Trust Asset Management

What is trust asset management?

Although trust asset management has existed as a legal institution in Hungary for more than a decade, many potentially affected individuals are still unfamiliar with how it works. It is a wealth planning tool primarily designed to enable private individuals to manage their assets efficiently and securely. A trust asset management arrangement involves three principal parties:

• the settlor, who transfers assets into trust and is the original owner of those assets;
• the trustee, an individual or legal entity that manages the assets in accordance with the trust agreement; and
• the beneficiary, for whose benefit the assets are managed and who may receive distributions from the trust property.

Virtually any asset or property right may be transferred into a trust asset management arrangement. Common examples include securities, shares or other ownership interests in companies, residential property, agricultural land, motor vehicles, movable property, rights with a monetary value and intellectual property.

Benefits of trust asset management

Trust asset management may offer a number of advantages, including the following:

• Asset segregation and protection: A trust arrangement allows the settlor to separate all or part of the settlor’s assets from the settlor’s personal estate, which may provide protection against creditor claims and other legal risks.
• Succession planning: A trust can be an effective succession planning tool, facilitating an orderly transfer of wealth and reducing the risk of fragmentation or loss of family assets.
• Tax efficiency: A properly designed trust structure may create significant tax efficiencies both at the level of the beneficiaries and in relation to the assets held in trust.

Types of trust asset management arrangements

Trust asset management may be implemented in several forms, depending on the objectives and circumstances. Common types include:

• Professional trust asset management: The trustee operates under a regulatory licence and manages assets for consideration under at least two separate trust relationships.
• Family trust asset management: A family manages its own assets with the primary objective of preserving family wealth as a coherent whole.

How does the process work?

The main steps are generally as follows:

1. Developing the trust strategy

The settlor defines the framework of the trust in the trust agreement, potentially in considerable detail. Among other matters, the settlor may determine when and subject to what conditions the beneficiaries may receive the trust property or the income generated by it.

2. Transferring assets to the trustee

The owner of the assets, acting as settlor, enters into a trust agreement with the trustee and transfers legal title to the relevant assets. The trustee then manages those assets within the limits and in accordance with the terms set out in the agreement. Hungarian law allows the settlor and the trustee to be the same person.

3. Asset management and reporting

The trustee is responsible for the efficient management and investment of the trust property for the benefit of the beneficiary. This includes administering the assets, making investments and complying with the trustee’s reporting and information obligations towards the settlor and the beneficiary.

4. Termination of the trust arrangement

A trust asset management relationship may be established for an indefinite term, but its duration may not exceed 50 years. Within this maximum period, the trust agreement may specify other events or conditions that result in termination of the arrangement.

Tax liability arising from the free use of trust property

Where assets held in trust are made available for private use free of charge, the individual using those assets, typically the settlor or a beneficiary, may incur a tax liability. The applicable rules depend primarily on whether the trust arrangement was established before or after the legislative changes effective from 12 September 2023.

For trust arrangements established under the former regime, there are no specific statutory rules governing free private use, so the general provisions of the Hungarian Personal Income Tax Act must be applied. By contrast, for arrangements established after the above date, the currently applicable rules are set out in Section 65/C of the Personal Income Tax Act.

Fees and costs associated with the arrangement

The costs generally fall into two categories: the cost of establishing the structure and the ongoing costs of operating it.

The establishment costs depend largely on the composition of the assets and the complexity of the proposed structure. They commonly include legal fees, notarial fees, tax advisory fees, the fee payable for the regulatory procedure before the National Bank of Hungary (MNB), and any duties associated with transferring assets into trust.

Ongoing operating and administrative costs may include trustee or structure maintenance fees, accounting fees, bank charges and applicable taxes.

Legislation governing trust asset management

Trust asset management was introduced into Hungarian law in 2014 through Chapter XLIII of the Hungarian Civil Code. The other principal source of law is Act XV of 2014 on Trustees and the Regulation of Their Activities, adopted in the same year. The legal framework has subsequently been amended and refined on several occasions, including significant changes at the end of 2023.

Act XV of 2014 on Trustees and the Regulation of Their Activities

Proposed changes to the taxation of Hungarian trust arrangements

On the evening of 17 July 2026, a bill was published on the website of the Hungarian Parliament that would fundamentally amend the personal income tax rules applicable to trust asset management arrangements and private foundations. The changes, scheduled to take effect on 31 August 2026, are expressly intended to narrow the scope of tax exemptions associated with trust structures and to fulfil commitments made to the European Union under the Recovery and Resilience Facility (RRF). As a general rule, an uplift in the value of assets transferred into a trust would continue not to trigger an immediate personal income tax liability. The main change would arise on the “exit side”, namely in the taxation of distributions from the trust property: the current opportunities to distribute trust capital free of tax would be substantially restricted.

Related Andersen services

• Active support in drafting and negotiating the trust agreement.
• Tax-efficient design of the trust asset management structure.
• Assistance with obtaining a Hungarian tax number for the trust property.
• Following establishment of the structure, support with implementing the pre-agreed steps and coordination of other professionals involved, including legal counsel and accountants.
• Ongoing monitoring of legislative developments and the interpretations adopted by the Ministry of Finance and the Hungarian tax authority in relation to trust asset management, together with recommendations on the implementation of specific steps or transactions where appropriate.
• Tax review of any proposed transaction by the settlor, trustee or beneficiaries that may affect the trust structure.
• Representation before the Hungarian tax authority if questions arise or an audit is initiated, drawing on all available official guidance, rulings and expert opinions.