Optional Extras – or why trusts are not the same as cars

For most families, establishing a trust is an important decision. Quite a lot of money can be involved, and you will be stuck with the results of your decision for a long time. In this way, trusts are like cars. Buying a car is also a relatively big decision and you are also have to live with the results of your decision.

But that is where the similarity ends.

You can see a car and you can touch it

When you go shopping for a car, you can look at the car in the showroom, you can sit in it, and you can feel the quality of the interior. You can close the door and listen to hear if you get a “clunk” or a “clink”. Looking at the car, even before you take it for a test drive, you can form some opinions about whether you like it and whether it is the right car for your family. Is it big enough? Is it too big? Is it strong enough? Is it comfortable enough? Is it practical?

Sometimes it is easy to recognise that a particular model is not suitable for you.

Caption: This one is very economical but not the ideal family car

In contrast, all trusts look like this:

The good ones look like this, the bad ones, the deluxe ones and even the ones that don’t work at all, they all look like this.

The price of cars correlates (at least to some extent) to their quality

People understand that as a general rule, better cars are more expensive. Thus, a Skoda Superb costs more than an Octavia, which in turn costs more than a Fabia.

Based on my experience, this rule doesn’t apply to trusts. It is true that a very ‘cheap’ trust is more likely to be a bad one but spending a lot of money is also no guarantee of quality. Some of the worst trusts I have seen have also been some of the most expensive.

Most people understand at least something about cars.

You don’t have to be a mechanic or a motoring expert to recognise some basic issues that a car might have. For example, if your car is missing wheels, or some other fundamental part which will prevent it from working, you won’t buy it. If the car has bad rust it might fall apart. You can see that and so you won’t buy the car. And if your car isn’t working, then you know it isn’t.

Sadly there are many people out there who have trusts that simply don’t work. They are missing the legal equivalent of wheels, brakes, or steering. But because of the nature of trusts those same people don’t even realise that they have a problem, and by the time they do realise, it is too late.

Some of these ‘bad trusts’ are so bad that they are far worse than having no trust at all.

You can take a car for a test drive

With a car, you can try before you buy. With a trust there is no way of doing that. As I said above the only real way to ‘road test’ your trust is to wait for something to go wrong and then see what happens. But of course, by then, it’s too late!

Optional Extras cost more.

With a car, there is a base price. For example here is the entry-level Skoda Octavia:

With most new cars it is possible to add ‘optional extras’ for some additional cost.

This Octavia includes a lot of features that are not optional at all (wheels, seats, steering, brakes, windows etc). But the standard model also includes quite a few things that are not really essential, but nice to have. For example, air conditioning, cruise control, and central locking. Skoda considers these as standard features, which are included automatically in the price: 519,000 CZK (21,000 EUR).

But if you want, you can play with the configurator on the Skoda website and add a few optional features. I did that. I chose a different engine, metallic paint, a towbar, heated seats and so on. In no time my price increased to 731,000 CZK (29,600 EUR).

Do I really need these extras? Perhaps I don’t. But even so, they would all certainly be nice to have.

For example, I don’t plan to tow a trailer, but who knows? One day, having a towbar might be useful. On the other hand, is it worth the extra 25,000 CZK (1,000 EUR) for something I might never use? Perhaps not.

Trusts are a bit different.

For example, your trust documents could include the possibility for you to make changes to your trust, the ability for the trustees to borrow money or to own cybercurrency. They could include the possibility for you to appoint a supervisor. They could include the possibility for you to relocate the trust to a different country.

Many people really don’t need these extra things just as I don’t really need a towbar. It is very important to point out that you cannot do these things unless your trust has clauses that allow them – just as I cannot tow a trailer if I don’t have a towbar.

But unlike the towbar, the ‘optional extras’ for your trust are normally free. They are not pieces of metal but rather (standard) words printed on paper. It may be that you have no plan to buy bitcoin or appoint a supervisor, just as I have no plan to tow a trailer. But because there is no additional cost, the basic starting point for good trust should always include:

  • The basic things (wheels, brakes)
  • The non-optional extras (air conditioning), AND
  • The optional extras (a towbar) that you will probably never use, but might one day

Of course once you start to ask for truly unique features (a jacuzzi built into the back seat, machine gun mounts) then those things will need to be tailor-made for you, and that will, of course, cost more. Likewise, if your trust is not standard (not a car at all but rather a bus, a truck, or a tank) then different rules will apply.

