Liechtenstein: Law of Offshore
This page was last updated on 28 May 2020.
Liechtenstein is the only civil law jurisdiction which has adopted largely Anglo-Saxon trust legislation (contained in the ‘Law on Persons and Companies 1926’ PGR), although, unlike the common law trust, there is no bar to accumulation of income or to perpetuities.
A Liechtensteiner trust is set up by a written agreement (trust deed) between the trustor (settlor) and trustee(s), or by a written declaration of trust by the trustor, matched by a written acceptance of trust by the trustee. The legislation in fact does not speak of 'trusts' but of 'trusteeship'.
The trust deed does not have to contain the names of beneficiaries. If the trust deed is deposited with the registrar of trusts, it will not be publicly available, and later instruments (egg naming beneficiaries) will not have to be revealed; if the trust deed is not deposited within 12 months, details of the trust must be placed on the public register, comprising:
- a description of the trust;
- the date of formation;
- the duration of the trust;
- the name (or trade name) and address of the trustee.
A registration fee of CHF700 (at the time of writing) is payable.
The trustor can make quite specific arrangements in the trust deed covering the identification of beneficiaries, and future procedures of various types; the trust property must be separated from the trustor's other assets, and the trustee can take action to enforce this against the trustor under contract law. The deed must not bind the trustee to the trustor's continuing directions, or the trust will lapse into ordinary contract law.
Some of the characteristics of Liechtensteiner trusts are as follows:
- a trustee can be an individual or a corporation or association; one trustee must be a Liechtenstein-resident individual with appropriate professional qualifications; trustees have various specified duties of care towards the trustor and the trust property; trustees who carry on business as such must keep an inventory of their trusteeships and must keep each trust's assets separate from other assets; if trust assets are deposited with banks they must again be kept separate;
- trustees are liable for breach of trust to the full extent of their assets; joint trustees must normally act jointly and are jointly liable; supervision of the trust is ultimately under the Court, even if the trust deed specifies alternative supervision;
- the trustee must keep a schedule of trust assets and update it yearly, submitting trust accounts as specified in the trust deed or to the court;
- the interests of named beneficiaries can be embodied in trust certificates, which if registered are transferable securities;
- being a civil law jurisdiction, trust assets are vulnerable to forced heirship provisions, although there are time limitations on such claims;
- in general, there is a limitation of one year on creditors' claims; the trustee's creditors have no access to the trust assets; the trustor's creditors have access to trust property only under certain defined circumstances, one of which is under law of succession; the beneficiaries' creditors have access to the trust assets only if the beneficiary has a claim to payment, and if the trust deed does not bar distraint; the trust property's creditors have limited access to the trustee but only to the trust property if the trustee enjoys specific liability cover from the property.
- trust documents, including the trust deed, can be in any language.
Trusts may be set up under foreign law, but may not have more favourable treatment than would apply under Liechtenstein law. A trust under foreign law is a Liechtenstein trust and subject to local taxation. Liechtenstein law applies to a foreign trust if the trustee, or more than half of the trustees, are resident in Liechtenstein, if the trust property is in Liechtenstein, or if the trust deed says so.