A Glance Into The Business World: Introduction to Trusts
As a part of the Lecture Series at AUBG, Andrea Raimondi hosted a lecture which cleared the ambiguity surrounding business trusts, thus, allowing students to acquire more knowledge on the subject. He provided a profound description of what a trust is and how it operates for everyone who is considering a business career.
Raimondi, who is a dottore commercialista and a certified accountant since 2000, a business consultant and an auditor, a senior partner of Raimondi & Partners (Italy), and an International Tax Planning Association (ITPA) member, visited AUBG for the second time to help students get a grasp of the complicated nature of business, and trusts in particular. “It was definitely useful,” Yanko Redenkov, a third-year student said. “It is good to learn it from someone who actually works in this sphere.”
According to Raimondi, the trust scheme, in its essense, is a method of protection and control and it consists of several important, irreplaceable parts. First, to create a trust, there needs to be a settlor, a person who puts his assets in a trust fund. Second comes the trustee, the legal owner of the trust property, whose job is to manage the trust fund. The duties and authorities of the trustee are supervised by a protector who has some veto powers to assist him in exercising control. Then, the trust funds are received by a beneficiary that can be either an individual or an entity.
Trusts classify in several different types. Raimondi discussed them in pairs, emphasizing on the distinguishing traits of each type.
First, a trust can be either revocable or irrevocable, depending on the aim. The revocable trust, or the living one, is such that the settlor can dissolve whenever he wants and collect all the trust funds. Having in mind this trait, the revocable trust has a major setback. If the settlor has debts, the creditors can take his place and withdraw all the funds. The irrevocable trust, however, protects the trust funds from creditors given that even the settlor cannot take them because they were given unconditionally in the first place.
Then, a trust can also be discretionary or fixed. The latter has strict rules that have to be followed in order to ensure that no beneficiary would be financially harmed at the expense of another. Using the first type, however, the trustee can decide where the financial aid goes to. This is unthinkable of doing with the fixed type because the protector would simply replace the trustee.
Last but not least, a trust can also be charitable or non-charitable.
Raimondi then continued with explaining the term family office and its applications. It represents the management of investments and trusts for a family’s entity where family, ownership and business overlap to some extent. That is what makes the matter complex and creates difficulties given that a family member can also have shares in the family business and simultaneously run the company. To strengthen his words, Raimondi provided examples from his line of work.