Czech Trusts in Zurich

Based on demand, I’m organising a one-day course in Zurich this autumn, focusing on the Czech wealth planning environment, trusts and foundations.

This course is designed for private bankers, fiduciaries, legal advisors, and wealth management professionals who work with Czech clients. Knowledge of the domestic environment and the available local structures is an essential part of developing comprehensive solutions for these clients.

Please see the flyer for full details.
Alternative dates and in-house sessions in other locations are available upon request.

Photos and Thank you – STEP Bratislava

It was an honor to be invited to speak at last week’s inaugural STEP Bratislava conference. While I’m also credited as an organiser, the truth is that most of the hard work was done by Miroslav Trencan, Stepan Holub, and the fantastic HILLBRIDGES team.

It was great to see such a strong turnout of professionals in the beautiful setting of the Bratislava Reduta. We look forward to expanding the presence of the Society of Trust & Estate Practitioners in Slovakia—and doing it all over again in 2026!

The photos below are low resolution in the interests of saving bandwidth, but if you would like a high resolution version, just let me know

Article – Enforcing Rules – What is a Protector?

In this article I explain the basis of the role of a protector in a trust or foundation. I will explain what protectors are, what they do, and help you decide whether including one in your trust or foundation is a good idea.

What is a Protector?

A protector is also sometimes called a supervisor.  As this second name suggests, a supervisor is a person who supervises your trustees as they administer your trust. Their role is to ensure that your trustees follow the rules you set when you created your trust.

Protectors typically have the power to:

  • Monitor the actions of trustees
  • Ensure trustees comply with your instructions
  • Replace trustees if they fail in their duties
  • Approve major decisions made by trustees

Although the Czech Civil Code does not explicitly outline the role of a protector in trusts, it also does not prevent them from being appointed. On the other hand, if you are using an international structure, protectors are a very common feature in most trusts and foundations. (In Czech Private Family Foundations, a protector is a legally required part of the structure).

You may see both terms—‘Supervisor’ and ‘Protector’—used interchangeably. Legally, they describe the same role. The choice of wording reflects the role’s intended function. But because the role is not legally defined in Czech, you can choose something else if you like in a Czech structure, for example ‘Lord of the Trust’ or ‘Head Honcho’!

Supervisors are especially useful in two key areas:

  • Asset protection
  • Multi-generational family succession planning

In this article, I will be focusing on this second use.

Much of my practice is focused on helping families design and implement their business and wealth succession plans.

Depending on how complicated your life is, your family succession plan can sometimes be quite straightforward, but in other cases, especially if you have a successful family business or a lot of accumulated wealth, it can be much more complicated.  In these more complex cases your succession plan will often involve a range of legal structures such as holding companies, family councils, trusts and foundations.  You will also typically write a number of important documents – including your family constitution and your letter of wishes.  All these structures and documents are designed to help you give effect to your goals.

However, when you start peeling away the surface layers of this onion, you will find that what is underneath it all is really just a set of rules – because that’s what your succession plan really is; a set of rules, made by you, perhaps together with your family members, which creates a road-map for the future of your family’s wealth.

When you create rules, it’s a good idea to have someone to enforce those rules.  It’s just like in the community in which we live.  We have rules (laws) and most of the time, we can rely on people to follow those rules.  So we don’t kill each other, we don’t steal things from each other, we don’t drive through town at 150 kph, and so on.  But we also know that it can happen that sometimes there is a temptation for some people to break those rules.  And that’s the reason why, in our society, we have police.  It’s their job to make sure the rules are obeyed.

During your lifetime, you are the one who makes sure your rules are followed.

But what happens when you are gone?  Who takes over as ‘policeman’ then?

One of the most common mistakes I see in succession planning is that people don’t have a policeman.  Instead, they pass complete control to their children after they have gone.  Of course, for some families, that’s fine.

But if that’s fine, then did you go to all the trouble of creating a multi-generational family dynasty structure in the first place?  In most cases, you did it to protect your children from themselves, and to ensure the survival and success of your family enterprise.  You did it because you wanted to benefit, but not harm your children, grandchildren, great-grandchildren, and future generations.

If you pass absolute control to your children (if there is no policeman), there will be a very strong temptation for them to destroy everything you have built and to just grab the money.

Trust protectors exist in these situations not just to monitor your trustees, but also to stop your children from doing that.  A trust protector is a person (or sometimes a company) that acts as your ‘voice from beyond the grave’ enforcing not just your rules but sometimes also reminding others of your guiding ethical and moral principles.