But I see too many people paying the deluxe price for a basic car, and sometimes they don’t even get all the essential standard features – let alone the full set of optional extras.

Goodness! This is complicated. What should I do?

We have some simple tips to help you avoid these pitfalls:

  1. NEVER try to make a trust without professional help. This is an almost certain recipe for disaster
  2. Make sure the professional who is helping you knows what he or she is doing. In many countries you can find plenty of so-called and self-proclaimed ‘trust experts’. Many of these people are not experts at all. For example in the Czech Republic, I estimate that there are around 10-15 people who are truly experts in this area. Did you strike it lucky? Probably not.
  3. Count the pages. Optional extras take up space. If your total package of documents (Statute and contract) is less than 20 pages, it will be missing important things
  4. If you are not 100% sure your expert really is an expert then get a second opinion before you sign anything. This won’t be free, but can potentially repay the cost many times over
  5. Find out the standard price for a trust in your jurisdiction.  For example, in the Czech Republic, most trusts cost less than  100,000 CZK (4,000 EUR).  If you are paying more then you are probably paying too much. Of course, if your trust is non-standard, then the costs will be (and should be) higher.

If you would like a second opinion of your proposed or existing trust, please contact me.  Together with truly experienced legal experts I can make sure your trust includes all the optional extras and is really delivering value for money.

APRSF Tax Event

Here are a few photos from yesterday’s excellent APRSF event at which I spoke briefly.

There are no photos of me in this collection because I am the one holding the camera.

A Second Edition

It was nice to learn that the first edition of our book, Svěřenské fondy – krok za krokem, was successful; so successful it seems that it has sold out.

Next week we expect the second edition to arrive from the printers

Many ordinary Czech people know something about trusts, and are increasingly interested in knowing more. They are interested not just in how trusts can help the wealthy, but also how they can help their own families.

Before we published the first edition of our book there was no easily accessible source of this information.

Our book is aimed at these ordinary Czech people and is written in language that they can understand. It is not dry and boring, but rather as fun and entertaining as possible. It provides practical rather than theoretical information.

The second edition is also updated with the latest information on the Register of Beneficial Ownership and includes two new chapters.

If you would like to order a copy of the second edition, please contact me. The book costs 379 CZK plus 49 CZ postage and handling (a total of 428 Czech Crowns).

Trusts and Foundations in Łódź

I am pleased to announce that I will be presenting at a seminar for Polish lawyers in Łódź on 27 April.

This is especially relevant given the anticipated introduction of family foundations which is being considered by the Polish Parliament.

Click here for more information.

Getting Down to Business

Much of my work and much of my time is focused on helping families achieve their goals.  Most often those goals are focused around business succession and the inheritance of family wealth.

But sometimes other kinds of projects come along.  Sometimes my clients are businesses rather than families and sometimes the goals are business goals rather than family goals.

This is not really that surprising.  Trusts are an important business tool in some countries, being used as SPVs, as investment vehicles, for securitisation, and in many other ways.

In Central Europe these uses are much less common.  However, it sometimes happens that business models from the US, the UK, or elsewhere can be successfully translated into a local context, delivering solutions that are easier, simpler, safer, and more robust than the ‘traditional’ way of doing things.

So despite some misconceptions to the contrary, trusts can sometimes (but not always) be fantastic tools for solving business problems.  For me, such projects are especially interesting and enjoyable as they require lots of creative thinking and sometimes the development of new and innovative solutions.  These projects always involve working as a team – especially with clients’ management, lawyers, and tax advisers.  It is always great to work with people who are open to new ideas and new solutions to old problems – rather than resisting change because “that’s the way we’ve always done it”.

Here are examples of some of the projects I am working on at the moment or have completed over the past few months.  Using;

  • a foundation as the launch pad for an innovative listed IT company
  • a trust as a tool to provide fidelity protection of advance client deposits
  • a foundation as a holding vehicle for a large cyber currency portfolio
  • a trust as a tool to provide a hybrid employee benefit program and virtual stock option scheme

I really look forward to implementing more similar projects in the future.

Is Inheritance Distasteful?

Is Inheritance Distasteful?

Daniel Craig seems to think so.

Thinking about inheritance probably isn’t the most positive activity for many people. Nobody likes to think about their own death, and for that reason, some people avoid this topic completely.

Others take the view that, since they’ll be dead, it’s not really their problem, and their children can solve it.

And there is another group who seem to secretly hope that that they are immortal. (Because they will never actually die, inheritance is therefore not something they need to worry about).

