Since 1926 trusts have been embodied in Liechtenstein law in the Persons and Companies Act (PGR). Switzerland, by contrast, despite recognising foreign trusts, does not have its own law on trusts. Trustees in Liechtenstein have more comprehensive responsibilities than their counterparts in Switzerland. They must have a licence to operate as a trustee and are subject to the FMA, the Liechtenstein financial market supervisory authority.
Based on trust
In a trust arrangement, a settlor transfers the trust property (trust fund) to a trustee. The trustee undertakes to administer or use the property in their own name as an independent legal owner for the benefit of one or more beneficiaries. A trust is a contractual legal relationship rather than a legal entity, and has no legal personality. Settlors transfer their assets to the trustee on the basis of trust in their abilities and integrity – hence the name.
Trusts can be set up for charitable, social, cultural or similar purposes. Similar to foundations, they follow global trends and international standards. A Liechtenstein trust is especially suited for the long-term preservation of business or family assets, for example to safeguard owners of assets in countries where there’s a risk of expropriation, to maintain group structures over generations, or for sustainable succession arrangements. What makes trusts particularly interesting is the individual room for manoeuvre they provide: a trust agreement can be set up to cover just about any arrangement.
Trust is in the DNA
Wealth and asset management, and the requisite legal set-ups, have a venerable tradition in Liechtenstein. The Princely Family itself embodies a dynasty philosophy, and has invested most of its wealth in foundations and trusts. Liechtenstein banks have also specialised in wealth and asset management for private clients and institutional investors. The Principality’s first bank, Liechtensteinische Landesbank (LLB), was established in 1861. The goal back then was to cover the savings and loans needs of a population of small farmers and artisans. LGT Bank, founded in 1920 and taken over by the Princely Family in 1930, concentrated from the outset on managing foreign assets. Verwaltungs- und Privat-Bank (VP Bank), which goes back to 1956, is also closely associated with the trust business. Liechtenstein has positioned itself as a centre of wealth and asset management, establishing trust as a fundamental value. Now the financial services sector is an important pillar of the Liechtenstein economy, accounting for 23% of economic output (see Figure 1).