The Italian Parliament recently passed new legislation for the protection of disabled children.

With the newly introduced, formal contract of “Affidamento fiduciario ” parents are in a position to set up a trust, fully effective and enforceable under Italian law, to make provisions for the protection, care and assistance of their disabled children, during the parents` lifetime and after their death.

In so doing Parliament fills a serious gap in the Italian jurisdiction and borrows the concept of “Trust” from the Common Law. So far, trusts were only incidentally mentioned in a few tax anti-avoidance provisions, never used nor regulated by national legislation and were widely regarded simply as a “foreign” tax avoidance tool, in Italy. This may all change, now.

Under this legislation, parents can set up a trust by public deed (Atto Pubblico), to provide for their seriously disabled (as defined by local legislation) children. Social inclusion, care and assistance (l`inclusione sociale, la cura e assistenza) of seriously disabled children must be the sole objects / purposes of these trusts.

The trust deed (Atto Istitutivo) must clearly identify the beneficiaries, the trustees (Affidatari) and their respective roles / duties. The trust deed must also identify the level of assistance required, how the trustee shall account for their activities, the assets and the term of the trust, and how the assets of the trust are to be disposed of on the death of the beneficiaries.

This new legislation also provides that these trusts will progressively come into operation, during the lifetime of the parents (Progressiva presa in carico), who will be able to retain some form of control and supervision over the trustee, initially, during their lifetime. Because of this, it is now possible for the parents to make corrections or improvements to these arrangements, as required in practice.

A detailed plan for the lifetime support of beneficiaries (Progetto individuale di vita del beneficiario) must be produced and implemented.

The new legislation also endows these new arrangements with substantial tax benefits.

No inheritance tax nor any gift tax is payable in Italy on inception of the trust. Where real estate is transferred to the trustees under the new arrangements, Italian registration tax (Imposta di Registro, Ipotecaria e Catastale) is only be payable at a flat, reduced rate (Misura fissa).

Any document, formal application or contract of the trust is exempt from Italian stamp duty (Imposta di bollo). Local authorities are now in a position to rule special reductions / rebates of local council tax (Imposta Municipale Propria) due on the trust`s real estate.

Expenses incurred to buy insurance cover for seriously disabled children (Premi associative a tutela di persone con disabilita` grave accertata), are also tax deductible for an amount of up to Euro 750 per year.

This new legislation also provides for the establishment of a special fund for the support of seriously disabled individuals, at public expense.

Quite appropriately this legislation has already been called “Dopo di Noi ”, that is, “After us”, addressed as it is to parents concerned for the future wellbeing of their seriously disabled children, for the period after their death.

Dr Claudio Del Giudice

23.06.2013 – copyrights reserved.