Not surprisingly, I disagree with these three avoidance strategies. If you have not (at the very least) thought about what happens to your assets when you die, then it is highly likely you are creating a big mess for your family to clean up. Not only that, but unplanned inheritances very often result in serious family conflict. They also deliver results that are not actually what you would have wanted (if only you had actually thought about it).

So I strongly recommend investing a little time in this task – because doing so is likely to save a lot of money and stress in the future.

But, back to Mr Craig. Unlike some, he has actually thought about his inheritance.

Perhaps that’s not surprising. He has two very good reasons to consider this topic;

  • Together with his wife, he has assets estimated to be worth 155 million euro. 
  • He has a complicated family situation.  He has two children, one with his ex-wife, Fiona Loudon and the second with his current wife, Rachel Weisz.  Ms. Weisz also has a son from a previous relationship.

So it’s great that he has turned his mind to this topic. Perhaps that’s not surprising.

What’s more interesting is the conclusion he has reached. In an interview with Candis magazine, Mr Craig revealed he will not be leaving much to his children.

“I don’t want to leave great sums to the next generation. I think inheritance is quite distasteful. My philosophy is get rid of it or give it away before you go.”

Mr Craig is not alone in sharing such sentiments, and while his future heirs might not be very enthusiastic about these plans, it is his money to do what he likes with.

. . . but . . .

If he wants to do this, he is going to need a very good plan.

For example, If Mr Craig lived in an EU country, he would most likely have to deal with forced heirship laws, which give Ms Weisz and both of his children (and maybe also his stepson) a fixed right to inherit part of his estate.

In the UK, where Mr Craig actually does live, his children have similar although less clearly defined rights. Another factor in the UK is inheritance tax which – at a top rate of 40% – will also eat up quite a bit of the 155 million.

It is possible to solve these problems, but only if a properly planned strategy is used – often (but not always) involving a trust or private family foundation.

I hope that Mr Craig has a good adviser and a good plan.

Of course, leaving nothing at all to your children is at the extreme end of the scale – but there are often very good reasons for leaving children less than they might otherwise have expected. Perhaps the best-known example of this is American billionaire Warren Buffett who is quoted as saying that:

“[t]he perfect inheritance is enough money so that [children] feel they can do anything, but not so much that they could do nothing.”

This is a good philosophy and one that is very popular among wealthier clients – but again it is not a result that you can achieve just by wishing it. You need to make and implement a plan.

Some Photos from Last Week’s Event

Here are some photos from last week’s seminar “Seven Years of the Trust Law in the Czech Republic” which was organised under the auspices of APRSF, the Society of Estate and Trust Practitioners (STEP), and the Czech Bar Association.

I was delighted to be one of the presenters. The seminar was a great source of new information not just in relation to Czech, but also Liechtenstein, Switzerland, Austria, the UK, and especially Poland where many interesting things are happening.

APRSF Training for Trustees and Trust Advisers – 24 – 25 November 2021

I am pleased to advise that I am presenting at the seminar for Asociace pro podporu a rozvoj svěřenských fondů, the Czech Trusts Association in November.

The seminar is for:

  • Anyone who has, or is considering accepting appointment as a trustee.
  • Lawyers, notaries, and others interested in a more in-depth knowledge of trust funds – appropriate to providing advice to clients.
  • Private bankers and financial advisers who want to provide comprehensive financial planning advice.
  • Anyone else who wants to deepen their knowledge and understanding of trusts in the Czech Republic.

For more information about the seminar please see the APRSF website.

What Is the Difference Between a Trust and a Foundation?


Many people ask me what the difference is between a foundation and a trust.

There is a short answer to this question and a longer answer.

Here’s the short answer:

“What Is the Difference Between a Trust and a Foundation?”

“Not much”.

They are more or less the same animal wearing different fur, and they help the same sort of people achieve the same objectives in the same way.

There are of course some differences in the way that they work – but if you look at the big picture those differences are really not important.

What IS important is your goals and objectives. Whether a trust or a foundation (or something else) is the right choice to help you achieve those objectives is very much a secondary question. A question that is normally answered towards the end of the planning process – not at the start.

Here’s the longer answer:

“What Is the Difference Between a Trust and a Foundation?”

Trusts have been around for a long long time – since the 12th Century.

They are used by millions of families around the world to own, protect and manage family assets. However, most of those millions of families live in ‘common-law’ countries, countries that inherited their legal systems from the British. Examples include the UK obviously, but lots of other countries that have some historical connection with Britain through colonisation or the British Commonwealth. That’s a lot of the world; the USA, Canada, Australia, New Zealand, India, Kenya, Singapore, Hong Kong, and lots of tiny islands in the Caribbean and elsewhere.

