Trust in the Hungarian Law 1.
The concept of the trust in the new Hungarian Civil Code
Twenty-five years after the collapse of the socialist system in Hungary and joining the market economy system again, both the legislature power and experts agreed that Hungary must provide a legal solution in helping long-term family wealth preservation and estate planning in Hungary. Earlier, during the soviet occupation, the importance of the private wealth was marginal but from 1989 privatization created a dramatic change in private wealth. Nevertheless, neither the legislature power, nor professionals realized in time that the lack of local estate planning solutions would create a massive capital outward flow from Hungary. This tendency resulted in the ‘90’s offshore spree and created an unhealthy environment where the focus was on the agressive tax planning.
The Civil Code regulates the trust (in Hungarian: 'bizalmi vagyonkezelési szerződés') among the mandate-type contracts. The concept of this new type of legal instrument was drawn up on the basis of the English trust model. Although the Hungarian law is influenced by the German law, this legal framework is far from the rules of the German Treuhand but very English. Strong, current demand in the economy was postulated the introduction of trust on a legislative level . Since the transition, Hungarian investors have chosen legal regimes of other countries because the institution of the trust provided them with a better legal and economic solution. The Chief Codification Committee of the Civil Code implemented the trust into the contract law chapter emphasising; however, the decisive element of the instrument is the transfer of ownership, which is based on the trust-like model. Under the rules of the Civil Code, the trust is an in personam legal instrument that implicitly carries substantial in rem effects. The framework’s general concept is that the trust is a contractual arrangement between the settlor and the trustee and its validity is bound to a written contract or statement. It derives from this concept that the central figures of the trust are the settlor and the trustee and this conceptual emphasis goes through the supplementary rules, as well. The supplementary rules including several details of the licensed trustee activity are regulated in two separate pieces of legislation. Such details are regulated in Act XV of 2014 on Trustees and the Regulation of Their Activity , and in Government Decree No 87/2014 (III. 20.) on certain rules concerning the financial security of trustees’ undertakings.