Category: Uncategorized

Probably you know the fantastic 1983 hit single by German band Nena called 99 Luftballons

If you read the lyrics of the song, you will see that 99 ballons are metaphors for peace.

Imagine that, inspired by this, you decide that you would like to establish a trust to launch 99 ballons into the sky every Tuesday as a symbol of peace.

Can you?

Czech Trusts are great for Czech people.

On the other hand, they are not normally considered as ‘export’ products. That’s because for people who live outside the Czech Republic there are other jurisdictions that offer more attractive alternatives.

But there is one, not very well known, exception to that rule. It’s an area in which Czech Trusts excel, and in which they are able to deliver outcomes that other countries cannot match. That’s the area of non-charitable purpose trusts

Before we explain what a non-purpose charitable trust is, we need to explain what a purpose trust is. To do that, we need to take a brief look at some important legal theory. We usually try to avoid talking about legal theory in these articles, basically because it is mostly quite boring. But in this case, I think the theory is interesting and it is helpful because it helps us understand the special problem that Czech Trusts can solve.

The piece of theory in question is the Three Certainties.

According to the law in most countries, the three certainties are the three essential things that you need if you want to create a valid trust. If you create something which does not have all three of these things, then you may have created a legally valid thing, but it probably isn’t a trust.

The first certainty is the certainty of intention.

The second certainty, certainty of subject matter.

The third certainty is the certainty of objects

The first certainly, the certainty of intention, means that it must be clear that the person who created the trust actually intended to do that (and not intend to do something else). Sometimes this a question of mistake or misunderstanding, but more often this issue comes up in the area of asset protection. Was the founder’s goal to really take care of his family? Or perhaps their real intention was to defraud their creditors, rather than to create a real trust for the benefit of future generations?

The second certainty, the certainty of subject matter, means that we need to know what is actually in the trust. If you put a house in your trust, then that is clear enough. However, if you say “All my good stuff”, it’s not clear to the trustees what’s good and what’s not good. If the trustees do not clearly know what is in the trust (and what is not), then it’s not valid.

But it is the third certainty, the certainty of objects, that is the most interesting one for today’s article.

This certainty means that we have to know who the trust exists for. For most trusts, that’s easy to answer. The trust is for the people who will get the benefit, in other words, the beneficiaries. So for a trust to be valid we need to know who the beneficiaries are, or at least have some clear system for working out who they are.

So, to recap, a trust needs intention, it needs some things to be in the trust, and it needs some people who will get the benefit.

And that’s where the idea of a trust for a purpose starts to get interesting.

 

What is a Purpose?

A purpose is limited only by your imagination.

The Royal Society for the Prevention of Cruelty to Animals (the RSPCA) was founded in 1824 and is the oldest and largest animal welfare charity in the world. According to its website its purpose is:

to inspire everyone to create a better world for every animal.

That’s a fantastic purpose. Here is another purpose:

to hold an annual hockey competition to find the champion team in the Dominion of Canada

Perhaps you know the Stanley Cup? It was established in 1892 as a trust and that was its original purpose

Here are some more purposes:

To award an annual prize to the best female economist in France

To maintain the village tennis court

To encourage the playing of tiddlywinks in Mexico

To support the election of Jára Cimrman as President

To look after my cat Tiddles after I die

To send the President a new pair of socks every Friday

To inflate and release 99 ballons every Tuesday

There really is no limit on what a purpose can be. Some purposes are positive and useful, others are not. Some purposes can be silly. Some of them have a great public benefit, but other purposes can be ‘private’

But we have a problem. Remember the three certainties? Certainty 3 says that a trust must be for someone. A purpose is not someone. (Even though he is lovely, Mr Tiddles is a cat, and he’s also not a person either).

So can you make a trust like this – which benefits a purpose rather than a person?

 

International Problems

The short answer in many countries is: no, you cannot. Judges in these countries do not like purpose trusts.

There was a quite famous case from 1882 called Brown v. Burdett. In that case the purpose was that a lady wanted her house to be boarded up with “good long nails to be bent down on the inside”, but for some reason with her clock remaining inside, for twenty years.

