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Establish a Trust in Luxembourg

Establish a Trust in Luxembourg

Updated on Thursday 08th June 2017

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Establish-a-trust-in-LuxembourgLuxembourg is one of the world’s largest and most reputable financial centers, however it does not attract only professional investors who usually set up investment funds here, but also private wealthy individuals interested in protecting their assets in a safe and legal manner. In order to welcome their needs, the government has enabled the Trust Law in 2003 when it became a signatory of the Hague Convention. Under the new Trust Law, Luxembourg acknowledges international trusts and fiduciary contracts.

Our Luxembourg lawyers can offer more information on the legislation governing the establishment of trusts in the Grand Duchy.

Elements of the trust in Luxembourg

Foreign and local wealthy individuals can set up trusts or private family offices with the purpose of protecting their estate. The trust is one of the most useful estate planning and even wealth management tools in Luxembourg. The Luxembourg trust must contain three essential elements:

  • -          the settlor;
  • -          the trustee;
  • -          the beneficiary or beneficiaries.

The settlor is the person creating the trust, while the trustee is the individual or company managing the estate on behalf of the settlor and to the wellbeing of the beneficiaries. The new Trust Law provides for the fiduciary contract which is also very useful when it comes to those who can administer an estate under the Trust Law. Moreover, Luxembourg companies acting as fiduciaries for the settlors of trusts must be authorized by the Financial Regulator in the Grand Duchy. The last element of the trust is the beneficiary who is the party in favor of which the trust was created.

The deed of trust in Luxembourg

In order to create a trust in Luxembourg, the settlor and the trustee must draw up a private agreement, also known as a deed of trust through which the two parties agree on the assets which will be administered. The deed of trust must be signed before a public notary in Luxembourg.

With respect to the taxation of trusts, the Luxembourg law provides for a special tax status for this type of establishment. You can find out more information on the taxation of trusts from our attorneys in Luxembourg. We also invite you to contact us if you are interested in setting up a trust in Luxembourg.



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