Another free video

I have released another free video from my series Trusts Made Simple.
This one provides some pointers to help you spot if you have a bad trust. It’s called “Is my trust a good one? (or is it a lemon?)”

I’m a university lecturer?

Not really.

But I have been asked to lecture on Czech Trusts as part of the International University of Monaco‘s International Management of Family Wealth course.   I am looking forward to the first round which is coming up in a month.

Partnership between Raiffeisenbank and ACT Azure Trust

I’m happy to share this positive post from Raiffeisen. Not only has it been a delight to be involved in this project, but it has also been a pleasure working with Jan and his team, especially Jakub Kučeja and Monika Havlíčková.

We are all looking forward to doing even more exciting things in the next 12 months, both in CZ and elsewhere in the EU.

 

Sometimes Good Things Come to an End

It was sad to observe that after 30 years together, former Czech Prime Minister Andrej Babis and his wife Monika have decided to separate.

I am commenting on this news on a website about trusts because this news might also turn out to be interesting from a trust perspective.  That’s because  According to Forbes magazine, the former prime minister’s assets amount to 3.5 billion dollars, making him the seventh richest Czech.  He is also one of the most famous founders of a trust in the Czech Republic.  In 2017, in order to comply with a law regulating conflict of interest, he transferred ownership of his company, Agrofert, into trusts.

It will be interesting to see what happens with this shareholding if Mr and Mrs Babis decide to get divorced.

In other similar high-profile cases, big numbers have been involved.  For example, it is reported that when Jeff and MacKenzie Bezos divorced in 2019, Mrs Bezos received a settlement of $ 38 billion.  Perhaps Mrs Babis is also in line for a large payment?  Of course, I cannot comment directly on the Babis’s particular situation as there are many things I do not know.  Mr and Mrs Babis were together for many years before they got married and I do not know if there was a pre-nuptial agreement between them before they married.  It is also interesting to observe that the trusts were established in February 2017 and the wedding was in July 2017.

I will be watching the next steps with interest.

However, this celebrity news does give me an opportunity to talk more generally about trusts, prenuptials and divorce.

One of the main objectives of setting up a trust is to protect assets from attack.  Mostly when we think about this, we have in mind external attacks.  But divorce can also be an ‘attack’ especially where one person brings more assets into a marriage than the other.

When partners consider getting married, and one of them has a lot of money and the other does not, then there is often a discussion about a prenup.

While such discussions are not uncommon, they can also be pretty unpleasant.  It can also be a highly emotionally charged issue, particularly if one or both of you have been through a divorce and have assets that they managed to salvage from a possibly very unpleasant process.

Many people solve these problems using a pre-nuptial agreement, often called a prenup.  Prenups are usually made before the marriage, but they can be made afterwards, in which case they are technically not pre-nuptial agreements but instead called ante-nuptial agreements

A typical prenup is written by the dominant (richer) partner with the goal of protecting themselves if the marriage doesn’t succeed. These types of agreements typically explain how the property will be divided and if spousal support will be paid in the event of a divorce.

Each individual may also set up their intentions about distributing property after one of them dies. This is particularly an issue for second marriages when one or both spouses want to preserve property for their bloodline children or grandchildren from a former marriage.

This all sounds fine in theory. It doesn’t always go so well in practice.

Prenups destroy trust.

“Honey, I love you. I want to spend the rest of my life with you. You’re the only person that I really love. I will never cheat on you. You are the one and only for me, forever . . . . . But would you mind coming with me to the notary to sign this little legal document? It’s that if we’re not married at least eight years, you don’t get more than 1,000,000 CZK; and you could acknowledge that my son, when he graduates from university, gets the business. . . and . . .and . . ..”

Prenuptial agreements are often good ideas. They often work, but sometimes they don’t work. The one thing, and the only thing, you are almost certain to achieve from a legally robust pre-nuptial agreement is damage to your relationship with your future spouse.  The “poor” spouse now knows for sure that he or she is not trusted. Simply stated: Prenups do not promote great marital relationships. In many cases, even the act of suggesting one creates serious impediments to personal trust. Is this what you want at the beginning of your married life?

An alternative, one that is widely used in other countries, is to establish a trust and place key parts of your wealth in it: the shareholding of your business, artworks, real estate etc.  The trust is established for your benefit, for the benefit of your children, and also for the benefit of your current spouse (whoever that may be).

Setting up a trust in this way can also be done by you and by you alone.  It does not need the agreement of your future spouse and means you do not have to have any of the unpleasant conversations above.  On the contrary, if you do decide to inform your future spouse it can even be presented as a positive – you are putting money aside and protecting it from external attack for the benefit of the whole family, including your new spouse (at least for the time being). Of course, it’s not always practicable or tax effective to put 100% of your assets into a trust in this way. But depending on your personal situation, it may be possible to achieve the result you want.

Remember that the assets you put into the trust before you get married are no longer yours.  That means that there is no way for them to subsequently become community property.  But remember that this applies only to things you put in before the wedding.  If you try to put things in afterwards, you need to be certain those things are not community property.  If they are, you may need your spouse’s agreement.

A trust is also much better than a prenup in ensuring that following your death assets end up in the right hands.

And of course when you set up such a trust it really does protect your whole family from external attack, or at least it does if it is set up properly.

 

 

Image Credit David Sedlecký Wikipedia. 2024. “Andrej Babiš.

Business Trusts – Webinar Recording

People often ask me if it is possible to use trusts for business purposes in the Czech Republic in the same way as they are used in other countries.

The short answer is “Mostly yes”

If you would prefer the longer answer, or if you are interested in learning more about what I have been doing with PTT in the Czech Republic, then you might enjoy this recording of our recent webinar.

 

Save the Date – November Prague Conference

I am delighted to be involved in preparations for this year’s STEP Conference in Prague. This year’s theme is:

How to Properly Structure a Trust or Private Foundation:
International Best Practice

As in previous years, the conference will be run by Stepan Holub and his great team at Holubová Advokáti and hopefully also, once again, with the support of the Czech Bar Association and APRSF.

This year’s conference will be extra special – as we have some exciting news to share.

We have already fixed the date for  8 November 2024, so put it in your diary now!  More details will follow soon.

Another Successful Course

I was very pleased to participate in the most recent APRSF Trustee Accreditation Course along with Eva Hruskova from Svěřenské fondy a trusty, Ivan Kovar from BDO, and Alena Popelkova from J&T.

We had a fantastic group of participants and a very enjoyable two days!

APRSF Trust Accreditation Course

There are a lot self-titled trust and succession planning ‘experts’ in the Czech Republic, many of whom lack the basic knowledge and skills to do a competent job for their clients.

If you would like to join the ranks of the real experts, come along to the APRSF Accreditation Course on 29-30 January.  The details are here.

STEP / CAK Prague Event 10 November 2023

It was a great pleasure to be invited back to speak at the third iteration of this informative and well-organised event.  It featured great speakers from all over the world including the USA, UK, Liechtenstein, Cyprus, Poland and the UAE

Many thanks to Stepan Holub and his team for the hard work putting this together.

We are all looking forward to an even bigger event next year as we celebrate the tenth year of Czech Trusts. Here’s to the continued growth and success of this invaluable event!