How to transfer a trust to a Swiss trustee

If you want to transfer a trust to a Swiss trustee, the first thing to understand is that the phrase covers two quite different operations. One is a change of the person or company that administers the trust. The other is a change of the law that governs it. They are often confused, and the confusion produces needless worry in both directions: families fear that a new trustee means a new legal system, while others assume that a new legal system can be had without touching the trust deed. In practice, the most common route keeps the governing law exactly where it is and moves only the administration.

This guide is about that route. It explains which elements of an existing trust normally stay in place, which ones move to the incoming trustee, how Switzerland treats a trust created under foreign law, and what banks and other counterparties tend to ask for. It does not compare jurisdictions and it does not discuss tax or succession outcomes; those depend on where you and your beneficiaries live and need an individual analysis. The subject here is the trustee and the handover.

Two questions hiding in one request

When a settlor, a protector or an adviser says "we want to bring the trust to Switzerland", they may mean any of the following:

• the current trustee will retire and a Swiss trustee will be appointed in its place;
• the trust deed will be amended so that a different law governs it;
• the trust assets will be moved to accounts held in Switzerland;
• a new trust under a different law will be created and the old one wound up.

Each of these has different legal consequences, and only the first is, strictly speaking, a change of trustee. The second changes the foundation of the trust and is usually done with the help of specific powers in the deed or with court involvement. The third is a banking matter that follows from the first. The fourth is not a transfer at all but a fresh settlement, with all that implies for the position of the settlor and the beneficiaries.

A sound starting point is the trust deed itself. It tells you who may remove and appoint a trustee, whether the consent of a protector is needed, whether the place of administration can change, and whether the governing law can be switched. Our step-by-step guide to changing trustee walks through the sequence once those answers are known; this page deals with the question that comes first, namely what actually travels.

What stays and what moves

The diagram below follows the usual order of questions. Most existing trusts end up in the first or second box: the law stays, the administration moves.

Behind that short diagram sits a practical split. The following elements normally stay where they are:

• the trust deed itself, together with its amendments and any deed of addition;
• the governing law chosen by the settlor, unless a deliberate and separate decision changes it;
• the identity of the settlor, the class of beneficiaries and the purposes of the trust;
• the protector's office and powers, unless the deed or a separate decision changes them;
• the letter of wishes, which remains a non-binding statement of intention, although the new trustee will want to read it and may ask for an update.

These elements normally move to the incoming trustee:

• legal title to the trust assets, which sits in the name of the trustee;
• the books, minutes, correspondence and decision records of the trust;
• the relationship with banks, custodians and any underlying companies;
• the duty to administer, to keep records and to account to the beneficiaries;
• the compliance obligations attached to the trustee's role, including anti-money-laundering and reporting duties.

What does not neatly fall into either group are the underlying structures, for example a company owned by the trust. The shares move with the trust assets, but the directors of the company and its own bank accounts need separate decisions. We come back to this below.

Governing law: why it usually stays foreign

The reason the law can stay where it is lies in the way the Hague Convention on the law applicable to trusts and on their recognition is built. Under its articles 6 and 7, a trust is governed by the law the settlor has chosen, expressly or by implication. Where no law has been chosen, the trust is governed by the law with which it has the closest connection. That connection is assessed by looking at the place of administration designated by the settlor, the location of the assets, the residence of the trustee and the objects of the trust. If the chosen law does not know the institution of the trust, the choice has no effect and article 7 applies instead.

Two consequences follow for anyone planning a move.

First, the settlor's choice of law is the anchor. A trust governed by a foreign law that recognises trusts remains governed by that law after the trustee changes, because the choice was made by the settlor and not by the trustee. Appointing a trustee who lives and works in Geneva alters one of the connecting factors, the residence of the trustee and probably the place of administration, but it does not displace an express choice of law.

