Italian resident settlor: working with a trustee in Switzerland

An Italian resident settlor who appoints a trustee in Switzerland does not hand over a problem and walk away. The trust assets sit under the trustee's control, but the settlor still lives, files and plans in Italy. That gap is where most friction appears: documents in two languages, advisers who have never met, and reports that arrive in a format nobody on the Italian side expected.

This page is about the working relationship. It explains what a trustee in Switzerland asks of a settlor in Italy, what your local advisers should prepare, and how the contact and reporting rhythm usually runs. It does not assess Italian law or Italian tax: those questions belong to an adviser qualified in Italy, and we show you what to ask them.

What the Swiss trustee needs from you

A regulated trustee cannot act on a handshake. Before assets move, the trustee has to understand who you are, where the money comes from and what the trust is meant to achieve. For a settlor living in Italy, that usually means:

• Identity and residence evidence, including the country where you are resident for tax purposes and any other nationality you hold.
• An account of the source of wealth, written plainly and supported by documents your local accountant or notary can obtain.
• Your objectives, set out in your own words: who should benefit, in what circumstances, and what you want to keep control over.
• The list of people and companies around the structure: beneficiaries, any protector you are considering, and your local advisers.
• The nature and location of the assets you intend to transfer, because a business interest, a property and a portfolio each raise different questions.

Anti-money-laundering duties explain the weight of this list. The trustee has to identify the settlor and the beneficiaries and keep that record current. Delays at this stage almost always come from missing source-of-wealth papers, not from the trustee. For the wider process of appointing someone, see appointing a trustee when you set up a new trust.

Who talks to whom

The cleanest arrangements give each party one job and one channel. You instruct the trustee on your objectives; your Italian adviser tells you, and the trustee, what Italian rules mean for you; the trustee administers the trust under the trust deed and reports back. The diagram shows the usual flow.

Notice the order. The trustee does not give Italian advice, and your Italian adviser does not run the trust. Each should be able to say what the other needs. When two advisers speak to each other only through you, details drop out; a short written note passed in both directions prevents that.

What your local advisers should bring

Your Italian accountant, lawyer or notary is not an optional extra. They hold the facts about your residence, your family and your Italian assets that the trustee cannot verify alone. The table sets out the split.

If you are an adviser looking for a trustee on behalf of a client, the page for advisers and family offices covers what to bring to a first conversation.

Language and documents

Working languages matter more than people expect. Many Italian families are comfortable with English for contracts, but a deed, a letter of wishes or minutes can carry different weight if a family member reads them in another language later.

• Agree early which language is the working language of the trust and which version of any document prevails.
• Ask whether certified translations will be needed for Italian authorities or banks, and who arranges and pays for them.
• Keep names, addresses and dates consistent across documents. A different spelling of the same name can stall a bank account opening for weeks.
• Decide who holds originals and who holds copies. A handover file shows how a complete record looks if the trustee ever changes.

Where the Hague Convention fits

A Swiss trustee works within a Swiss legal framework for trusts. Switzerland signed the Hague Convention 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.

Under Articles 6 and 7 of the Convention, a trust is governed by the law the settlor chooses, expressly or by implication. Without a valid choice, it is governed by the law with which it has the closest links, looking at the place of administration, the location of the assets, the residence of the trustee and the purposes of the trust. If the chosen law does not recognise trusts, the choice has no effect and that fallback applies.

Article 2 also matters for a settlor: reserved powers do not by themselves prevent a trust from existing. That is why the extent of the powers you keep is a question to settle with your trustee and your lawyer before signing. The page on settlor reserved powers covers the practical side.

The Convention says what Switzerland does. What a court or authority in Italy will do with the trust is a separate question. Article 13 allows a State not to recognise a trust whose significant elements (apart from the chosen law, the place of administration and the trustee's habitual residence) are closely connected only with States that do not have the institution of the trust. Article 15 leaves in place the mandatory rules of the forum, including those on protecting minors, the effects of marriage, succession rights and the protection of creditors. Whether either provision touches your situation is for an Italian lawyer to assess.

Tax and recognition: flagged, not answered

Swiss federal guidance describes how Switzerland itself taxes trusts, and the principle is worth knowing because it shows the questions to put to your Italian adviser:

• For a revocable trust, the assets and their income stay taxable with the settlor at the settlor's place of residence, and a distribution to a beneficiary is treated as a gift.
• For an irrevocable fixed interest trust, the beneficiary may be treated like a holder of a usufruct, with assets and income attributed to them; creation is treated as a gift from the settlor.
• For an irrevocable discretionary trust, where the settlor is resident outside Switzerland at the time of creation, the assets are attributed neither to the settlor nor to the beneficiary under that guidance.

That is Swiss treatment only. It does not tell you how an Italian resident is taxed, and nothing here should be read as saying so. Ask your Italian adviser at least these questions:

• How would the authorities in Italy classify this type of trust for someone resident in Italy?
• Which reports or declarations does the trust create for you or for beneficiaries who live in Italy?
• How would a distribution, or the creation of the trust itself, be treated in Italy?
• Do family or inheritance rules in Italy limit what you can place in the trust?
• Does moving your residence later change the answer? See when the settlor moves country.

Please ask for the answers in writing and share them with the trustee. A Swiss trustee can only structure and administer around what it knows.

A first-year calendar of contacts and reports

The following is an illustration. It describes a fictional family established near Milan, with a Milan-based accountant and a notary, and a trust administered in Geneva. Your own rhythm will be agreed in the engagement terms.

The point of the calendar is not the dates but the habit: every contact produces a short written record that the Italian adviser can see if you choose to share it. For what the review itself covers, see the yearly compliance review.

Reporting: what you should expect to receive

A trustee must manage the trust and give an account of it. In practice that means regular statements of what is held, a record of decisions taken, and answers when you or a beneficiary ask reasonable questions. Beyond that, a Swiss trustee has its own regulatory and anti-money-laundering reporting; the settlor's role is to keep the trustee informed of any change in residence, family circumstances or source of funds. A fuller list is on what information your trustee must give you and on compliance and reporting duties.

Because the trust's reporting follows Swiss and international standards, ask your Italian adviser early which of those documents they expect to see. Agree in advance who forwards what, so that nothing reaches the adviser late or in a form they cannot use.

First-meeting checklist

• Gather identity documents and proof of tax residence
• Write a short account of the source of wealth
• List the intended beneficiaries and any protector
• Name your Italian accountant, lawyer or notary and ask them to expect the trustee's questions
• Decide the working language and which version of documents prevails
• Prepare the questions on recognition and tax for your Italian adviser
• Ask the trustee how fees are structured and when they are disclosed