How does it work in practice?

A protector is usually someone independent from outside the family.  Quite often it is a professional trust adviser or trustee company. The protector may not have any power at all until the founder has died

After that, the protector holds the set of rules and guidelines that you, as the founder, created during your lifetime.  These rules might say specific things like ‘don’t sell the business for at least 15 years’ or they might be more general ‘Give my children enough support to allow them to lead rich and fulfilling lives, but do not give them so much that it spoils them’

The protector then takes on quite a passive role.  They are not proactive. They do not create recommendations. Like the police in our analogy, they don’t interfere, (and don’t need to interfere) unless something goes wrong.

Instead, they simply allow the family and the trustees to do whatever it is they want, and what they think is best within the confines of the rules.  They watch and monitor and usually consult, but they do not need to interfere until the family or the trustees try to do something (for example sell the business or grab all the money) that conflicts with your rules.  In that case, the protector has a ‘veto’ power, to help make sure that things stay on the right track.

Of course, in an extreme case, your protector also has the power to fire the trustees.  But in real life, this power is almost never used, just in the same way that the police rarely need to arrest people.  It is the rules and the system that prevent the bad things from happening – long before the protector’s powers ever need to be used.

In many cases, the protector also helps support and guide the family and the trustees in their discussions and decision-making.  It is sometimes useful to have a wise, experienced and independent person to turn to for advice.

The role of protector is often formalized in the legal documents that create trusts and foundations, but I recommend giving the protector a wider role.  This can be set out in your family constitution and means your protector can be active in overseeing the management of family companies or your family governance structures.

 

Do I need a protector in my family structure?

The answer is that it depends.  Every family is different, and every family sets different rules for its own future.  However, as you set your rules, beware of accidentally creating ‘democracies’.  If you give future generations absolute power to do whatever they want, there is a risk (probably a pretty high risk) that they will do something different from what you would have wanted.  If that concerns you, then incorporating a protector into your family structure may be a wise decision.

 

Any questions?

If you have any questions or would like to talk about building a protector into your family structure, please just let me know.

Gina Pereira

I was really delighted, along with Dagmar Goldmannová of Via Clarita, to organise the recent visit of Gina Pereira to Prague.

Gina is based in Bermuda and is the Chair of STEP’s Responsible Stewardship of Wealth Thought Leadership Group.

Thank you for those who attended the events throughout the day. Thank you also to Fichtner for supporting the STEP breakfast. Thank you most of all to Gina for coming all the way from Bermuda (with a stop in Rome) to share this great information with us!

For those wanting to see the slides from the breakfast, they are here.

Here are some photos from the event (higher resolution available on request).

STEP Conference in Bratislava

Following the success of the annual STEP conference in Prague over recent years it made sense to do the same thing in Bratislava.

I am very proud to be an ‘Event Partner’ of this inaugural event, which I hope will be the first of many.

This will be a truly international conference focused on the tax and legal implications of using foundations and trusts in Slovakia. The jurisdictions examined will include Czechia, Poland, Liechtenstein, the United Kingdom, and Jersey.

Keynote speaker H.S.H Princess Gisela of Liechtenstein
The conference is in English language without translation.

More details are here.

Gina Pereira and Family Values

It has been a great pleasure for me to work with Via Clarita to put together a visit to Prague by Gina Pereira,

Gina is based in Bermuda and is Chair of STEP’s Responsible Stewardship of Wealth Thought Leadership Group.  I have heard Gina speak before and know she is a great presenter.  She will be bringing us many new and valuable insights into this highly topical theme.

The first of two events is a breakfast.  You can find the invitation here

Article – What’s a Family Constitution? Do I need one?

Happy new year!

I wish you all the best for a fantastic 2025.  To start the new year, here are a few thoughts on family constitutions:

What’s a Family Constitution?

I have been saying for years that if you have a family business it is very important that you have a succession plan for that business . By ‘very important’ I mean that it is even more important than a business plan, a marketing plan, and other similar operational plans. If you don’t have these other plans, then your business will struggle, but if you don’t have a succession plan, it is more likely than not that your business won’t survive .

How do I Start?

One of the most common questions I get from families is ‘How do I start?’

In myexperience, the beginnings of this process often involve some thinking, some family conversations, and also typically a bottle (or two) of wine. How you start is not so important, what is important is that you do start. Don’t delay. Leaving the process too long typically reduces your possibilities and makes everything harder – sometimes much harder.

