The "Trust" structure, which has been practiced for many years and is frequently encountered in the Anglo-Saxon legal system, is an increasing trend in Turkey especially utilized by families who want to structure their wealth in a certain manner.

The structure and nature of the “Trust” is not a familiar concept to Turkish law, and currently, there is no regulation for Trust structures within Turkish legislation.  Likewise, with some exceptions, Trust structures are also not generally regulated in Continental Europe, however, are mostly encountered in countries where Anglo-Saxon legal system are adopted.  Yet, in practice, Trust structures are generally formed and incorporated in countries who have domestic legislation on “Trust law/ Equity law”, being the concepts related to Anglo-Saxon legal systems.

From a fundamental perspective, a “Trust” is a non-corporate establishment (i.e. who has no separate legal personality) that has been founded by the “Settlor”, in which the ownership rights of certain assets (e.g. the ownership of certain deposits, yachts, real estate or movable properties such as shares, stocks etc.) belonging to Settlor are being vested in the Trust for the benefit of certain persons (”Beneficiary”) through the control of professional institutions and/or persons acting as the Trust representatives, so called as the “Trustee”.  In that sense, by establishing the Trust, the Settlor incorporates his/her several assets into the Trust structure with various motives, whereas the Trustee, as a representative/ fiduciary of the Trust structure, retains and/or utilizes these assets in favor of the Beneficiary(ies) in certain manners.

If the control of the assets vested ​​in the Trust are subject to extensive power of the Settlor and/or the 'Protector Committee' - for instance, if the Settlor has the power to use/ benefit from the assets ​​​​within the Trust as he/she wishes or has the power to dissolve the Trust, wholly or partially, at any time- then the Trust is often referred to as a “revocable” or “discretionary” Trust.  On the flip side, if the Settlor's powers on the assets vested in the Trust are completely or significantly restricted, then the Trust structure will qualify as “irrevocable” or “non-discretionary” trust.  Almost none of these concepts are similar to the structures currently existing under Turkish law.  Hence, although fiduciary assignment, representation, fiduciary or foundation arrangements under Turkish law can be thought to have similarities with the Trust concept, the Trust structure, and the above-mentioned “Trust law” in several domestic legal systems, are largely different from these structures in Turkish law and Continental European system.  It would therefore not be the correct approach to explain the Trust structures with the existing regulations within Turkish law or to assert a conclusion through comparison of the same.

While noting the difficulty of finding a legal basis for the Trust structures under the Turkish law concepts, the Trust structures, which have been used for many years in countries -especially in Anglo-Saxon countries- with domestic legal legislation towards the same, are also being established and operated by Turkish citizens in the said countries in recent years ever-increasingly. Although there might be various motivations behind this approach, the most frequently encountered motive is to secure the integrity of family assets and to ensure the transfer of these assets to the next generations in a manner that is desired by the Settlor.

To our view, Trust structures, that are being encountered and guaranteed by legal regulations in many countries where the Anglo-Saxon system is adopted, are observed to serve successfully in achieving its objective.  That is the main driver for Trusts to become one of the most preferred structures by many families over the recent years, which shall be regarded as both a natural and a positive development with regards to the integrity of family assets.  As stated above, it is possible to achieve the desired results by establishing the Trust structure in full compliance with the regulations and tax legislation.

Av. Çağrı Cem