The Trust Matters Update is a periodical summary of cases, case comments, consultations, publications, legislative developments, legal updates, articles and news in the area of trust law and related issues.
I. Until death do us part...
Two siblings asked the Oristano Court to declare the trust created by their father invalid, because they considered it detrimental to their reserved portion of the estate (quota di legittima).
By decision dated 27 July 2015, the Court - without considering the invalidity of the trust challenged due to breach of the mandatory provisions on the reserved portion of the estate - rejected the claim, holding that the claimants had no 'legal interest in bringing proceedings' when the proceeding was filed.
Indeed, according to the Court, the claimants would not have obtained any "legally appreciable' advantage from a declaration of invalidity, since the assets fell under their father's estate and not their own estate, given that they were not (yet) the heirs of the settlor.
II. Trust? What trust?!... If the assets are not transferred to third parties
With ruling dated 4 November 2015, the Bergamo Court declared that the trust pursuant to which the settlor had segregated its real estate property, appointing itself as trustee, was invalid, without identifying the beneficiaries of the trust.
Substantially the Court held that since the settlor and the trustee were one and the same, and since no beneficiary had been identified - after more than one year from when the trust was created - one of the essential aspects of the trust did not exist, namely the transfer to 'third parties' of the assets made subject the disposition.
III. Trust and creditors of the settlor
A creditor of the settlor of a trust filed an enforcement action against the segregated real estate assets of the trust, regardless of the fact that the same were officially owned by the trustee.
In particular, the creditor in question believed that it might benefit from a ruling pursuant to which the trust, in a separate ruling in favour of another creditor of the settlor, had been declared invalid pursuant to section 2901 of the Italian Civil Code (Pauline action).
In the subsequent third party opposition proceeding filed by the trustee, with ruling dated 28 August 2015, the Cuneo Court upheld the opposition and declared the attachment invalid, given:
- the 'subjectively relative' effectiveness (namely to the benefit of the only other creditor of the settlor) of the decision pursuant to section 2901 of the Italian Civil Code, and thus
- that the creditor in question could not benefit from the decision pursuant to which the trust had been declared invalid.
In other words, according to the Cuneo Court, the trust continued to be effective with respect to the attachment creditor, thus continuing to segregate the assets in the trust owned by the trustee.