Vadym Vasko on Entrusted Management and Trusts at WealthPro Ukraine Kyiv 2019
Vadym Vasko, Managing Partner of the Firm as one of the key speakers of the WealthPro Ukraine Kyiv 2019 Conference presented major benefits of structuring business and assets through trust instruments offered by western law and asset management under Ukrainian law. Under conditions of deoffshorization and substantial increase of the value of Substance confirmation in foreign jurisdictions, Ukrainian instruments provide with an opportunity to structure the business and assets essentially cheaper with a complete confidentiality.
Trust as any other asset management is based on the agreement. Western trust agreements are of a confidential nature; however, in the future, almost all beneficiaries of European trusts will appear in open registers of beneficiaries. This will not prevent trusts to continue performing the function of protection of the assets before third parties, tax structuring, to plan and structure the inheritance and assets, to avoid for some time declaration of foreign assets in Ukraine, to transfer the assets to real professional management.
Entrusted asset management today meets the challenges of de-offshorization, anti-money laundering and creation of new agencies for asset-chasing, strict and detailed compliance before the banks, exchange of tax information, openness of corporate and other public registers, CFC principles (some countries) and declaration of the beneficiaries.
Entrusted asset management (hereinafter "EAM") is developing in Ukraine. EAM is a legal relationship based on an agreement entered into for a period of time with trustee for a fee regarding asset management in the interest of settlor or a person (beneficiary) specified by the latter. EAM is the only legal contractual mechanism in Ukraine which provides you with protection against attacks of third parties on certain property (including the encroachment of any creditor and other interested parties, namely, in certain cases, separating the efforts of the creditors directed onto the asset from the asset itself and from the debtor); if it is required, EAM allows you to make asset management completely confidential, to determine the beneficiaries at the sole discretion of the settlor (including legal, permitted, alternative asset distribution bypassing the existing rules of inheritance, etc.), to optimize taxation or defer the payment of certain taxes.
Assets transferred to the entrusted management are not mixed-up with the assets of the manager or any third parties; entrusted management is maintained on a separate balance sheet and separate bank accounts. Only the bank and the manager know the name of the real Settlor. Names of the beneficiary may only be known to the Settlor and Trustee. Beneficiaries can be determined either during the establishment of the EAM, or in future under a respective contract. The assets transferred to the entrusted management can be registered in the name of trustee (to achieve full confidentiality, as it may be possible not to disclose the beneficiary in certain electronic registries, or, at the time of the establishment of the EAM, the beneficiary's name may still be unknown, etc.), and may be registered in the name of Settlor.
Sustainable development of the EAM is already observed at the securities market and corporate rights (with the involvement of quasi-trust structures), as well as in the transport industry.