In 2021, an Italian entrepreneur, a long-􀆟me resident of Milan, began thinking seriously about
how to organize his family wealth for the next genera􀆟on. A􀅌er more than three decades
building a successful manufacturing business and inves􀆟ng in property across Italy, the client
had accumulated significant assets. His children, however, had gradually built their lives
abroad. His first son had moved to London to work in finance, while the other son had se􀆩led
in New York, where he was involved in tek-ventures. Several of the client’s grandchildren were
growing up in Switzerland.
As the family became increasingly interna􀆟onal, the client realized that tradi􀆟onal succession
planning might create complica􀆟ons if assets were transferred directly to heirs living in
different jurisdic􀆟ons. On the advice of legal and tax advisers, he decided to establish a trust
structure designed to preserve family wealth while allowing flexibility in suppor􀆟ng
beneficiaries abroad.
Italy does not have a comprehensive domes􀆟c trust law; however, trusts are recognized
through the Hague Conven􀆟on on the Law Applicable to Trusts and on their Recogni􀆟on,
which has been ra􀆟fied by Italy. For this reason, the trust created by the client was governed
by Jersey Trust Law, a commonly used governing law in Italian trust planning.
Unlike many interna􀆟onal structures, the client decided that the trustee should remain in Italy.
The role of trustee was therefore assigned to a professional Trustee company based in Milan,
which had experience managing trust structures connected to Italian families and assets. The
client believed that appoin􀆟ng an Italian trustee would allow closer oversight of the trust’s
investments, par􀆟cularly the real estate and business interests located in Italy. A trusted legal
adviser based in Lugano was appointed as protector, with limited powers to oversee major
trustee decisions.
At the 􀆟me the Family Trust was established, the client transferred a por􀆞olio of assets valued
at approximately €12 million into the structure. These assets included both real estate and
corporate equity, reflec􀆟ng the diverse nature of the family’s wealth. The rental income from
this property provided a steady cash flow for the trust.
Corporate investments formed another important part of the trust property. The client
transferred a 35% shareholding of the manufacturing company he had founded earlier in his
career. The company con􀆟nued to operate successfully and distributed dividends regularly,
which became a key source of income for the trust.
The trust was established as a discre􀆟onary trust, meaning that the beneficiaries had no
automa􀆟c en􀆟tlement to income or capital. Instead, the Italian trustee retained the authority
to decide when and how distribu􀆟ons would be made, taking into account the needs of the
beneficiaries and the long-term preserva􀆟on of the assets.
Although the structure appeared straigh􀆞orward at the outset, its interna􀆟onal dimension
quickly introduced a number of legal and tax considera􀆟ons. Because the trustee was an
Italian company and the trust held significant Italian assets, the trust maintained a strong
connec􀆟on with the Italian tax system. Rental income from the commercial property in Milan
remained subject to Italian taxa􀆟on, while municipal property taxes con􀆟nued to apply to
both the Milan and Florence proper􀆟es.
Dividends received from the manufacturing company also required careful tax treatment.
Even though the shares were held within the trust, distribu􀆟ons from the company were s􀆟ll
subject to Italian corporate and withholding tax rules before reaching the trustee. The Italian
trustee then had to determine whether these funds should remain within the trust for
reinvestment or be distributed to the beneficiaries abroad.
When distribu􀆟ons were made, the cross-border dimension became even more evident. The
client’s son in London had to consider the United Kingdom’s complex rules governing offshore
and foreign trusts. His son in New York faced detailed repor􀆟ng obliga􀆟ons under United
States tax law, which requires disclosure when American residents receive distribu􀆟ons from
foreign trusts. Meanwhile, the grandchildren living in Switzerland were subject to Swiss
taxa􀆟on rules that vary depending on cantonal prac􀆟ce and the characteriza􀆟on of the trust
under Swiss tax principles.
Over 􀆟me, the Family Trust became a structure requiring careful coordina􀆟on between
professionals in several jurisdic􀆟ons. The Milan trustee worked closely with Italian tax advisers
to ensure compliance with domes􀆟c repor􀆟ng requirements, while interna􀆟onal advisers
assisted beneficiaries in managing their own tax obliga􀆟ons abroad. Regular asset valua􀆟ons
were also necessary, par􀆟cularly for the real estate proper􀆟es and the shares in
manufacturing company, to ensure transparency and proper financial repor􀆟ng.
For the client, the trust ul􀆟mately served its intended purpose. It created a structured
framework for managing the family’s assets while maintaining flexibility for future
genera􀆟ons.
At the same 􀆟me, the case demonstrates how trusts connected to Italy can operate effec􀆟vely
even when beneficiaries are spread across mul􀆟ple countries. The presence of an Italian
trustee ensured strong oversight of domes􀆟c assets, while the trust structure allowed wealth
to be administered for an increasingly interna􀆟onal family.
The Family Trust illustrates that when Italian assets, an Italian trustee, and foreign
beneficiaries intersect, careful governance and cross-border tax coordina􀆟on become
essen􀆟al to ensure the trust operates smoothly and achieves its long-term wealth planning
objec􀆟ves.