Unlike some of the purposes above, this one is perhaps not quite so positive and constructive. The judge in that case decided that the trust was not valid – because it was ‘useless’

There are two other reasons that courts don’t like purpose trusts. First, in the case of a normal trust with beneficiaries, we have somebody (the beneficiaries) who can keep an eye on the trustees and make sure that they are doing a good job. With a purpose trust, that person is missing

But more fundamentally, WHO is it actually for? In the opinion of the courts, you can’t just take money and put it in a bucket forever, with no person at the end of the line. And that is the reason that in most of the world, trusts need, in the end. to be for people.

Trusts without people do not satisfy that third certainty – and so, even though they might be fantastically useful – they are not valid.

 

Exception and Solutions

As you may have noticed, the RSPCA does actually exist. It’s an example of the first exception: charities. In many countries, charities are established as trusts, because a trust is a fantastic structure for running something like a charity, and charities generally, by definition, are established for purposes.

In the UK, for example, there is a list of purposes set out in law, and if your charitable purpose trust complies, then you can establish your trust. However, this is very strictly regulated, controlled and supervised by the Charity’s Commissioner. That means that it’s expensive and complicated and beyond the reach of ordinary people. It also only works for charitable purposes.

But what if your purpose is not charitable?

There a couple of additional exceptions in many counties including looking after pets and maintaining graves.

But otherwise, you are out of luck, and I am sorry to inform you that your plan to launch 99 ballons every Tuesday will not come to fruition.

Czech to the Rescue

But that’s where the Czech Republic comes to the rescue.

Your balloon plan won’t work in most countries, but it will work in the Czech Republic

That’s because section Section 1448 of the Civil Code says:

A trust fund is created by setting aside assets from the founder’s ownership in such a way that the founder entrusts the asset to the administrator for a specific purpose

There is no rule in Czech law that says there needs to be a beneficiary and the three certainties do not apply in Czech, so there is nothing to stop you from realising your plan.

Not only that, but we think such a trust could actually be quite tax efficient. It would not make any profit and, because there is nobody who gets the money, there is presumably also nobody who would need to pay tax.¹

So this is something that is handy, not just for Czech people, but for everyone else in the world who cares about ballons and world peace.

There is no reason either why the ballons need to be released in Czech either. You might live in Albania and you might want to release the balloons there. There is nothing we can think of to stop you setting up a Czech Trust to do this.

So this could even be the Czech Republic’s next great export program!

__________________________________________________________________________

Take Jimi Hendrix as an example:

In 1970 he had just $20,000 in his bank account. But he also had lots of debts and unpaid taxes. So while he wasn’t exactly poor, he was not a wealthy person either.

Plus, he was young. That’s another reason you don’t need an estate plan. If you are young you don’t need to worry about dying.

Unfortunately for Jimi, even though I am sure he didn’t plan to die, that’s exactly what happened. On 18 September he joined what is now known as the ‘27 Club’ – whose celebrity members all died at that age. (Some other members of the club include Kurt Cobain, Brian Jones, Jim Morrison, Amy Winehouse, and Janis Joplin. There are quite a few interesting estate planning lessons to be learned from this group, but for now, let us return to Jimi).

Jimi did not have that much money, and he did not have a will. He was not married, and he had no children, so when he died, 100% of his estate went to his father, Al Hendrix. Jimi apparently had a close relationship with his brother Leon, so it may be that he would have preferred his estate to go to Leon rather than his father. Whether that’s true or not, we will never know.

But the story does not end there. When he died, Jimi was not a rich man. But he (or his estate) is very rich now. The estate currently has assets of around 4 billion CZK and makes 146 million CZK a year from royalties.

Leon, perhaps understandably, was not happy that none of the wealth was headed in his direction and sued to try to get some of the money. The main outcome of that seems to be that estate spent a lot of money on legal fees.

But perhaps you are thinking “never mind, everything will be all right in the end, because Leon will inherit when the father dies”. Sadly, that also didn’t work out. When Al Hendrix died in 2003, his estate left all of his rights in the Hendrix estate to his adopted stepdaughter, Janie – and completely excluded Hendrix only blood-related sibling, Leon

Not surprisingly Leon kept trying, but the main winners from that were the lawyers.

This argument and the resulting family conflict is still continuing today.