Once you have begun your journey, you should find a specialist such as myself who can guide you through the process. One of the first things I am likely to do is to work with you to help you put together a family constitution (FC). That document is the subject of today’s article.

Despite what many lawyers think, your FC is not a legal document. That means that you don’t need a lawyer to create it, even if, sometimes, some input from a lawyer can be helpful.

Instead, your FC is an expression of your, and your family’s, vision for the future and the principles that guide future decision-making. It is a living document. That means that it evolves and is updated regularly as your family learns and understands more. Quite often FCs start relatively short; two or three pages. Over time they transform into considerably longer documents; typically in our experience 15-20 pages. That’s fine. A start, even an incomplete start, is the most important thing.

Even though it’s not a legal document, your FC is the most important part of the succession planning process. Lawyers focus on company structures, trusts, foundations, shareholder agreements, family office models and so on. But none of these things make any sense at all without a clear FC at their core.

In fact by building a good FC, you can often save a lot of money on legal fees. That’s because a good FC will create a ‘roadmap’ which will make the design and implementation of legal structures much easier.

Your FC is a written statement that records your family’s history, culture, hopes and goals for the future. It also includes some guidance and plans how to achieve those goals. Sometimes it is dictated by the wishes of the founder of the family business, but more often, it is the result of family discussions; reflecting the wishes of the founder, but also taking into account the wishes and opinions of other family members.

What’s in a FC?

A good FC might answer some of these questions. (You will notice that some parts are in italics. I would say that these parts are the essential core of a good FC and also a good place to start):

    • Who is our Family? (This varies from family to family, but often means blood descendants of the Founder)
    • Where do we come from?
    • Where are we now?
    • What is our vision for the future?
    • What are our family values and beliefs
    • What are our guiding principles?
    • As a family member, what should I expect from the family?
    • As a family member, what should the family expect from me?
    • Should the business always be owned by the family?
    • Can the family release their interest in the business, and if so, on what terms?
    • What criteria should there be for the employment of family members in the business?
    • How do we make decisions?
    • How often should we meet as a family?
    • Who leads our family after the founder has passed?
    • Should there be a family council?
    • Do we have an ‘enforcer’? If not, how do we make sure that these rules are followed?
    • What is the role of our family in our community (Philanthropy, ESG, etc)

Though a FC is not binding, these basic rules will help prevent future family conflict. As I said above, they also provide a great ‘roadmap’ for advisers as they develop current and future structures to give effect to the family goals

Involve everyone

As I mentioned above, the development of your FC will vary from family to family. Sometimes the FC can be similar to the tablets of stone that Moses brought down from Mt Sinai – in other words, commandments imposed from above. More often, and in our view much better, is a FC that reflects the input and opinions of all the adult family members at the time it is created. Although not everyone may like the outcome of any particular decision, they will respect that they have been involved in creating the FC, and are less likely to protest if decisions are not in their favour.

Either way, what is essential is that all the family members should sign the FC. The signature indicates that the person understands and accepts the guidelines and agrees to play by the rules. I recommend that signature be a prerequisite for any benefit from the family wealth. As new family members reach adulthood in the future, their signature becomes a symbolic marker that they have become a full member of the family. In this way, we can make sure that the FC is a meaningful document that lives on into future generations.

Let me know if I can help you build a FC for your family.

 

Plan – Announcement

We’ve put a new coat on our Czech language book.

You can still purchase it in bookstores under the title Svěřenské fondy – krok za krokem (Trusts – Step by Step” – 2nd Edition).  But we are also now offering substantially the same book under a new title:  Plán – Jak ochránit vše, co za život vybudujete (The Plan – How to Protect Everything You Build in your Lifetime).

We made this change because the old version looked like a legal textbook.

Those of you who have read the book will know that it is nothing like a legal text.  Instead, we wrote our book for ordinary people who use, or plan to use trusts.  It is full of practical examples and tips. It aims to inspire you and;

  • to help you  protect and preserve your property,
  • to benefit future generations, and
  • to strengthen your family and prevent family disputes.

You can now order the new version of the book here.  .

Eva Hrušková and James Turnbull

2024 Prague STEP Conference

It was a pleasure to be a part of the organising team for last week’s STEP Conference in Prague.

It was a great event starting on Thursday with a dinner for the speakers and concluding on Friday evening with a gala dinner to celebrate the launch of the new STEP Czech and Slovak chapter and our new book on Czech and Hungarian trust law.

You can find some photos of the event here.