Real Estate Held in Trust: How Seat and Situs Rules Interact

Real estate held in trust jurisdiction questions rarely have one answer, because two legal systems apply at once. The law chosen for the trust governs the relationship between settlor, trustee and beneficiaries. The law of the place where the land lies, the situs, governs who may own it, how ownership is recorded and what formalities a transfer requires. A trust seated in one country can therefore hold property in another only on the terms that second country allows.

This page explains how those two layers meet, how land registries in different countries treat a trust, and what an individual review of a property portfolio held through a trust involves.

Why the situs usually has the last word

Land is the asset most closely tied to one territory. Courts and registries of the country where it sits will apply their own rules on title, mortgages, planning, inheritance and enforcement, even when the trust deed names a different governing law. The Hague Trusts Convention helps by obliging its parties to recognise a trust, but it does not displace local rules on how real property is registered or transferred.

In Switzerland, trusts are addressed through Article 149c of the Private International Law Act, which refers to the Convention for the applicable law. Article 15 of the Convention, however, keeps mandatory rules on succession rights in force. For a family holding a house through a trust, this means the trust deed cannot simply switch off the rules of the place where the owner or the property is connected. The distinction between governing law and seat matters here: choosing a favourable law for the trust does not move the land.

How land registries treat trusts

Registries differ in what they will record. Some systems allow a trustee to be entered as owner while keeping the trust itself off the public entry. Others have no concept of a trust as such and register the trustee as an ordinary owner, leaving beneficiaries invisible. A few require disclosure of the beneficial owner behind the entry. Registers of beneficial ownership are a separate subject, covered in the guide to trust registers and privacy.

The comparison below is deliberately general. It shows tendencies, not a statement of the law of any specific country, and local advice is needed before relying on it.

Transfer formalities and what they usually involve

Putting a property into a trust is a transfer of ownership, and the situs treats it as such. Depending on the country, this can mean a notarial deed, a registry application, a declaration of the true owner, local transfer taxes and a review of any mortgage. The consequences differ depending on whether the settlor is also a trustee, whether the transfer is a gift or a sale to the trustee, and whether the property is a home, a rental building or land held for development.

Typical points to settle before any transfer:

• who will appear as registered owner, and in what capacity;
• whether the lender holding a mortgage must consent;
• whether the property is the settlor's main home, which can change tax and succession treatment;
• how rent, upkeep and insurance will be paid out of trust funds;
• what happens to the entry if the trustee is later replaced or the trust is moved to another seat.

Tax treatment of the transfer and of ongoing ownership depends on residence of the settlor and beneficiaries and on the country of the property. It cannot be summarised in general terms and is part of an individual analysis.

Switzerland: rules for buyers who count as foreign

For property in Switzerland, the first question is often not the trust but the buyer. Under Article 2 of the Federal Act on the Acquisition of Real Estate by Persons Abroad (LFAIE), acquiring real estate as a person abroad requires an authorisation from the competent cantonal authority.

Exceptions exist. Article 2 paragraph 2 provides that no authorisation is needed for a permanent establishment of a business, a trade or a liberal profession, for the acquirer's principal residence at their legal and actual domicile, or where another exception in Article 7 applies.

The definition of a person abroad is wide. Article 5 paragraph 1 covers, among others:

• EU and EFTA nationals without legal and actual domicile in Switzerland;
• nationals of other states who have no right to settle in Switzerland;
• legal entities with a registered seat abroad;
• Swiss legal entities controlled by persons abroad;
• anyone who acquires on behalf of persons abroad (letter d).

That last category is the one a trust structure must be checked against: a trustee who holds title for beneficiaries or a settlor abroad can fall within it. Whether a particular structure triggers the permit regime depends on the facts, so an analysis of who really controls and benefits is needed before any acquisition. A permit refused after a purchase agreement is signed is the kind of outcome this review tries to prevent.

Direct holding or a holding company

Real estate can sit directly in the trustee's name or in a company owned by the trust. A company can simplify the sale of a property abroad, since shares may be transferred without a new land registry entry, and it can separate liabilities. It also adds accounts, local filing duties, director requirements and sometimes an additional layer of tax or disclosure. In several countries, holding residential property through a company is treated less favourably than holding it personally. Neither route is better in the abstract. See also holding structures by seat for operating businesses and combinations of trusts and foundations.

Succession rules that follow the property

Family homes are where trust planning meets forced heirship most directly. Swiss law, after the revision in force since 1 January 2023, sets the reserved portion at one half of the statutory inheritance share (Article 471 of the Civil Code). Under Article 470 paragraph 1, it protects descendants, a spouse or a registered partner; parents no longer figure among the heirs entitled to a reserved portion. The Federal Office of Justice describes the reform as allowing people to dispose freely of a larger share of their estate. A change to the Private International Law Act on international successions takes effect on 1 January 2025, per the Federal Council's decision of 26 June 2024.

Other countries with a different forced heirship model may still apply their own rules to land located there. The overview of forced heirship and trusts explains the general risk. Example: a family settled in Lausanne holds a holiday apartment abroad through a trust. The Swiss succession rules and the rules of the apartment's country may both be relevant, and they do not always point to the same result.

What the real estate review covers

The service looks at property held in or through a trust, applying the rules of the country where it is located. It is relevant to families with homes in more than one country, to owners considering buying in Switzerland through a structure, and to trustees or advisers asking whether an existing holding still works. In practice it covers:

• the choice between direct holding and a holding company;
• a review of acquisition rules for foreign buyers in Switzerland;
• handling of foreign property under the local law of its situs;
• management of rents, upkeep and insurance within the trust;
• succession planning for family homes.

It does not cover the choice of a trustee, family succession analysis under French or German law, or a general introduction to trusts, and it does not replace advice from local counsel in the country where the land lies. The confidential assessment establishes which rules apply to each property, which documents are needed (deed, registry extract, loan papers, any permit) and which decisions come first. Fees depend on the structure and are indicated after the assessment.

For a related review of an existing set-up, see reviewing whether a trust still fits its seat and the situation of an owner of property in several countries.