The Five Most Important Questions About Trust Asset Management in Hungary

Trust asset management (bizalmi vagyonkezelés) is a relatively new legal concept in Hungary, and many misconceptions surround it. While entrepreneurs often hear that this structure offers a number of tax and asset protection benefits, most of them still start with the same fundamental question:

“Is trust asset management the right choice for me?”

There is no one-size-fits-all answer—but asking the following five key questions can help clarify the decision.

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1. Is my wealth sufficient to justify a trust?

One common myth is that trust asset management in Hungary is only for the ultra-wealthy. In reality, clients should already consider this solution if they possess a few hundred million HUF in assets, whether liquid or illiquid (e.g. company shares or stocks).

Whether a trust agreement makes sense depends largely on its intended purpose. For example, in the case of tax optimization, it is advisable to perform a cost-benefit analysis—but note that not all benefits of a trust can be quantified purely in financial terms.

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2. What is the purpose of setting up the trust?

In eight out of ten cases, people associate trusts with tax planning—and rightly so. Significant tax advantages can be gained, particularly in the context of company exits (full or partial sales) or the sale of low-cost shares.

However, a trust can also serve as an alternative to a will. The settlor (vagyonrendelő) can predetermine who receives what assets, when, and under what conditions—*during their lifetime*. This offers three key advantages:

– heirs can gain access to funds without waiting for the probate process to conclude,

– the testator’s final wishes can be fulfilled more flexibly,

– and legal challenges to a will can be avoided altogether.

Trusts are also a powerful tool for asset protection. For example, before starting a business, a cautious settlor may transfer assets to a trust, thus shielding them from future creditors—provided the transfer takes place before liabilities arise.

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3. Am I willing to relinquish control over my assets?

Unlike a mandate or management contract, trust structures involve a transfer of ownership. The trustee receives legal title to the assets and thus full power of disposal—meaning they can sell, encumber, or donate the property, provided they act in accordance with the trust deed and in the best interests of the beneficiaries.

From a legal standpoint, the trustee—not the settlor—will exercise voting rights, for example in a general meeting of a company. This requires a certain level of trust and comfort with delegation.

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4. Do I have a trusted person who could serve as trustee?

Many prefer to appoint someone they trust unconditionally, such as a close friend, business partner, or family member. However, even in the absence of such a person, there are solutions.

One option is to appoint a licensed professional trustee—a legal entity authorized by the Hungarian National Bank (MNB) to manage multiple clients’ assets under strict compliance.

Moreover, Hungarian law does not prohibit the settlor from acting as trustee if there is at least one other beneficiary apart from themselves.

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5. What are my long-term plans for the assets?

Trust asset management in Hungary can be established for a maximum of 50 years. Although the trust deed can be modified during that time, it’s wise to build in a long-term vision from the outset—especially if there’s a chance the settlor will not be able to amend it later.

The settlor can specify short-, medium-, and long-term objectives for the trustee and plan succession through the trust structure. This makes it an ideal instrument for business succession, estate planning, and even philanthropic goals.

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Conclusion

Trust asset management is not an exclusive tool for the wealthy elite. It is a flexible legal structure that offers powerful solutions for those who want to plan ahead—be it for tax purposes, estate planning, company succession, or asset protection.

If you are wondering whether a trust structure is the right fit for your situation, we are happy to assist you with a tailored legal assessment.

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📞 Contact:

Dr. Katona Géza, LL.M. ügyvéd (Rechtsanwalt / attorney at law)

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