All of this could have been avoided if only Jimi had made a simple plan for his inheritance. Not only would that have avoided all these problems, but more importantly Jimi would have achieved the result he actually wanted

 

Here are the lessons from this:

Lesson 1 – Even if you are not rich, you need an estate plan.

You might not be rich today, but by the time you die you might be. Your plan does not need to be complicated, and it can be as simple as a will – but you do need a plan

Lesson 2 – Even if you are young, you need an estate plan

Because you never know . . .

Lesson 3 – Don’t assume everything will work out well in the end

It usually doesn’t

Sources:

Doane & Doane: https://www.doaneanddoane.com/the-late-jimi-hendrix-a-cautionary-tale-for-estate-planning

The McVey Law Firm: https://mcveylawfirm.com/jimi-hendrix-20000-estate-turned-into-a-decade-of-nightmares/

CNN: https://edition.cnn.com/2004/LAW/07/13/hendrix/index.html

In our work we spend most of our time helping families to protect their family businesses and wealth.
That means that we spend most of our time focusing on ‘big assets’ – shares in family companies and real estate; houses, apartments, commercial property and farms.

The structures we create protect those ‘big assets’. However, they are often also used to protect otherimportant assets: Cottages, Jewelry,  Classic cars, Fine art collections, safety deposit boxes and IP rights. Of course, each of these different types of assets require slightly different approaches and skill sets – sometimes including the involvement of outside experts and advisers. With this focus on physical things, it is very easy to overlook another category of assets that is perhaps just as important – digital assets.

Think about your online footprint, and the various accounts that need a password to log in. Your online footprint includes social media sites, online photo storage, data clouds, digital currencies, online banking access, credit card points, and more.

Some of these things – for example the online banking – are obviously important. Others, such as online photos, perhaps less so? On the other hand, perhaps that collection of photos is in some ways the most important asset of all? If you are gone (and if you take the password with you) then those photos and memories are gone too. What about your email address? What happens to your emails when you are
gone?

Another problem can be the devices themselves. For example, without the password, some Apple and other devices become ‘bricks’. Perhaps not such a big deal, but the information, photos, and other files on the device (including your novel manuscript) might be.

Other things that seem even less important can also have financial value.

Famous chef Anthony Bourdain left his frequent flyer points to his wife in his will. He did on awful lot of flying and we imagine he had a lot of those points. Leaving them in his will ensured that his wife got the benefit of them – if he had done nothing the points (and their value) would have died with him [1] . And of course, there are some digital assets that have obvious value – especially digital currencies and NFTs.

What should you do?

For starters, make a list of your digital assets, along with usernames and passwords. Think very carefully about what you do with this  list. Even making the list can in theory be a breach of some providers’ business terms and so you need to be very sure that the list never falls into the wrong hands! The list is not just to help access the assets after you are gone – but also to let your family know that the assets exist.

When making your list, it is easy to forget things, so we would recommend using some sort of checklist. The best one we know of is from the Society of Estate and Trust Practitioners. It is 30 pages long and includes far more detail than most people need, but it is a great prompt to remind you of the things you need to think about. (Unfortunately, it is only in English).

Next, check the terms-of-service on the important sites and services you use. If you are a google/android user check out Google’s “Inactive Account Manager.” If there are other important sites you use, look for the equivalents [2] . Finally, for the assets with high financial value, make sure they are included in as part of your succession plan. This is especially important for cryptocurrency and NFTs.

Trusts and Cryptocurrency

People ask us if it is possible to put something in a trust. For example, is it possible to put a gun in a trust, or a kiss? The answer is simple – if it the thing an asset that can be owned by someone, then it can be put in trust. So guns are fine, kisses not. Cryptocurrency is an asset and so there is no reason it cannot be put in trust. However, it is important that the trust includes specific rules regarding digital assets, which can otherwise be problematic for trustees.

There are endless horror stories about assets vanishing on death. For example, in order to access Bitcoin, you need to know the password or private key — a 256-bit long string of alphanumeric characters. If you die and your loved ones cannot find the key, then the money is gone forever. This is a frustrating but also surprisingly common problem.

