Trusts in België: Liaisons Dangereuses (Trust in Belgium: Dangerous Liaisons)

Tijdschrift voor Privaatrecht (Private Law Journal) 2012, n° 2, p. 693-704

7 Pages Posted: 9 Dec 2012

See all articles by Alain Laurent Verbeke

Alain Laurent Verbeke

KU Leuven - Faculty of Law; Harvard Law School; KU Leuven - Faculty of Psychology; Tilburg Law School; Catholic University of Portugal (UCP) - Católica Global School of Law; Greenille Private Client Team @ Deloitte Legal - Lawyers

Date Written: July 5, 2012

Abstract

In this article I make a claim against off shore trusts and foundations as useful estate planning vehicles for Belgian residents. My point is that such structures may end up causing a nightmare both from the perspective of tax law and of civil law.

On the fiscal side, the Belgian tax administration makes a strong argument for taxation both on the level of income tax and inheritance tax. Even fully discretionary and irrevocable trusts have a hard time to pass the tough tresholds. The administration has a point: how often is such fully discretionary trust really also in the facts fully discretionary with no power whatsoever for the settlor?

This may change dramatically upon the decease of the settlor. At that moment the trust may become genuinely discretionary, in the hands of the trustees. Their fiduciary obligation is towards the goals and objectives set out in the trust deed and defined by the settlor. The latter however is not there anymore to correct or finetune.

Hence, on the civil law side, the paradox of the discretion may turn into a true nightmare after the settlor has passed away. In many instances trustees may then rely on the discretionary character and the will of the late settlor to pretty much act as they seem fit. The heirs of the settlor are then at the mercy of the trustees goodwill.

Note: Downloadable document is in Dutch.

Keywords: Trust, Fiduciary obligation, Inheritance taxes, Income tax

JEL Classification: K11, K34

Suggested Citation

Verbeke, Alain Laurent P. G., Trusts in België: Liaisons Dangereuses (Trust in Belgium: Dangerous Liaisons) (July 5, 2012). Tijdschrift voor Privaatrecht (Private Law Journal) 2012, n° 2, p. 693-704. Available at SSRN: https://ssrn.com/abstract=2185324

Alain Laurent P. G. Verbeke (Contact Author)

KU Leuven - Faculty of Law ( email )

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HOME PAGE: http://www.law.kuleuven.be/fvr

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KU Leuven - Faculty of Psychology ( email )

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Tilburg Law School

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Netherlands

HOME PAGE: http://www.tilburguniversity.edu/research/institutes-and-research-groups/tisco/

Catholic University of Portugal (UCP) - Católica Global School of Law

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Lisboa
Portugal
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HOME PAGE: http://www.fd.lisboa.ucp.pt/site/custom/template/ucptplfac.asp?sspageID=3293&lang=2

Greenille Private Client Team @ Deloitte Legal - Lawyers ( email )

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Brussels-Zaventem, 1930
Belgium
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