Second, the connecting factors matter when the deed is silent or unclear. A trust that never named a law, and whose trustee, assets and administration all shift to Switzerland, may find that the closest connection now points somewhere different from where it pointed before. That is a reason to read the deed before the appointment, not after. If the choice of law is ambiguous, say so to the incoming trustee at the outset and ask for it to be settled in writing.

The Swiss federal rules on private international law confirm the approach. Article 149c of the federal act on private international law (LDIP) states that the law applicable to trusts is governed by the Hague Convention. The same chapter says nothing about succession law, which is a separate question and is outside the scope of this page.

How Switzerland treats a trust created under foreign law

Switzerland signed the Hague Convention of 1 July 1985 on the law applicable to trusts and on their recognition on 3 April 2007, ratified it on 26 April 2007, and it entered into force for Switzerland on 1 July 2007. The Federal Office of Justice confirms that foreign trusts have been recognised in Switzerland since that date. The Convention is classified as RS 0.221.371.

Recognition has a concrete content. Under article 11 of the Convention, a trust validly created under the applicable law is recognised as a trust. At a minimum, recognition means that the trust assets are separate from the trustee's personal estate and that the trustee may sue and be sued in that capacity. For a family this is the core reassurance: when a Swiss trustee takes office, the assets do not become part of that trustee's own property, and the trustee can act for the trust before the courts.

Article 2 of the Convention also describes what a trust is for these purposes: a legal relationship, created during life or on death, in which assets are placed under the control of a trustee for the benefit of a beneficiary or for a specified purpose. The assets form a separate fund, title stands in the name of the trustee, and the trustee must manage and account for them. Powers reserved by the settlor, or the fact that the trustee is also a beneficiary, are not inconsistent with the existence of a trust. That last point matters in practice, because many older trusts reserve powers to the settlor, and we discuss the consequences for the trustee relationship in the guide to settlor reserved powers.

Article 13 contains a limit. A state is not bound to recognise a trust whose significant elements, apart from the chosen law, the place of administration and the habitual residence of the trustee, are connected more closely with states that do not have the institution of the trust. For a trust that moves to Switzerland, this provision rarely bites, because Switzerland has the Convention. It can matter elsewhere, for instance if the assets, the settlor and the beneficiaries are all in a country that does not know trusts and a court there is asked to treat the structure as something else.

Swiss rules that complement the Convention

The implementing chapter of the LDIP (articles 149a to 149e), introduced by a federal decree of 20 December 2006 and in force since 1 July 2007, fills in the procedural side:

• Scope. Under article 149a, "trusts" means trusts created by a legal act within the meaning of the Convention, whether or not they can be proved in writing.
• Jurisdiction. Under article 149b, a choice of forum in the terms of the trust is decisive, provided it is in writing or in a form allowing proof by text. Failing that, the courts of the defendant's domicile, of the seat of the trust or of the place of the Swiss establishment have jurisdiction.
• Publicity. Under article 149d, where trust assets are entered in the name of a trustee in the land register, or in the register of ships or aircraft, the link with the trust can be noted. A link that is not noted cannot be relied on against third parties acting in good faith.
• Foreign judgments. Under article 149e, foreign decisions in trust matters are recognised in Switzerland in particular where they come from the validly designated court, the state of the defendant's domicile or establishment, the seat of the trust, or the state whose law governs the trust.

For debt enforcement, article 284a of the federal debt enforcement and bankruptcy act (LP) provides that when trust assets answer for a debt, proceedings are directed against a trustee as representative of the trust, at the seat of the trust, and continue as bankruptcy limited to the trust assets. Article 284b adds that in the bankruptcy of a trustee, trust assets are set aside from the bankruptcy estate after deducting the trustee's own claims against them.

These provisions do not make Switzerland a place where one can ignore the deed. They make it a place where the deed, whatever law governs it, can be recognised, enforced and relied on by a trustee who is established there.