But that’s not the only reason trusts can be a great choice for cryptocurrency, especially as these assets come under increasing regulatory scrutiny.  Tax is also another important consideration. So if you own cryptocurrency, adding it to an existing trust or even creating a dedicated trust specifically to hold it can make a lot of sense.

If you would like more information about using trusts to secure you cyber currency and other valuable digital assets, please contact us.

__________________

[1] Not every frequent flier points program allows the transfer of points on death, but some do.  If you have a lot of points, it is worth checking.

[2] Sadly, they don’t always exist. (As far as we know there are no Microsoft or Apple equivalents)

We are all in favour of taking steps to prevent Money Laundering and Terrorism, and we strongly support any sensible steps taken by the State to present the misuse of the financial system for these purposes.

Unfortunately, over recent years, the EU has started to go far beyond what is sensible, imposing a range of measures which in our opinion, have zero impact on criminals, but have a hugely negative effect on innocent individuals and families as they seek to go about their legitimate business.

It is also interesting to keep in mind the protections provided to us all by the GDPR and the European Convention on Human Rights.  The Convention says:

Article 8 – Right to respect for private and family life

1. Everyone has the right to respect for his private and family life, his home and his correspondence.
2. There shall be no interference by a public authority with the exercise of this right except such as is in accordance with the law and is necessary in a democratic society in the interests of national security, public safety or the economic well-being of the country

Despite these basic protections, the EU and the Czech State have imposed a number of rules around the Register of Beneficial Ownership which seem to directly conflict with those important rights.  They argued that this interference with our fundamental rights was justified because it was proportionate and necessary.

We support the existence of a UBO register.  It is important in preventing abuse of the system.  The State, banks, and contractual parties have a logical interest in knowing who is behind companies and who they are really dealing with. Criminals must not be allowed to use companies to mask their criminal activities.

What we strongly disagree with is the extension of this system so that the private details of company shareholders and in some cases also trusts and foundations are exposed to public view, available not just to those with a legitimate interest, but to anyone at all.

Anyone at all includes your nosey next-door neighbours and people with ill intent including gold diggers, blackmailers and scam artists.  Thus, the state has been taking steps with the stated objective of preventing crime which have the actual effect of assisting criminals.  That’s not proportionate and nor is it necessary.

Thankfully, common sense has finally prevailed!

Last week, the Court of Justice of the European Union (CJEU) decided that the measures in the EU Fifth Anti-Money Laundering Directive (5AMLD) which require EU Member States to give the public unlimited access to their UBO registers are invalid because they breach privacy and data protection rights.

The CJEU said that the measures in 5AMLD go beyond what is necessary and proportionate. Making the register public enables a potentially unlimited number of persons to find out about the material and financial situation of a beneficial owner, and that information can never be recalled from the register. Making the register fully open to the public thus violates individuals’ privacy, it said, concluding that Member States must put appropriate safeguards in place to protect privacy in accordance with articles 7 and 8 of the Charter of Fundamental Rights of the European Union.

As a result of the judgment, Luxembourg and Holland have already suspended public access to their registers

We suppose Czech will follow soon (as the Czech State is now in effect in breach of GDPR!) and we hope that a renewed sense of common sense will apply to future AML measures.

For most families, establishing a trust is an important decision. Quite a lot of money can be involved, and you will be stuck with the results of your decision for a long time. In this way, trusts are like cars. Buying a car is also a relatively big decision and you also have to live with the results of your decision.

But that is where the similarity ends.

You can see a car and you can touch it

When you go shopping for a car, you can look at the car in the showroom, you can sit in it, you can feel the quality of the interior. You can close the door and listen to hear if you get a “clunk” or a “clink”. Looking at the car, even before you take it for a test drive, you can form some opinions about whether you like it and whether it is the right car for your family. Is it big enough? Is it too big? Is it strong enough? Is it comfortable enough? Is it practical?

Sometimes it is easy to recognise that a particular model is not suitable for you.

This one is very economical but not the ideal family car

In contrast, all trusts look like this:

The good ones look like this, the bad ones, the deluxe ones and even the ones that don’t work at all, they all look like this.

 

The price of cars correlates (at least to some extent) to their quality

People understand that as a general rule, better cars are more expensive. Thus, a Skoda Superb costs more than an Octavia, which in turn costs more than a Fabia.

