Trust Holding Foreign Real Estate: How Situs Rules Shape the Seat

A trust holding foreign real estate is governed by two layers of law at once. The trust deed and its governing law decide how the trustee must act. The country where each building or plot is located, the situs, decides who may own it, how title is recorded, how it is taxed and what happens on death. Where the two disagree, the property country usually wins, because only its courts and land registers can act on the asset.

This page is written for an owner with property in more than one country who is asking whether a trust is the right holding vehicle, and which seat copes best with the mix. It is general information, not advice: the answer depends on your residence, the countries involved, how each property is held and who the beneficiaries are.

Why real estate behaves differently from other trust assets

Shares and bank balances can move to a trustee's name with a signature. Land cannot. Every property country has its own rules on who may hold title, whether a trustee can be registered as owner, and whether a trust is even understood by the land registry.

Three consequences follow:

• Recognition is not uniform. A country that has joined the Hague Convention will normally acknowledge that a trust exists. A country outside it may treat the trustee as plain owner, or refuse the structure for land. The Hague Trusts Convention explained covers the mechanism, and the map of recognition shows where it applies.
• Mandatory rules survive. Even where a trust is recognised, the property country may apply its own rules on inheritance, transfer formalities and local ownership limits. Article 15 of the Hague Convention itself keeps mandatory rules on succession rights in place.
• The registry sees the trustee, not the trust. In many places the land register names a person, not an arrangement. Who that person is, and in which country the trustee operates, then matters in practice.

For a deeper look at the mechanics, see holding real estate through a trust and the definition of situs.

Governing law, seat and situs are three different questions

Owners often merge these into one. Keep them apart:

A trust can have a governing law in one country, a trustee in a second and land in a third and fourth. That is normal. The task is to make sure none of the three clashes with the others. The distinction is developed in governing law versus seat.

A worked example: Swiss property held for foreign persons

Switzerland shows how a property country can restrict a structure regardless of where the trust sits. The federal act on the acquisition of real estate by persons abroad (LFAIE) makes the acquisition of Swiss property by persons abroad subject to authorisation from the competent cantonal authority (Art. 2 LFAIE).

There are exceptions. No authorisation is needed for an established business premises, such as a commercial, manufacturing or professional-practice site, or for the acquirer's main residence at their legal and actual domicile, or in other cases covered by Art. 7.

The definition of "person abroad" is wide. Under Art. 5 para. 1 it includes EU or EFTA nationals without legal and actual domicile in Switzerland, nationals of other states without a right to settle in Switzerland, legal entities with a registered office abroad, Swiss legal entities controlled by persons abroad, and anyone acquiring on behalf of persons abroad (let. d).

That last limb matters for a trust. A trustee who buys for beneficiaries or a settlor who live abroad may be acquiring "on behalf of" them, so the structure can fall within the authorisation regime even if the trustee itself is local. Whether it does depends on the facts, the canton and the exceptions, and needs individual analysis.

Switzerland also illustrates the succession layer. Article 471 of the Civil Code sets the reserved share at half of the statutory inheritance entitlement, and Art. 470 para. 1 limits it to those leaving descendants, a spouse or a registered partner; parents are no longer reserved heirs. The federal justice office presents the revision, in force on 1 January 2023, as allowing people to dispose freely of a larger part of their assets. Trusts fall under Art. 149c of the private international law act (LDIP), which refers to the Hague Convention for applicable law. Because the Convention keeps mandatory succession rules, property in such a country can be pulled back toward local heirship rules whatever the trust says. The forced heirship guide looks at which seats cope with this.

Other countries have their own versions: foreign-buyer permits, transfer duties triggered by changing the registered owner, annual property levies, or rules on companies and trusts holding homes. This page does not state those rules, since they differ and change. They are exactly what the checks below are for.

Property country to trust seat: the checks, in order

The order is deliberate. Recognition and ownership limits are gating questions: if a country will not register a trustee, the other points become moot for that property. Succession comes next because it can undo the purpose of the structure. The seat is tested last, against everything the property countries demand.

What a trust can and cannot do for a multi-country property owner

What it can do

• Separate legal title from benefit, so the property does not pass through a single owner's estate in each country in the same way.
• Give a continuous owner of record when family members live in different places.
• Allow a trustee to apply one set of written rules to properties in several countries.
• Let you choose a seat whose law and courts are familiar and stable, which helps when disputes arise abroad. See courts, enforcement and foreign judgments.

What it cannot do

• Switch off the property country's mandatory rules on inheritance, permits or local transfer formalities.
• Make a foreign land registry recognise a trust it does not understand.
• Remove reporting duties: trust data may be disclosed under automatic exchange regimes (AEOI / CRS), and some property countries keep registers of beneficial owners. See trust registers and privacy.
• Give a protection without limits. Claims by creditors, spouses or heirs are decided by the courts that have power over the land.

Alternatives and combinations

A trust is not the only way to hold foreign land. Depending on the country, owners use:

• Direct ownership with a local will. Simple, but it leaves succession to local rules and can mean separate probate procedures.
• A holding company, local or foreign. The company owns the land; shares can sit inside a trust. This often suits countries that dislike trusts on land but accept corporate owners. The holding structures page discusses the seat angle.
• A foundation or a trust-and-foundation combination. Useful where civil-law countries are more at ease with a legal person than with a trust.
• A separate trust per property country. More administration, but each can use the instrument its situs understands.

Which of these fits is a question for a lawyer in each property country as well as in the seat. Choosing the vehicle before the seat is explored in trust, foundation or company.

Where Switzerland fits as a seat

Switzerland is a civil-law country with a regulated trustee sector and a stable banking infrastructure, and it applies the Hague Convention to trusts. As a seat for a trust that owns property elsewhere, it offers a recognised trustee supervised in Geneva and a legal system comfortable with cross-border files. It does not change the law of the property country, and it does not make Swiss property easier for foreign persons to buy. The honest comparison is by property: for each country, ask which seats produce the fewest conflicts. The strengths and limits of Switzerland as a seat sets this out.

Trustee fees depend on the structure, the number of properties and the countries involved; they are indicated after the confidential assessment.