therefore your trust is not a ‘real’ trust.

If you do insist on being a trustee, then as a minimum, we recommend that there be at least two other trustees. If you do this you will always be in ‘the minority’, which considerably weakens the argument that you have kept control.

Should I be a beneficiary of my own trust?

It is possible for you to be a beneficiary of your own trust but, depending on your objectives, this may not be a good idea.

In most cases, if you want to be able to access the money that is in your own trust, there are mechanisms you can use which are better than being the beneficiary of your own trust. Please contact us to discuss this is more detail.

The reason we don’t recommend that you name yourself as a beneficiary is that this might undermine the integrity of the trust and leave you open to potential challenge from creditors and other claimants. They could argue in court that – because you are a beneficiary of your own trust – you never fully gave away the money – and that therefore it’s still yours.

Can a bankruptcy executor or creditor make a claim against a Trust?

This should be impossible in almost all cases, as the money no longer belongs to you. It belongs to the trust.

However, there may be some situations in which, in the future, courts might allow access to trust funds. The Czech law in this area is new and untested, so it is not yet possible to say with certainty where the boundaries lie. However, if any of the following apply, then the integrity of your trust could be threatened:

  • You put money into the trust shortly before your insolvency
  • The court believes that the primary purpose of your trust is to defeat the claims of creditors
  • You retain too much control of the trust (for example by being a trustee of your own trust)
  • You make your trust revocable
  • You are a beneficiary of your own trust

However, if your structure your trust well, without any of these weaknesses, we expect the trust assets will be fully protected.

Why is ongoing administration important?

Administration is important for two reasons.  First, you need to keep accurate records for legal and accounting purposes, and of course you also need to prepare and file a tax return for the trust.

Second, if someone challenges the validity of your trust, and if they can show that you did not administer your trust correctly, and instead treated it as some sort of ‘offshoot’ of your own personal finances, then it strengthens their argument considerably.

We strongly recommend you employ a professional to handle trust administration for your Trustee. Doing so relives your trustee of what would otherwise be an annoying administrative burden, helps to protect the Trustee from potential legal liability, helps to protect the validity of your trust, and ensures that proper procedures are followed.

My friend has asked me to be his Trustee. Should I accept?

Being the Trustee of a trust is an important job.  It’s also a great honour as it means that your friend really has faith in your ability to look after his or her interests and his or her money.  If you use a trust administrator, it is not a time consuming or difficult job, but it is a very responsible one.

When thinking about whether to accept, you should take into account these things:

  • As trustee, you will be responsible for the correct management, investment and administration of the trust.  If you do anything that doesn’t meet these responsibilities – for example if you spend the money, yourself or if you don’t look after it properly, you can be sued by the founder or the beneficiaries.  In some extreme cases you could even be criminally liable.
  • You must be careful never to use the Trust or the assets of the Trust for your own benefit.
  • To protect yourself from potential liability, we strongly recommend that you encourage your friend to appoint a professional trust administrator.  A professional administrator will do all the mundane work for you. They will also ensure the administration of the trust complies with the law, they will prepare accounts, tax returns etc and will maintain proper and correct records for the trust – but still leave all the important decisions to you.
  • You should also ask your friend to write and give you a ‘Memorandum of wishes’.  Most trust deeds give you a lot a flexibility as to how you manage the trust, what investments you can make and sometimes even who should receive distributions from the trust  In the memorandum of wishes, your friend should give you as much guidance as he or she feels you need.  This includes how your friend wants you to make these decisions.  In the end, the decisions will ultimately be yours to make,  but in almost all cases you will want to comply with the wishes of your friend.
  • Most Trusts allow for Trustees to be repaid any expenses they incur – for example for travel, telephone costs etc, but it is not normally a paid position – although it would be possible to negotiate and discuss this with your friend.


The responsibility is great, but if you are prepared to take a little time to ensure everything is done properly, then the risks are very low and in fact this can be a very rewarding role.

What is the minimum asset value to create a trust fund?

There is no minimum. The only constraint is the relative cost benefit equation. Establishing a simple trust, including notary’s fees etc will typically cost around 50-60,000 CZK. For more complex and individually tailored trusts fees are higher.

In addition, you should also take into account the cost of professional ongoing administration and compliance, plus accounting and tax – usually around 12,000 CZK p.a.

Can I set up a trust by myself?

In theory, you can. All that is required is a notarial deed. However In practice this is not a recommended approach for a number of reasons:

First: very few notaries in the Czech Republic have the experience necessary to establish a trust, and

Second: The documentation associated with your trust is critically important. Failure to establish your trust correctly will almost inevitably result in expensive problems in the future. A badly drawn trust document may not even considered to be valid by the courts. These problems can be prevented for a modest cost by using our services.

How do I set up a trust?

Setting up a trust is not complicated.

The first step is to have a clear idea of what you are trying to achieve.

The next step is normally to meet with us. Our first meeting with potential clients is always free of charge and without obligation.

At this meeting, you can expect:

  • We will spend some time gaining a clear understanding of your goals and objectives
  • You will have the opportunity to ask us questions and of course decide whether you are happy to work with is
  • During the meeting, we will indicate whether we are able to assist you, and what the next steps should be
  • If we are unable to assist you, if your situation is already under control, or if it is more appropriate for us to refer you on to a third party for assistance, we will tell you at this meeting
  • Any next steps, and anticipated charges will be discussed and agreed at this first meeting

If your solution requires a trust, then we will then prepare your trust documents for you.  As part of this we will need you to fill in a comprehensive ‘fact find’ form.  This is often done as part of the initial meeting. If you already know what you want and would like a copy of our ‘fact-find’ form in advance of the initial meeting, please contact us.

Once the Trust Documents have been prepared, one of them, the Trust Statute, needs to signed in the form of ‘public deed’.

The trust then needs to be registered on the Public register of Trusts.  Once the trust has been registered it will legally come into existence.

How Much Does it Cost?

Click here for more information about our fees and charges.


Is my information confidential?

In short; yes, but with some exceptions.

The Czech Republic has a public register of trusts. That means that all the details of your trust will be available to a range of State agencies. This includes the tax authorities, Czech National Bank, the police etc.

There is a second category. Persons with a ‘legal interest’. This includes banks and others who will have access to some of your information in order to comply with Anti money laundering obligations and for other legitimate legal purposes.

In contrast, only very limited information is available to the general public. Depending on how your trust is structured, that means that ‘nosy neighbours’ and other persons will not have any access to your sensitive family information and indeed will not even be able to identify any connection between your trust and your family.

Our company will not disclose any information about you or your trust to any third person unless we have your consent or a legal obligation to do so.