Based on our experience, this rule doesn’t apply to trusts. It is true that a very ‘cheap’ trust is more likely to be a bad one but spending a lot of money is also no guarantee of quality. Some of the worst trusts we have seen have also been some of the most expensive.

 

Most people understand at least something about cars.

You don’t have to be a mechanic or a motoring expert to recognise some basic issues that a car might have. For example if your car is missing wheels, or some other fundamental part which will prevent it from working, you won’t buy it. If the car has bad rust it might fall apart. You can see that and so you won’t buy the car. And if your car isn’t working, then you know it isn’t.

Sadly there are many people out there who have trusts that simply don’t work. They are missing the legal equivalent of wheels, brakes, or steering. But because of the nature of trusts, those same people don’t even realise that they have a problem, and by the time they do realise, it is too late.

Some of these ‘bad trusts’ are so bad that they are far worse than having no trust at all.

 

You can take a car for a test drive

With a car, you can try before you buy. With a trust there is no way of doing that. As we said above the only real way to ‘road test’ your trust is to wait for something to go wrong and then see what happens. But of course by then, it’s too late!

 

Optional Extras cost more.

With a car, there is a base price. For example here is the entry-level Skoda Octavia:

With most new cars it is possible to add ‘optional extras’ for some additional cost

This Octavia includes a lot of features that are not optional at all (wheels, seats, steering, brakes, windows etc). But the standard model also includes quite a few things that are not really essential, but nice to have. For example, air conditioning, cruise control, and central locking. Skoda considers these as standard features, which are included automatically in the price: 519,000 CZK.

But if you want, you can play with the configurator on the Skoda website and add a few optional features. I did that. I chose a different engine, metallic paint, a towbar, heated seats and so on. In no time my price increased to 731,000 CZK

Do I really need these extras? Perhaps I don’t. But even so, they would all certainly be nice to have.

For example, I don’t plan to tow a trailer, but who knows? One day, having a towbar might be useful. On the other hand, is it worth the extra 25,000 CZK for something I might never use? Perhaps not.

Trusts are a bit different.

For example, your trust could include the possibility for you to make changes your trust, the ability for the trustees to borrow money or own cybercurrency. It could include the possibility for you to appoint a supervisor. It could include the possibility for you to relocate the trust to a different country.

Many people really don’t need these extra things just as I don’t really need a towbar. It is very important to point out that you cannot do these things unless your trust has clauses that allow them – just as I cannot tow a trailer if I don’t have a towbar.

But unlike the towbar, the ‘optional extras’ for your trust are normally free. They are not pieces of metal but rather (standard) words printed on paper. It may be that you have no plan to buy bitcoin or appoint a supervisor, just as I have no plan to tow a trailer. But because there is no additional cost, the basic starting point for good trust should always include:

• • The basic things (wheels, brakes)
  • The non-optional extras (air conditioning), AND
  • The optional extras (a towbar) that you will probably never use, but might one day

Of course once you start to ask for truly unique features (a jacuzzi built into the back seat, machine gun mounts) then those things will need to be tailor made for you, and that will of course cost more. Likewise, if your trust is not standard (not a car at all but rather a bus, a truck, or a tank) then different rules will apply.

But we see too many people paying the deluxe price for a basic car, and sometimes they don’t even get all the essential standard features – let alone the full set of optional extras.

 

Goodness! This is complicated. What should I do?

We have some simple tips to help you avoid these pitfalls:

1. NEVER try to make a trust without professional help. This is an almost certain recipe for disaster
2. Make sure the professional who is helping you knows what he or she is doing. The Czech Republic is full of so called and self-proclaimed ‘trust experts’. Most of these people are not experts at all. We estimate that in the CR there are around 10-15 people who are truly experts in this area. Did you strike it lucky? Probably not.
3. Count the pages. Optional extras take up space. If your total package of documents (Statute and contract) is less than 20 pages, it will be missing important things
4.  If you are not 100% sure your expert really is an expert then get a second opinion before you sign anything. This won’t be free, but can potentially repay the cost many times over
5. If you are paying more than 100,000 CZK for a standard trust, then you are probably paying too much. Of course if you trust is non-standard, then the costs will be (and should be) higher.

