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Trust Formation

Can I set up a UK-style Trust in Georgia?

Not exactly. Georgia is a Civil Law country. While you cannot create a Common Law Trust, you can achieve similar results using Fiduciary Management contracts or Corporate vehicles.

Who holds the title to the assets?

Under Fiduciary Management, the manager (fiduciary owner) holds the title in their name, but the law obliges them to manage it strictly for the benefit of the settlor/beneficiary.

Is it registered publicly?

Yes, Fiduciary Management contracts involving real estate must be registered in the Public Registry, making the arrangement visible to third parties.

Can I use this for inheritance planning?

Yes, it's an excellent tool. You can transfer assets to a manager with instructions to distribute income or assets to your heirs at specific times or conditions.

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Trust Formation and Fiduciary Management: Modern Asset Protection Mechanisms

A Trust is a legal instrument widely used in international practice to protect assets and manage inheritance. However, Georgia, as a Civil Law country, does not recognize the classic "Trust" (as found in English law) in a direct form. Instead, Georgian legislation offers an alternative and very effective mechanism — Fiduciary Management of Property. This service allows an owner (settlor) to transfer their property for management to a trusted person or company (fiduciary owner), so that they manage this property for the benefit of a beneficiary (e.g., children or family).

Creating trust-like structures in Georgia is particularly relevant for business people who want to separate assets from personal risks, or parents who want to ensure the financial future of their minor children until they come of age. Legal.ge offers access to corporate and civil law experts who will help you set up complex fiduciary management schemes and guarantee the safety of your assets.

What Does Trust/Fiduciary Management Service Cover?

Specialists on Legal.ge provide full legal support for creating asset management structures:

  • Drafting Fiduciary Management Agreements: A detailed document defining the manager's rights, obligations, and liabilities. This is the foundation of a "trust" in Georgia.
  • Asset Structuring: Transferring real estate, business shares, or securities into management in a way that protects the owner's interests.
  • Protecting Beneficiary Interests: Embedding mechanisms to ensure the manager uses income solely for the benefit of the beneficiaries (e.g., children's education).
  • Creating Investment Funds: An alternative structure where assets are placed in a special fund managed by a licensed manager.
  • Recognition of International Trusts: Operating foreign trusts (Offshore Trusts) in Georgia and determining their tax status.
  • Tax Planning: Optimizing the taxation of income derived from fiduciary management.

Common Scenarios and Use Cases

Fiduciary management and trust-like structures are used in the following cases:

  • Protecting Minor Children: Parents want a professional to manage the business in case of their death or incapacity, with the income supporting the children until they turn 21.
  • Asset Protection: A business person wants to create a "safety cushion" and transfer real estate into fiduciary management to protect it from personal creditors (under certain conditions).
  • Anonymity: Managing assets so that the fiduciary owner appears as the owner in the Public Registry, while the real beneficiary is someone else.
  • Charitable Purposes: Setting aside property for specific charitable goals managed by a foundation.

Georgian Legal Framework

Trust-equivalent structures in Georgia are regulated by:

The Civil Code of Georgia (Articles 724-729) regulates the "Property Fiduciary Management" contract. According to the law, the fiduciary owner is obliged to manage the property in their own name but in accordance with the interests of the settlor (founder). It is important that the fiduciary management contract be in writing, and in the case of real estate — registered in the Public Registry.

The Law on Investment Funds provides the opportunity to create more complex, corporate-type structures for asset management.

The Law on Activities of Commercial Banks also provides for trust services offered by banks to clients.

Step-by-Step Service Process

Cooperating with a specialist on Legal.ge involves:

  1. Defining Goals: What do you want to achieve? (Inheritance, protection, management).
  2. Selecting Structure: Civil fiduciary management, holding company, or foreign trust.
  3. Drafting Documentation: Creating a contract detailing the manager's powers and limitations.
  4. Registration: Registering the contract in the Public Registry (for real estate) or corporate changes.
  5. Monitoring: Establishing mechanisms to control the manager's activities.

Why Choose Legal.ge?

Trust and fiduciary management structures require top-level legal qualification, as an incorrectly drafted contract can lead to loss of ownership. Legal.ge gives you access to experts with experience in both Georgian and international trust law. Create a solid foundation for protecting and managing your capital with our professionals.

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