Certification of capability

All kinds of companies have themselves and their work processes certified. This is quite different from what is meant by certifying assets. It involves splitting legal control and economic interest. You often come across this in the case of shares, where control is exercised by a foundation and the original shareholders are given share certificates.
But certification can also be interesting in the case of real estate or an art collection.

Real estate

Certification of real estate can be used, for example, when you want to put a new property to be purchased in the name of your children, without donating it all at once and without needing the cantonal court. The property is then bought by the foundation, which finances the purchase price with money that comes at least in part from yourself and possibly in part from others. The part of the financing that comes from you should be at least equal to the amount you want to gift to your children in the first year.

You can then combine the following:

• you exercise who has control at your death and/or when the children acquire control;
• the increase (or decrease) in value of the property sits entirely with the children;
• you can decide what value you donate all at once and what part is donated on an annual basis;
• what the children obtain does not fall into a community of property in which the children could be married in the future;
• if a child is seized, the seizer cannot do much with the certificates;
• the interest that the children have to pay can be quite low, so the positive return and the increase in value entirely benefit the children.

Keeping assets together

Certificates of assets can also be used very nicely to keep assets together. With regard to the certificates entitling the holder to the underlying assets, it can be stipulated that they are not freely transferable. It can also be stipulated that in certain cases they must be offered to a certain person and what the purchase price will then be.

Money tap

The articles of association of the trust office can provide that the board determines whether distributions are made to the depositary receipt holders at any time. Especially with high returns, this can prevent relatively young children from spending too much money each year.

Administration

Much of what can be done through certification of assets can also be arranged through a guardianship. Nevertheless, certification has the major advantage that the law does not stipulate that the trust can be terminated by the court if it has been in place for more than five years. In addition, it is easier to regulate control when it comes to a situation where assets have to be held together and the beneficiaries also have (or will have) their own say.

Learning how to handle assets

Certification of assets can be put to good use in programmes to teach children how to (better) deal with assets. Indeed, it can be arranged through the trust office to gradually give children a greater say.

For more information on asset certification, please contact us. We will be happy to help.