If you would like a second opinion of your proposed or existing trust, please just contact us.

It was nice to learn that the first edition of our book, Svěřenské fondy – krok za krokem, has been successful; so successful it seems that it has sold out.

Next week we expect the second edition to arrive from the printers

Many ordinary Czech people already know something about trusts, and they are increasingly interested in knowing more. They are interested not just in how trusts can help the wealthy, but also how they can help their own families.  We suppose this is the main reason behind the success of our book.  Before our book came out there was no easily accessible source of this information.

Our book is aimed at these ordinary Czech people and is written in language that they can understand. Our aim was that the book would not be dry and boring, but rather as fun and entertaining as possible. We wanted to provide practical rather than theoretical information. Lots of great positive feedback from readers tells us we have succeeded in these goals

The second edition is updated with the latest information on the Register of Beneficial Ownership and includes two new chapters.

So if you have not already read it, now is a great time to order a copy of the second edition.  To order please contact us by email. The book costs 379 CZK plus 49 CZ postage and handling (a total of 428 Czech Crowns).

Planning is important.  Putting those plans into action is even more important. But when you do implement your plans, you need to make sure the job is done correctly.

This is especially the case in the area of trusts, where a badly implemented plan can sometimes be even worse than no plan at all.

In this month’s article, I illustrate this point by highlighting the story of Philip Macalister from New Zealand.  It is an interesting and also slightly sad story made more powerful by the fact that I know Philip personally.

Philip lives in New Zealand As we have mentioned in the past, and as the box to the right illustrates, unlike the Czech Republic, New Zealand is a country of trusts.

So in the area of trusts, New Zealand and the Czech Republic are very different.  But there are other areas of life where our two counties are very similar.  For example, many Czechs have cottages where they like to go at the weekends.  To some people, this obsession with tiny houses can seem strange, but not to New Zealanders who also enjoy spending time in their weekend houses and holiday homes, which they call the “Bach[1]”.

Philip’s story can be read in full (in English) in this article from the newspaper in New Zealand. It is a great illustration of the importance not just of setting up a trust, but of structuring it correctly so that it works as it should.

The reason that the trust was set up in the first place is that Philip’s grandfather bought a cottage in 1920, and he wanted it to stay in the family after he died in 1967, for use by future generations.  This is a very common and logical reason for setting up a trust.  Putting the cottage in the trust means that it belongs to ‘the family’ but not to any particular person, it is not subject to future inheritance proceedings and if the trust is set up correctly, then it will also fairly manage the cottage into the future, avoiding the family conflict which is otherwise almost inevitable.  It will also achieve the other goal, which is to make sure the cottage stays in the family.

So a trust was an excellent idea.  Or at least it would have been a good idea if it had been established correctly

In fairness, the trust did its job for quite a long time, but in the end, it failed to achieve its purpose because although the cottage is still in the family, some family members, including Philip, have been ‘shut out’ against their will.  At the same time, the trust caused rather than prevented family conflict.

These problems were all the result of the way the trust was designed in the first place.  A better structure design could have prevented all this.  As Philip himself says,

“You should always have an independent trustee. You need an odd number, so you could have one from either side of the family and an independent … And you need a mechanism to refresh trustees, . . . .  every three years you could retire one on rotation. And with trustees the decisions should be unanimous.”

This is a good starting point and is one of the points we made in our article in 2015 on this very topic.

There are a few more mechanisms that we would also build into something like this to make sure that it works.  If you are interested in a copy of a case study showing how a typical well-designed cottage trust looks please email us.

The moral of this story is to remind you of the need to make sure that you get professional help when setting up your trust.  A do-it-yourself approach can save money in the short term but often ends up costing a lot more in the long term.

 

---

Caption:  This is a picture of a typical New Zealand batch.  If you would like to see a picture of Philip and the actual batch involved on this case you can find them in the linked article.

 

 

 

 

[1] This word is pronounced different from the name of the composer.  In Czech, it would be written Bač.*

Is Inheritance Distasteful?

Daniel Craig seems to think so.

Thinking about inheritance probably isn’t the most positive activity for many people. Nobody likes to think about their own death, and for that reason, some people avoid this topic completely.

