Trusts, from English law to the international model
- Avv. Edoardo Tamagnone
- Mar 18
- 3 min read
How to choose the law governing the trust
Italy does not have its own law governing trusts but has acceded to the Convention on the Law Applicable to Trusts and on their Recognition , adopted by the signatory States in The Hague on 1 July 1985, and ratified in Italy with Law no. 364 of 16 October 1989. The Hague Convention requires the signatory States to recognize the trust institution within their own legal systems (even if governed by a foreign law) and guarantees the Settlor the possibility of freely choosing the governing law.
Therefore, the operating rules of the trust are generally set out in the trust deed, which regulates the relationships between the various parties to the trust, as well as the methods of managing the assets and their destination in accordance with the chosen foreign law.
It is therefore of fundamental importance to choose a governing law that is capable of protecting the interests established by the Settlor when he set out to establish the trust.
The governing law, therefore, regulates the validity of the trust, its interpretation, its effects and its administration, with particular reference to the Trustee's powers to manage and dispose of the trust assets and to make investments, the relationships with the Beneficiaries, the distribution of the trust assets, and the Trustee's obligation to account for its management.
Generally, international trust laws differ on certain points, such as the duration of the trust, mandatory residency, the requirement for a professional trustee, reporting requirements, the possibility of appointing a guardian, and specific rules regarding asset protection . Finally, a practical characteristic of the international trust model is the tax exemptions currently available to the institution in all national legal systems that have governed it.
When choosing the governing law, therefore, it must be borne in mind that while in English law a trust, at least in its simplest form, refers to a transaction characterized by the transfer of ownership of a specific asset from one person ( settlor ) to another ( trustee ) in the interest of a beneficiary or for the achievement of a specific purpose, in the international model the definition of the institution is much less rigorous, so that its contours are much more nuanced. This vagueness could therefore lead to a violation of the limits set by the Hague Convention for the recognition of trusts in our legal system.
Some jurisdictions have therefore adopted a broader definition of trust that focuses not so much on the transfer of ownership (as in the traditional model) but rather on the subjection of the assets to the trustee's control. Finally, some countries have adopted a radically different solution (Jersey, followed by Guernsey, Malta, Turks and Caicos, Belize, Mauritius, Nevis, Seychelles, and Anguilla), choosing not to refer to the settlor's will but instead focusing the entire legislation on the figure of the trustee and the concept of asset allocation/segregation.
To choose the governing law, it is therefore necessary to understand the Settlor's intended goals, verify the composition and location of the estate, and consider any applicable double tax treaties. It is also essential to understand the inheritance rules and, if there are international elements, know which national law will apply in the event of the Settlor's death.
About the Author
Edoardo Tamagnone is a lawyer and partner at the law firm Tamagnone Di Marco Avvocati Associati. He focuses on international taxation, investment structures, and wealth planning for investors, family offices, and businesses with cross-border operations.
He works in Turin and international contexts, focusing on the intersection of law, economics, and global capital.
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