Court of Cassation, Sec. II, 17 February 2023, No. 5073: foreign discretionary trusts and protection of forced heirs in Italy

Abstract

Abstract The judgment under comment contains some valuable statements that may now be considered as milestones in the matter of trusts in the Italian legal system. First, the Italian Supreme Court held that a discretionary family trust which allegedly impairs the portion reserved for the forced heirs is valid and recognisable under the Hague Convention on trusts and that the only remedy available to the forced heirs is an action for reduction (“azione di riduzione”, clawback action). Although the subject matter of the dispute was not the reduction of transfers in trust, the Court also provides guidance as to who is the plaintiff and who is the defendant in an action for reduction and as to other conditions for the action. However, there are still some open questions concerning the jurisdiction and enforcement of judgments in legal systems that provide for the so-called firewall provisions.