Others take the view that, since they’ll be dead, it’s not really their problem, and their children can solve it.

And there is another group who seem to secretly hope that that they are immortal. (Because they will never actually die, inheritance is therefore not something they need to worry about).

Not surprisingly, we disagree with these three avoidance strategies. If you have not (at the very least) thought about what happens to your assets when you die, then it is highly likely you are creating a big mess for your family to clean up. Not only that, but unplanned inheritances very often result in serious family conflict. They also deliver results that are not actually what you would have wanted (if only you had actually thought about it).

So we strongly recommend investing a little time in this task – because doing so is likely to save a lot of money and stress in the future.

But, back to Mr Craig. Unlike some, he has actually thought about his inheritance.

Perhaps that’s not surprising. He has two very good reasons to consider this topic;

• Together with his wife he has assets estimated to be worth 3.8 billion CZK.
• He has a complicated family situation. He has two children, one with his ex-wife, Fiona Loudon and the second with his current wife, Rachel Weisz. Ms. Weisz also has a son from a previous relationship.

So it’s great that he has turned his mind to this topic. Perhaps that’s not surprising.

What’s more interesting is the conclusion he has reached. In an interview with Candis magazine, Mr Craig revealed he will not be leaving much to his children.

“I don’t want to leave great sums to the next generation. I think inheritance is quite distasteful. My philosophy is get rid of it or give it away before you go.”

Mr Craig is not alone in sharing such sentiments, and while his future heirs might not be very enthusiastic about these plans, it is his money to do what he likes with.

. . . but . . .

If he wants to do this, he is going to need a very good plan.

For example, If Mr Craig lived in the Czech Republic he would have to deal with Title III of the Czech Civil code, which gives Ms Weisz and both of his children (and maybe also his stepson) a fixed right to inherit part of his estate.

In the UK, where Mr Craig actually lives, his children have similar although less clearly defined rights. Another factor in the UK is inheritance tax which – at a top rate of 40% – will also eat up quite a bit of the 3.8 billion.

It is possible to solve these problems, but only if a properly planned strategy is used – often (but not always) involving a trust.
We hope that Mr Craig has a good adviser and a good plan.

Of course leaving nothing at all to your children is at the extreme end of the scale – but there are often very good reasons for leaving children less than they might otherwise have expected. Perhaps the best-known example of this is American billionaire Warren Buffett who is quoted as saying that;

“[t]he perfect inheritance is enough money so that [children] feel they can do anything, but not so much that they could do nothing.”

This is a good philosophy and one that is very popular amongst our wealthier clients – but again it is not a result that you can achieve just by wishing it. You need to make and implement a plan.

A few photos from last week’s succesful seminar; „Seven Years of the Trust Law in the Czech Republic” at which we were delighted to present.

We have published another installment in our series of educational videos.  This on is on the topic “Czech Trusts and their Uses”.

You can watch the video (in Czech language only) here:

We are delighted to be presenting at this prestigious event which is jointly organised by APRSF, STEP, and the Czech Bar Association.

The seminar takes place on 13 November and will be presented in English.

Click here for the full program and registration details

We are pleased to announce that we are continuing with the regular seminars for trustees and trust advisers that we run in conjunction with Deloitte and J & T Family Office for the APRSF.

After successfully completing the course, participants will understand the structure, history, and practical uses of trusts in the Czech Republic. At the same time, the seminar will cover in detail the duties and obligations of trustees. The seminar is especially suitable for lawyers, private bankers, and other professionals who provide advice to clients in the field.

The seminar is for:

• Anyone who has, or is considering accepting appointment as a trustee.
• Lawyers, notaries, and others interested in a more in-depth knowledge of trust funds – appropriate to providing advice to clients.
• Private bankers and financial advisers who want to provide comprehensive financial planning advice.
• Anyone else who wants to deepen their knowledge and understanding of trusts in the Czech Republic.

After the successful completion of the seminar, including the final exam, participants will receive a certificate of completion.

The next seminar will take place on 24-25 November 2021 in Prague.

If you are interested in more information about the seminar, pricing and registration, please download a detailed syllabus here (in Czech) or send an e-mail to info@trusty.cz