A French resident settlor and a trustee in Switzerland: who does what

A French resident settlor who places assets with a trustee in Switzerland ends up with two sets of professionals who rarely meet: the trustee in Geneva and the advisers at home. The trust works when they share the same facts at the right time. This page describes what the trustee asks of you, what it expects from your French advisers, and how a first year usually runs. It is general information, not advice on French law.

What a trustee in Switzerland needs from you

A Swiss trustee authorised by FINMA must know who it is dealing with before it accepts assets. For a settlor living in France, that usually means the following, whatever the structure.

• Identity and residence. Passport, proof of French residence and a clear statement of any other nationality or tax residence. A trustee cannot administer a trust well if it is unsure where the settlor is resident.
• Source of wealth and source of funds. A written account of how the assets were built and how they reach the trust. Anti-money-laundering rules (AMLA) require this, and it is easier to produce at the start than under pressure later.
• Purpose and beneficiaries. Who is meant to benefit, in what circumstances, and where they live. Beneficiaries in other countries change the questions the trustee must ask.
• Assets to be settled. Their nature, where they are held and who currently holds title. Property, shares in a family company and bank accounts each bring different documents.
• Reserved powers. Whether you intend to keep any, since these affect how the trust is characterised. The Hague Convention itself says that powers reserved by the settlor are not necessarily inconsistent with a trust, but how far they go is a matter for your advisers on both sides. See settlor reserved powers.

The trustee will also ask for the name of your French lawyer, tax adviser and, where relevant, notary. That request is not a formality. It tells the trustee whom to send reports to and whom to ask when a French question arises.

Who talks to whom

The settlor sits in the middle. Your French adviser handles French law and tax; the trustee handles administration, record-keeping and reporting; counsel chosen for the governing law handles the trust deed. The diagram shows the usual flow of information.

Two habits keep this flow healthy. First, ask your trustee to write to your French adviser only with your instruction, and put that instruction in writing. Second, make sure your French adviser receives the trust deed itself, not a summary of it. Advice on a summary is advice on a different document.

What your French adviser should be asked

Recognition of a trust and its tax treatment in France are matters for a French adviser. This page does not set them out, and the sources it uses are Swiss and international. What it can do is list the questions worth putting to that adviser before you sign anything.

Bring the answers back to the trustee in writing. A trustee that has them can plan its reporting around them; one that does not will have to ask again, usually at an awkward moment.

What the Swiss trustee does for a settlor in France

Once the trust is funded, the trustee's work is mostly steady. It holds title to the assets in its own name, keeps them apart from its own property, and must manage them and account for them, as the Hague Convention puts it. In practice that means day-to-day administration, bank accounts held in the trustee's name for the trust, and compliance and reporting that includes automatic exchange of information (AEOI/CRS) where it applies.

For a French resident settlor, three points deserve attention.

1. Reporting must be consistent. The trustee's statements, your French declarations and your adviser's file should tell the same story. Differences are easier to explain when they are spotted early.
2. Residence is not static. If you or a beneficiary moves, the position can change. The trustee needs to hear about it promptly; when the settlor moves country sets out what follows.
3. The trust deed governs. The trustee acts under the deed and the governing law, not under French practice. If French requirements and the deed pull in different directions, the answer comes from your advisers, and the trustee follows the deed as amended with proper advice.

If you are weighing whether the trustee should sit near you or in Switzerland, see trustee near you or trustee in Switzerland.

Example: a first-year calendar

The following is an illustration, not a recommendation. Take a family established in Lyon whose parents, as settlors, set up a discretionary trust with a trustee in Geneva. Their year might run like this.

• Before signing. The family sends identity documents and source-of-wealth papers. Their French adviser writes up the points from the table above. The trustee and counsel agree the deed, and the adviser reads the final version.
• At funding. The trustee confirms in writing what it has received and in whose name each asset is held. The family sends the confirmation to their adviser.
• Soon after. A first call involving the settlors, the adviser and the trustee agrees who will send what, and in what form. The trustee notes the French adviser as the family's local contact, with the family's written consent.
• During the year. The trustee records every decision and every distribution in minutes, and shares statements as agreed. The family tells the trustee of any change of address, marriage, birth or move abroad.
• Mid-year check. The adviser asks the trustee for the documents needed for the family's French filings, and the trustee supplies them.
• At year end. The trustee produces accounts and reviews its own compliance file. The family compares both with what was filed in France. The same exercise, applied later to an older trust, is described in the annual trust health check.

Nothing in this calendar depends on a number, because the timings depend on the structure and on what France requires. Ask your adviser to fix them.

Where Swiss law and the Hague Convention fit

Switzerland ratified the Hague Convention on the law applicable to trusts and on their recognition, 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 then. Under Articles 6 and 7, the trust is governed by the law the settlor chooses, and failing a valid choice, by the law with which it has the closest connection.

Recognition elsewhere is a separate question. Article 13 allows a State not to recognise a trust whose significant elements are connected essentially with States that do not know the institution of the trust, and Article 15 preserves mandatory rules on matters such as inheritance rights, marriage effects and the protection of creditors. How France treats your trust is for a French adviser to say, and the trustee will ask for that advice rather than assume it.