What Is a Financial Trust En Francais?

Finance Trust a été créée en 1981 par des femmes juristes, banquières, entrepreneurs et formatrices. Elle a pour mission de fournir crédit aux femmes rurales.

Introduction à la French law in 2007 and governed by the law of February 2009, the fiducie n’a que vagues ressemblances avec le droit anglais d’un trust et ne peut être comparée d’une manière adéquate.

Settlor

The settlor of a financial trust en francais is the person who establishes the trust. The settlor can be the same as the trustee or a separate individual. The trust can be created during the settlor’s lifetime (an inter vivos trust) or by will (a testamentary trust). In either case, the settlor’s legal rights to the trust property are reserved. The trustee must comply with the rules of the trust deed and the laws of the country in which it is located. The trustee must report the income and capital gains of the trust to the tax authorities.

The new law of 2011 (the “Loi de Finance rectificative pour 2011”) clarifies French trust taxation and reporting obligations, particularly when a French real estate is held through a trust. The report must include a detailed inventory of the assets and their market value as of Jan. 1 and must be filed by June 15 (and extended to August 31 for non-resident settlors and beneficiaries). Failure to file the report results in a fine of up to 20000 euros, payable by the trustee, as well as 80% of any wealth tax due on the unreported assets.

In addition, a transfer tax will be imposed on the trust property upon its death, with 45% taxes applied to direct descendants after a deduction of EUR100,000 per descendant and progressive rates that reach 30% for assets above €1,805,677. These taxes will not apply to trusts established for the benefit of charities or public interest entities, which can use a lower rate of 35%.

The annual declaration must also indicate whether the assets are taxable or not for purposes of ISF and the PSG. This is determined by assessing whether the settlor or beneficiary deemed to be the settlor are domiciled in France for tax purposes as of Jan. 1 and by considering the proportion of the net taxable assets in the report that each one holds (or will receive from the trust) relative to the total net taxable assets of the trustee. This information is fed into a French register of trusts, known as the Registre des établissements fiduciaires.

Trustee

When a person dies and their estate is settled in a trust, the trustees are charged with managing the property and distributing it to the beneficiaries according to the terms of the trust. The trustees are also responsible for avoiding taxes on the trust's assets. To avoid pitfalls, trustees should have the benefit of professional advice. A good trustee is a good communicator and has the right balance of skills and experience to carry out their duties. They will be able to handle the responsibilities and liabilities of the trust, while maintaining the privacy and independence of the beneficiaries.

A financial trust en francais can be used for many purposes, including asset protection, estate planning, tax mitigation and business planning. These advantages make it a popular choice for families with complex situations. However, there are many pitfalls that can cause trouble for the trustees. These pitfalls can include: a lack of knowledge of French law; problems with inheritance taxes; and disputes between the trustees and beneficiaries.

Trustees must declare the value of the trust's assets to the French authorities by 15 June each year, and in addition to this, they must make additional declarations when the trust is "modified," for example, through distribution of income or capital. Failure to make these declarations results in severe penalties, and the French authorities can go back as far as 10 years.

French trust reporting requirements are designed to comply with EU anti-money laundering and countering the financing of terrorism (AML/CFT) laws, which require the identification of beneficial owners of legal entities. This information is recorded in a national register that is accessible to public authorities and others performing due diligence under AML/CFT rules.

As a result, it can be difficult for trustees to keep up with the information, and this can lead to disputes and disagreements. Trustees must be able to communicate effectively with the beneficiaries, and this includes explaining their role and responsibilities clearly. This will reduce misunderstandings and improve the trust's efficiency. They must also be able to respond quickly and proactively when issues arise, particularly in the event of a dispute between the trustees and the beneficiaries.

Beneficiaries

A financial trust en francais is established for the benefit of one or more beneficiaries. Depending on the type of trust, these beneficiaries may have different rights and powers. The trustee has the obligation to respect the wishes of the settlor in determining the beneficiary. The trustee is also required to notify the beneficiaries of any significant changes.

A trustee must also comply with EU rules on anti-money laundering and countering the financing of terrorism (AML/CFT). This means that certain information about a trust’s beneficial owners must be reported to a national register. This information is available to public authorities and other parties carrying out due diligence under AML/CFT rules. It is not, however, a substitute for the event-based and annual reports that trustees must submit to tax authorities.

The trustee must report to the relevant authorities the identity of any individual or legal entity that has a controlling interest in the trust (either as the owner or the legal representative). The annual reports should include a detailed inventory and net asset value of assets held at Jan. 1 of each year, as well as a list of the beneficiaries at that date. bayanipay

Beneficiaries are taxable under the same rules as French residents. This means that they can be subject to Inheritance and Gift Tax, and Income Tax. However, the trustee can apply for a deduction from these taxes under double tax treaties with other countries.

In addition, the trustee must report to the tax authority any taxable income earned by the trust during the course of the year. This includes rental income and capital gains on investments and property. In some cases, the trustee can deduct the amount of tax paid on investment income from the overall taxable income of the beneficiary.

The fiducie, which was introduced into French law in 2007, has been hailed by some as a powerful tool for wealth planning and has been criticized by others as an inflexible alternative to more flexible foreign systems (for instance, the trust used in the United Kingdom). In particular, it is thought that the lack of flexibility will limit its usefulness to family situations.

Taxes

A trust is a legal vehicle that allows one person to hold assets, such as money and investments, on behalf of other people. These assets are governed by a set of rules, known as the trust deed. This deed sets out the trustees, beneficiaries and other key details of the trust. These include the power and duties of the trustees, their liabilities, and the beneficiaries’ rights. The trust deed can also set out how the trust is managed, including the investment strategy. It can also state whether the trust will be discretionary or non-discretionary.

There are various taxes associated with a financial trust en francais, and the exact implications depend on many factors, including how the trust is established and operated. In some cases, trusts can be subject to inheritance tax and/or gift tax. In addition, the trustees may be required to file annual reports and issue tax slips. This is to comply with EU anti-money laundering / countering the financing of terrorism (AML/CFT) laws.

In general, trusts are not subject to French wealth tax (ISF), but they can be liable to prelevement sui generis (PSG). This is a flat rate of 1.5% on all taxable assets in France. This is in contrast to ISF, which is assessed at a range of rates based on the relationship between the beneficiary and the trustee.

The PSG is also applicable to foreign-controlled trusts, even if they do not have a permanent establishment in France. It is important to seek advice from an experienced Anglo-French lawyer when dealing with a trust that involves French assets. Sarah Walker [add link to profile] regularly assists clients with preparing French Wills, and advises on estate and inheritance tax planning in connection with English trusts.

A family trust en francais is an excellent way to manage and protect your assets in France. However, you must be careful when choosing the type of trust to use and ensure that it meets your objectives. Our experts will be able to help you navigate the complexities of this regime and make sure your family trust is properly structured.