The Fiducie

When thinking of the good things to come out of France, many things spring to mind but laws are not amongst them. Yet, the trust has now found its way into the French Civil Code with the introduction of the Fiducie. One has to wonder how a country which has been without the trust for 200 years could come up with something which should, by rights, have been created by us Brits.

The Fiducie was introduced in February 2007. In English parlance, the Fiducie is a mix of trust and contract bringing about an arrangement under which a settlor transfers current, or future, property rights to one, or more, trustees who shall hold such property separate to their own property and subject to designated rules for the benefit of one, or more, other persons.

The Fiducie is available only for use in commercial contexts, without bounty, but can be used by any corporation tax paying entity in the EU, and those further afield in countries with a suitable double tax treaty with France. Only certain institutions can act as trustee but they need not be French and need not assume any fiduciary obligations to the beneficiaries. Importantly, perhaps, with the current political climate and its distaste for trusts, the Fiducie contract must be publicly registered, as do any subsequent amendments to the contract and the Fiducie fails should it have no current trustee. The perpetuity period is 33 years which, being relatively short, may serve as a reminder of the history of the perpetual trusts which contributed to the French Revolution, but should, nevertheless, not be problematic given the commercial purposes to which the Fiducie is directed.

At this early stage, the more obvious applications of the Fiducie will be in commercial lending or agency arrangements but it remains to be seen whether wider, and more imaginative, uses will be found in fields such as pension provision and asset protection.