Why the trustee must be approved to act

A trustee who acts professionally in Switzerland is a regulated financial institution. Under article 2, paragraph 1, letter b of the financial institutions act (LEFin, also known as FinIA or FINIG), trustees are financial institutions, alongside asset managers. Article 17, paragraph 2 defines a trustee as anyone who, on a professional basis, manages a separate estate or disposes of it for a beneficiary or for a specified purpose, on the basis of a trust deed within the meaning of the Hague Convention. Under article 3, an activity is professional when it is an independent economic activity pursued to obtain a regular income.

FINMA grants the authorisation. Day-to-day checks that the conditions are still met are carried out by a supervisory organisation (SO), which is itself authorised and supervised by FINMA, and changes in the relevant facts must be notified to that organisation in advance. For a person considering a transfer, this has two practical consequences. The incoming trustee has to be approved before it can accept the role. And the trustee will itself have to keep its supervisor informed about material developments, which can include taking on a trust with a complex history.

Our guide to FINMA and SO-FIT explains what that approval does and does not tell you, and the guide to due diligence on your trustee lists the questions worth asking before you sign anything.

The handover, step by step

The legal mechanics are usually organised around a single document, the deed of retirement and appointment, by which the outgoing trustee retires and the incoming trustee is appointed. Around it sits a sequence of preparatory and follow-on steps.

Reading the deed

Before any approach to a bank, read the power of appointment and removal. Some deeds give it to the settlor; some to a protector; some to the existing trustee; some to a majority of adult beneficiaries. If the person who holds the power is not the person who wants the change, expect more work. Where the deed is silent or unworkable, a court application may be needed, and the court that has jurisdiction will depend on the terms of the trust and the connecting factors discussed above.

An independent review first

A responsible incoming trustee will want to review the trust before accepting it. This is not a formality. It is how the trustee learns whether there are gaps in the minutes, undocumented distributions, assets held in unusual ways or beneficiaries whose entitlements are unclear. Our page on the independent review of an existing trust describes what such a review covers, and the questions in reviewing an existing trust give you a way to prepare.

The deed of retirement and appointment

The deed should be drafted for the governing law of the trust, not for the law of the new trustee's home. Whoever drafts it must check that the outgoing trustee's retirement is effective only when the new appointment takes effect, so that the trust is never without a trustee, even for a day. The glossary entry on the deed of retirement and appointment gives the practical meaning of the terms.

The deed will usually also deal with the release or indemnity position of the outgoing trustee. This is a point to read carefully. A beneficiary or protector who signs a broad release may be giving up claims that they would want to keep, and a new trustee should not be put in a position where it inherits unresolved problems without knowing of them.

Transfer of title and records

Legal title to trust assets sits in the trustee's name, so it must be formally transferred. For bank accounts and securities this means new account opening or a change of account holder, depending on the custodian. For real estate it means a registry process, and in Switzerland the link with the trust can be noted under article 149d LDIP. For shares in an underlying company it means a share transfer and updates to the company's register. For records it means a handover file; our checklist of the handover file from the outgoing trustee shows what a complete one contains.

Banks and recognition by counterparties

Recognition of the trust by the law is one thing; acceptance by a bank is another. Banks apply their own onboarding standards, and they do so for any trust, whatever its law. What the incoming trustee brings is a regulated status and a documented procedure, which many banks find easier to deal with than an unregulated or distant administrator.

Expect banks to ask for the following, in some form:

• a certified copy of the trust deed and all amendments;
• the deed of retirement and appointment;
• identification documents for the new trustee, its authorised signatories, the settlor, the protector and, in many cases, the beneficiaries;
• information on the origin of the assets;
• a statement of who the beneficial owners are, in the sense of anti-money-laundering rules (AMLA, LBA, GwG);
• information needed for automatic exchange of information (AEOI, also called CRS) and, where relevant, for other reporting regimes.

A bank may decide to keep the existing accounts and simply change the signatory, or ask for new accounts to be opened. Either is normal. What you should not expect is that a change of trustee automatically preserves every term of the existing banking relationship. Credit lines, custody arrangements and investment mandates may need renegotiating.

