The trust, a device not to be neglected

Trust, do you know?

The decryption of an interesting management tool for the company

Introduced in France in 2007 on a distant inspiration from Anglo-Saxon trusts, the trust is a booming device that has many interests, especially for businesses.

Conclude a convention

Schematically, the trust allows one or more persons (the settlers) to transfer the ownership of property, rights or security rights belonging to one or more trustees to administer them for the benefit of one or more beneficiaries. Read more about Trusts & Visas here.

The agreement between these parties is sealed by an agreement, which is the cornerstone of the trust. With great flexibility, it determines the duties of the trustee and the extent of his powers. The terms of the contract to allow the trustee complete and autonomous management of the transferred assets, without there needing to return to the constituent to take new instructions. 

A trust is also intended to be realized in perfect fiscal neutrality.

Finally, any trust must be used for a specific purpose. A company will be able to use it either to guarantee a debt (trust-security) or to manage a patrimony (trust-management).

Guarantee a claim

In the context of the trust, the assets (property, patent, etc.) that the settlor brings to the trust are fully protected, the trust patrimony being unseizable and reserved solely for the beneficiary of the trust. A guarantee that protects the latter from competition from other creditors of the settlor or the tax administration. This trust thus makes it possible to privilege and secure those who invest in the most critical phases of the restructuring of the company by providing them with a refund in the event of default by the recovery of the asset. In this respect, Stephan Catoire, Partner at Equitis Gestion SAS, indicates that ” the trust-surety is now required as the queen of security against the heaviness of seizure procedures or breaches the rights of creditors in insolvency proceedings “.

A trust that can also help finance the business! This is what Stephan Catoire points out: ” When the business is doing well, the trust can be used to obtain more favorable terms from its financial partners. It also allows, by its security, to use, for financing, more assets, not apprehended by the law of security such as mortgage or pledge. In complex financing transactions, it also makes it possible to retain and manage collateral assets and to secure lenders by taking into account their different ranks of seniority. “

Manage a heritage

The management trust offers the guarantee that a contractual obligation will be executed. In French law, the debtor of an obligation to do cannot be compelled to act, the obligations to do not executed can only be resolved in damages and not by enforcement measures. An issue that does not necessarily interest creditors. However, once the trust agreement is signed, the trustee must perform the tasks entrusted to him. 

Thus, for example, to ensure the correct execution, a company can pass the management of its shareholder agreement to a trust. “It will thus avoid isolated sales of units, which, if they were made with buyers in good faith who did not know the existence of the pact, could not be canceled but only give rise to the payment of damages for the benefit of the other shareholders ” explains Stephan Catoire.

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