2. Trusts

Russian law does not contain a concept of trusts. A degree of uncertainty therefore exists with regard to the legal treatment of trusts, the taxation of foreign trusts and distributions received from trusts, and trust property situated in Russia.

The existence of a trust will, in principle, be recognised in Russia, provided that such a trust has been validly formed according to the governing law.

Although not always suitable, trusts are of considerable interest to Russian individuals on the basis that, unlike Russia, many countries have clear rules addressing the use of trusts. Russian families are increasingly establishing trusts to hold their investments, including direct or indirect ownership of Russian operating entities, often in conjunction with an offshore private trust company.

Russian law also recognises the concept of ‘trust management’. In contrast to a trust relationship, ‘trust management’ relationships remain fully of an in personam nature, and a ‘trust manager’, as opposed to a trustee, does not enjoy any proprietary rights/rights in rem.

© 2012 Society of Trust & Estate Practitioners