Our page on the trustee and the trust bank accounts explains how a Swiss trustee typically runs those accounts, and the page on compliance and reporting duties covers what the trustee must do each year once it is in office.

A table to keep the picture straight

Mandatory rules that sit above the deed

Article 15 of the Convention preserves the mandatory rules of the forum. These cover the protection of minors and persons lacking capacity, the effects of marriage, succession rights, the transfer of title, the protection of creditors and the position of third parties acting in good faith. In plain terms, a trust recognised in Switzerland is not immune from the rules that protect those groups.

This is a reason to be careful about the facts of each family rather than treating a transfer as a mechanical exercise. A trust whose settlor is married, whose beneficiaries include minors, or whose assets include property in another country raises questions that the deed alone cannot answer. A Swiss trustee will ask about these facts early, and you should expect to be asked. For beneficiaries who need particular care, see the page on trustee care for vulnerable and blended-family beneficiaries.

An example: law stays, administration moves

Take a fictional family established in Lausanne. The settlor, a retired engineer, created a discretionary trust some years ago under the law of a common-law jurisdiction. The trust was set up by a corporate trustee in a distant location, chosen at the time for convenience. Over the years the family has found the trustee slow to reply, and the beneficiaries, who are adult children living in different countries, have begun to ask for accounts.

The family does not want to disturb the legal framework. The deed is well drafted, the chosen law recognises trusts, and an advisor has told them that changing it would raise more questions than it answers. They ask a Geneva trustee to take over.

The steps run as follows. The incoming trustee first reads the deed and finds that the settlor holds the power to remove and appoint the trustee, with the consent of the protector. It carries out its own onboarding and asks for a copy of the trust records. A review reveals that some minutes were never written up, and the family and the trustee agree how to record those decisions properly rather than ignoring the gap. A deed of retirement and appointment is drawn up under the governing law of the trust. The outgoing trustee hands over the files, the bank accounts are re-papered in the name of the Geneva trustee, and the underlying company receives new directors.

At the end, the governing law has not changed, the deed has not changed, and the beneficiaries have the same rights as before. What has changed is who administers the trust, where the records are kept, and which regulator stands behind the person in charge. A trust whose law stays foreign while administration moves is a perfectly ordinary outcome, and it is the one most families should consider first.

For a comparable story, see the case of a trust that moves from an offshore trustee to Geneva.

Points to settle before you sign

Before any deed is signed, make sure you can answer the following:

• Who holds the power to remove and appoint the trustee, and has their consent been recorded?
• Does the deed restrict the place of administration or the choice of trustee?
• Is the governing law clearly stated, and is it staying put?
• Has the incoming trustee confirmed that it is approved to take the role?
• Has an independent review of the records been done, and are the gaps understood?
• Is the scope of the outgoing trustee's release clear, and have the right people read it?
• Are the bank and custody arrangements agreed in principle with each institution?
• Have underlying companies, real estate and other structures been mapped?
• Has the letter of wishes been shared with the incoming trustee?
• Is there a written timetable for the effective date, so that the trust is never without a trustee?

If you are choosing among candidates, the guide on how to choose a trustee in Switzerland sets out a decision method, and the checklist of documents to gather before changing trustee helps with preparation.

What a transfer does not do

A transfer of administration is sometimes presented as a solution to problems it does not address. It does not rewrite the trust deed. It does not turn a weak deed into a strong one. It does not remove tax or reporting obligations that attach to the settlor or the beneficiaries in their countries of residence, and it does not cure past breaches by a former trustee. It also does not give anyone a protection without limits: the mandatory rules mentioned above remain, and a court in another country may take a different view of the structure.

What it can do is put the trust in the hands of an administrator who is regulated, locally present, accountable to a supervisor and equipped to keep proper records. For many families, that is the real objective, and it is a modest, realistic one.

Whether it is the right move for you depends on your residence, the countries of your beneficiaries, the nature of the assets and the terms of the deed. That is why a confidential assessment starts from the documents and not from a template.