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Let's imagine the following: Mr. Leopold is an investor. He managed to save fifty million rubles by investing by now. He has children, but he is afraid that they will waste all his fortune after he dies. He wants to let his children receive a certain amount of money from his investments every month, but he does not want to allow them to ever be able to receive all the money. He wants them to be forbidden to dispose of all his property, but he also wants them to receive money every month, that is, passive income.

My question is the following: How can he do this? With the help of the bank? Is it even possible?

Chris W. Rea
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Жёлудь-мистэ́р
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2 Answers2

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This is done with a legal entity called a trust.

A trust is where a person (trustor) arranges to give assets to another person (trustee) for them to hold and manage for the benefit of a third person (beneficiary). There are lots of different use cases for this type of arrangement, but a common use is the one you describe; it allows a person to set up an account with a financial institution where the assets are managed, and the profits can be given to a beneficiary, but the beneficiary does not have any control of the assets. The person setting up and funding the trust decides ahead of time how and when those profits are given to the beneficiaries, and what ultimately happens to the assets (and when).

To set up a trust, in most cases you need to consult a lawyer. Depending on your country and what you want to do with the trust, there are some types of trusts that can be set up directly with a financial institution without involving a lawyer.

Ben Miller
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In Russia, Mr. Leopold would draft a will and specify that he wants to leave some or all of his assets to an inheritance fund (наследственный фонд):

ГК РФ Статья 123.20-8. Создание наследственного фонда и управление им

После смерти гражданина, который предусмотрел в своем завещании создание наследственного фонда, такой наследственный фонд подлежит созданию по заявлению, направляемому в уполномоченный государственный орган нотариусом, ведущим наследственное дело, с приложением к заявлению составленного при жизни указанного гражданина его решения об учреждении наследственного фонда и утвержденного этим гражданином устава фонда и после его создания призывается к наследованию по завещанию в порядке, предусмотренном разделом V настоящего Кодекса.

The inheritance fund is a non-commercial organization (НКО) that would be incorporated by the notary handling Mr. Leopold's probate case (наследственное дело) upon his death, according to the instructions he would give to the notary certifying the will.

Upon incorporation, the fund would accept the inheritance and (hopefully) manage it according to the instructions given by Mr. Leopold.

The fund is a heir at will (наследник по завещанию), so if Mr. Leopold is survived by heirs at law (наследники по закону) eligible for a mandatory share of the estate (обязательная доля в наследстве) — that is senior, disabled or underage spouse, parents, children, or dependents — the fund will only receive what's left after carving out their legally mandated shares in the estate.

This is a relatively new (to Russia) instrument, so I'm not sure how well it works in practice, although I know someone who told me they've set it up.

Quassnoi
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