Trúnaðarréttur

Trúnaðarréttur, or "trust law" in Icelandic, refers to the legal framework governing trusts in Iceland. Trusts are legal arrangements where one party, known as the settlor, transfers assets to another party, the trustee, who holds and manages those assets for the benefit of a third party, the beneficiary. This system is rooted in both Icelandic law and international legal principles, particularly those influenced by English common law.

In Iceland, trusts are primarily governed by the *Trusts Act* (*Trúnaðarréttarlög*), which was enacted in 2008 to modernize and clarify trust law. The act establishes the legal structure for creating, administering, and terminating trusts, ensuring clarity on the rights and obligations of all parties involved. Trusts in Iceland can serve various purposes, including estate planning, asset protection, and wealth management.

A key feature of trúnaðarréttur is the separation of legal ownership from beneficial ownership. The trustee holds legal title to the trust assets, while the beneficiary retains the economic or equitable interest. This distinction helps avoid issues such as creditor claims or family disputes over assets. Trusts can be revocable or irrevocable, depending on the settlor’s intentions and the terms outlined in the trust agreement.

Icelandic trusts must comply with local regulations, including tax obligations and reporting requirements. The Icelandic Financial Supervisory Authority (*Fjármálaeftirlit Íslands*) oversees certain types of trusts, particularly those involving foreign elements or significant assets. While trusts offer flexibility in managing assets, they must be properly structured to ensure legal validity and effectiveness.

Trúnaðarréttur continues to evolve, reflecting both domestic needs and international legal trends. Legal professionals, including lawyers and notaries, play a crucial role in establishing and administering trusts to ensure compliance with Icelandic law.