One of the most attractive features of this unique Hungarian legal institution in the field of asset protection, generational change, inheritance planning, and cross-border investment management is that settlors, trustees, and beneficiaries may be of any nationality; in fact, they don’t even have to reside in Hungary.

This completely open structure for foreigners allows investors to manage their assets from Hungary on favorable terms, even if they live abroad. In addition, a wide variety of foreign and domestic assets can be placed under trust management, including real estate, vehicles, works of art, collections, securities, business shares, intellectual property, and claims.

This legal form allows the assets to be separated from the personal and business property of the settlor and the trustee, and provides protection against external claims by creditors. Assets placed in trust are not affected by probate proceedings.

For example, a company placed in asset management can be kept intact and continue to operate smoothly even after the death of its owner. In contrast to the strict, fixed rules of wills and legal inheritance, in a trust agreement, the settlor is free to decide on the beneficiaries, their shares, and the conditions and timing of their acquisition of the assets.

In practice, the owner of the wealth, the settlor, transfers ownership of all or some of their assets to the trustee by means of a contract. The trustee preserves and increases the value of the assets in the interests of the beneficiaries and distributes them at the time specified in the contract.

The trustee may be a natural person or a company that is fully legally responsible for the management of the transferred assets. The beneficiaries may be private individuals, family members, charitable organizations, other legal entities, or even the settlor himself.

In addition to wealth-protection benefits, trust asset management can also be very tax-favorable. Although this depends largely on the composition of the assets under management and the manner in which they are managed and utilized, under certain conditions, it may even be tax-exempt.

Therefore, when setting up the structure, it is important to plan the management and expenditure of assets from a tax perspective as well.

The form of trust management outlined above is one of two possible approaches: The other is an asset management foundation. This is an independent legal entity registered by a court, which is authorized to actively manage the assets transferred by the founder(s) for the purpose specified in the deed of foundation.

This is a more binding and regulated form than trust asset management, and for this reason, it is more expensive to set up and operate. But its tax advantages are the same as those of a trust, so this may be a good choice for very complex, very high-value assets exceeding HUF 600 million (about EUR 1.585 mln).

The advisors at LeitnerLeitner, LeitnerLaw Private Clients, and the Family Office Services Competence Center know that every person and every family is different, and, therefore, their wealth requires individual treatment. We take all relevant factors into account: treating family members fairly while preserving the value of the assets; complying with domestic and international tax regulations while obtaining the most advantageous tax treatment.

In these difficult situations, but also in the selection of the form of asset management, preparation of contracts, establishment of foundations, taxation, and administration, LeitnerLeitner and LeitnerLaw are available with a full scope service package.

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