If you’re setting up your wealth overseas, you’ll have several ways to structure it, including through a trust or foundation. In Hungary, both frameworks are supported legally. The country’s Civil Code began to include trust laws in 2014. Five years later, Hungary passed the Private Foundation Act in March 2019 as a non-expiring alternative to trusts.  

Ownership Works Differently in Each

A private foundation in Hungary is often referred to as an asset- or wealth-management foundation. Considered as a separate legal entity, the foundation owns the assets as soon as they are transferred to it. The funds are not owned by the founder, board, or beneficiaries.

A trust has a totally different framework. Trustees are not distinct legal entities that own the assets; they are only tasked with managing them for the beneficiaries. While a foundation takes legal ownership of the assets, a trust merely outlines a set of obligations among all stakeholders.

Crossing Borders

Given the nature of a foundation, which is similar to a company as a separate legal entity, it’s more widely recognized around the world. Problems rarely emerge when you take foundations in other civil-law European countries, as they are familiar with how to treat a registered legal entity.

This is not always the case with trusts, which may not provide clear guidance on addressing ownership issues. Hungary has sought to minimize friction in interpreting and implementing trust principles by modeling its trust rules on English law.

However, foundations offer a ready solution to this problem by creating an entity that is easily recognized elsewhere, similar to a company, complete with its own name, registration number, and address.  

What It Takes to Set One Up

You’ll find a big difference between setting up a foundation and a trust. Establishing a foundation in Hungary is expensive, requiring you to allocate cash or assets totaling at least 600 million Hungarian forint. That level has to be maintained, or you risk your foundation being dissolved after three years of non-compliance. A Hungarian foundation also needs at least five trustees, an independent auditor, and a supervisory board.

Establishing a trust is far simpler. It does not require a minimum cash or asset level, may be created with only one trustee, and involves little paperwork. This makes trusts more flexible and less complicated, unlike foundations, which require more oversight and capital outlay.    

How Long Each One Lasts

This is where the two structures pull apart the most. A Hungarian trust agreement is capped at 50 years by law, after which it terminates automatically unless wound down earlier. A foundation has no such ceiling; it can run indefinitely, which is part of why Hungary’s government has used the structure to manage long-term institutional assets, including the endowments of several state universities.

Families thinking in terms of multiple generations tend to gravitate toward the foundation for that reason, while those who want a defined endpoint often prefer the trust.

Creditors and Tax

Both structures protect assets from a founder’s creditors under roughly the same rule: a creditor has to prove the transfer was made fraudulently to avoid using the asset to pay an existing debt.

Where they differ is in taxation. A trust is its own taxpayer in Hungary and is generally subject to corporate tax, with distributions later taxed to the beneficiary as dividend income. A wealth management foundation can qualify for a full corporate tax exemption if it only has individual or non-corporate founders and beneficiaries.

Selecting the Better Choice

There’s no single right answer here. A foundation gives you and your family permanence, formal governance, and a structure that other countries recognize without much fuss. A trust offers faster setup, lower costs, and a track record going back centuries in common-law systems, even though Hungary’s version is a civil-law adaptation.

The decision usually comes down to where your beneficiaries live, how many generations the plan needs to cover, and how much oversight you, as the founder, actually want.