Family foundations are more often found in ‘civil law’ countries, such as in continental Europe. They too have a long history with roots dating back to Mediaeval Europe where they were created for charitable purposes.  While they are still commonly used in this way, over time foundations have evolved so that they now perform many of the functions and provide many of the benefits of trusts – but in a way that ‘fits’ more easily into their legal system.

Having said that there are an increasing number of countries that offer both trusts and foundations, each structure being tailored to a particular audience.

The law of trusts and foundations varies a lot from place to place, but it is possible to make some generalisations as follows:

The basics are the same.

In both the case of trusts and foundations, they are established by someone (The Settlor for Trusts, the Founder for foundations) for the benefit of some other people (The beneficiaries).

The founder, when he or she sets up the trust or foundation also creates a set of rules – covering who gets the money and when, as well as many other things.

A third person, or more often a group of people (The Trustees for trusts, the Foundation Council for foundations) acts as a kind of board of directors and is legally responsible for carrying out the founder’s wishes and acting in the interest of the beneficiaries. (Some foundations and trusts can also be created to achieve a purpose rather than for the benefit of beneficiaries – but that’s a topic for another day).

So far, the same thing . . but

Trusts are not legal entities. Foundations are

Trusts are best thought of as a set of legal relationships between the people involved. The settlor establishes the trust and puts the assets into it. The assets are managed by the trustees, for the benefit of the beneficiaries (normally the settlor’s family).

Nobody is the absolute owner of the assets. The trustees and the beneficiaries have ownership rights of a kind, but the important thing is that even though the settlor remains firmly in the driver’s seat, the assets don’t legally belong to him or her anymore. If he or she dies, goes bankrupt or something of the sort, the trust carries on regardless – with the assets being protected, in accordance with the settlor’s instructions for the benefit of the beneficiaries.

If you look at the bank account for a trust, you will find that it is in the name of “Joe Smith and Fred Blogs as Trustees for the XYZ Trust”. The trust does not own the money in the account. Instead it is ‘owned’ (or perhaps better to say “managed”) by Joe and Fred on behalf of the trust.

In contrast, foundations are legal entities in the same way that a company is a legal entity. They are created by and under the law of the country in which they are based. Otherwise, in practice the structure is very similar. The underlying legal concepts and theory is vastly different – but as we said above, the end result is not.

From this difference flows the biggest practical difference. Because foundations are legal entities, they are registered on the commercial register of their home country. This can be a big positive if they are operating in a Civil law country, because being “another kind of company” generally makes doing things like owning assets, opening bank accounts, and signing contracts in those countries much easier.

For example, the bank account will be in the name of “XYZ Foundation”

So if you are going to be operating in a ‘civil law’ country, then a foundation often makes a lot of sense for this reason alone. (In some civil law countries, trusts are not recognised at all, which makes the choice rather simple). In common law countries, where trusts are common, they often make more sense than foundations.


Foundations are established under the government-made laws and regulations of the relevant state. As a general rule, that makes foundations more complicated and more tightly regulated. There is more paper and more forms to fill in and more interaction with the state. This means that it is often more expensive to set up and run a foundation than a trust.

Foundations also often have some sort of minimum capital requirement. For example in Switzerland this is CHF 50,000. In contrast, trusts don’t have any minimum (Well at least no minimum to speak of – there must be at least something in a trust, even 1 euro – otherwise you don’t actually have a trust).

Trusts on the other hand can exist based on a single document – which is often not filed anywhere. (In fact, it is possible in my places to establish a trust without any paper at all – although that is usually not a terrific idea) . Trusts can also be extremely simple (or not, as you wish). They are also, as a general rule much more flexible, cheaper, easier to run, and as we shall see, more private.


Because a foundation is registered in the commercial register, there is also normally some at least basic information available to the public about it. Trusts in contrast are not registered on the commercial register so there is often much less public information available.

It is worth noting that due to anti-money laundering rules, many countries are now seeking to register Trusts in some form either via registers of trusts or registers of beneficial ownership. However, even where this is the case, access to that information is typically more restricted than for foundations.


Finally, it is usually relatively easy to redomicile a trust to a different country – that is move somewhere else – perhaps because of changes to tax laws or family situations. In the case of foundations, that’s often much more difficult.


There is an even longer answer than this of course. If you would like more information, please contact us.