Trust in the Hungarian Law 2.
General rules of the trust
Pursuant to Section 6:310(1) of the Civil Code, under the trust the trustee must manage the assets transferred into the trustee’s ownership by the settlor for the benefit of the beneficiary, for which the settlor is obliged to pay a fee. The trust assets may be tangible or intangible assets, rights and claims as well. From this general definition derives three determinative elements of the trust: for the creation of trust it is necessary to transfer the ownership of the asset from the settlor to the trustee; the trustee acts for the benefit of the beneficiary; therefore, the framework requires at least one beneficiary; nevertheless, the settlor remains the contracting party, consequently, the rights to modify or terminate the relationship remains in the settlor.
It must be noted first of all that the Trust Section’s rules are mainly dispositive; therefore, the settlor may differ from the rules with the exception of a few obligatory rules (any deviation is null and void). The obligatory rules are:
- The trust arrangement must be in writing;
- The trustee can’t be the sole beneficiary;
- The trust assets must be separated from the trustee’s own assets and other trust assets;
- The settlor and the beneficiary can’t instruct the trustee;
- The trust period cannot last longer than 50 years.
The above mentioned rules mean as well that the settlor has large extend of freedom to specify the content of the trust relationship, apply protector or other advisors, like investment board.
It is allowed to create several types of trust including testamentary or inter vivos, discretionary or non-discretionary. The purpose trust is not regulated as a typical legal arrangement, but with using appropriate schemes, a legal arrangement that resembles the English private or charity trust may also be achieved. The general concept of the trust framework is the revocable trust. It is controversial, whether it is possible to create an irrevocable trust, as the settlor may terminate the trust arrangement and this right may be limited but not excluded.
If the settlor and the trustee are one and the same person, the trust must be established by an irrevocable unilateral declaration of the settlor in a public instrument. A legal relationship of the trust settled by last will and testament is valid if the trustee accepts of his appointment to such position, under the terms set out in the testament. In the case of creating a trust by unilateral legal statement, which must be done in a public instrument, the same rules must be applied as mentioned above.