Wealth Protection in Italy: How HNWIs Use Trusts and Life Insurance Structures

Relocating to Italy as a high-net-worth individual is rarely just about enjoying the beauty of the country, its villas, or its food and wine. For many wealthy families, moving to Italy raises one central question: how do we protect our wealth for the next generation while optimizing our tax position?

In this context, trusts and life insurance structures have become essential tools for expats who decide to settle under Italy’s flat tax regime. They offer a way to combine tax efficiency, estate planning, and asset protection, ensuring that wealth is not only preserved but also transferred in a way that reflects family values and long-term vision.

Why Wealth Protection Matters for Expats

When a family chooses Italy as its new base, the focus often begins with taxation. The flat tax regime, offering a fixed €200,000 per year on worldwide income, is a powerful incentive. Yet once this is secured, deeper questions emerge: How will inheritance be handled? What happens to global real estate, investment portfolios, or family businesses? How can wealth be shielded from risks, disputes, or double taxation?

Italian inheritance law, known as successione legittima, can impose strict rules on how assets are divided among heirs. Without proper structures, international families may find themselves subject to unfamiliar legal frameworks and heavy taxes, especially when assets are spread across several jurisdictions. This is where wealth protection planning becomes not only advisable but necessary.

Trusts as a Shield for Global Families

Although Italy does not have a domestic trust law, it recognizes foreign trusts through the Hague Convention, which makes it possible for expats to use trusts created in common law jurisdictions such as Jersey, Guernsey, or Liechtenstein. For wealthy families, the trust is not just a legal mechanism — it is a framework for control, continuity, and protection.

A trust can hold shares of a family company, luxury properties in Italy and abroad, or even financial portfolios. By placing assets into a trust, the settlor ensures that they are managed according to clear rules, reducing the risk of disputes and protecting wealth from creditors or legal challenges. For expats under the flat tax regime, the trust also simplifies taxation: income generated outside Italy can fall under the substitute €200,000 tax, ensuring predictability and peace of mind.

What makes trusts particularly valuable is their ability to outlive individual lifespans. They allow families to create multi-generational strategies, ensuring that wealth is preserved and passed on according to long-term objectives rather than being fragmented by inheritance rules.

Life Insurance Wrappers: A Flexible Wealth Planning Tool

Alongside trusts, life insurance policies have become one of the most widely used wealth protection structures for international residents in Italy. These are not simple insurance contracts, but sophisticated wealth wrappers often issued in jurisdictions like Luxembourg or Liechtenstein.

The appeal of these structures lies in their flexibility. Investments inside a life insurance policy can range from traditional securities to private equity, real estate, and even digital assets. The growth of these investments is generally not taxed on an annual basis, creating a powerful tax deferral mechanism. At the same time, life insurance provides direct succession planning advantages, since beneficiaries can be named explicitly and assets can bypass some of the rigidities of Italian inheritance law.

Perhaps most importantly, life insurance solutions often enjoy a high degree of creditor protection, making them a safe vehicle for preserving family wealth in uncertain times. For HNWIs who combine the Italian flat tax regime with such policies, the result is a structure that is both efficient and secure.

Combining Trusts and Life Insurance

Sophisticated families rarely rely on a single tool. In practice, the most effective wealth protection strategies in Italy often combine trusts and life insurance policies. The trust becomes the central repository of family wealth, offering governance, stability, and control. The life insurance policy, on the other hand, acts as a flexible investment wrapper, simplifying taxation and succession.

Together, they create a structure that is resilient, internationally recognized, and fully compatible with Italy’s legal and tax environment. For expats, this dual approach ensures that wealth is not only preserved but also structured in a way that reflects both family governance principles and the opportunities offered by the Italian flat tax regime.

Wealth Planning Beyond Tax

What distinguishes successful expats in Italy is that they do not stop at the fiscal advantage. They use their residency as an opportunity to rethink their entire wealth structure: from trusts and insurance to family governance, cross-border estate planning, and even philanthropic initiatives.

Italy, with its combination of tax incentives, cultural appeal, and lifestyle advantages, provides a unique setting for this kind of planning. It allows families to live fully in the present while securing their future across generations.

Conclusion: Securing Wealth, Preserving Legacy

For HNWIs relocating to Italy, trusts and life insurance are more than financial tools — they are instruments of continuity and protection. They transform the flat tax regime from a simple tax incentive into a comprehensive wealth strategy, ensuring that family assets are shielded, managed, and passed on in a structured way.

By combining these structures with Italy’s fiscal advantages, international families can achieve both stability and freedom, making their move to Italy not just a lifestyle choice but a strategic legacy decision.

At Knotted, we specialize in helping international families relocate to Italy with customized tax, estate, and wealth protection strategies. Whether you are evaluating a trust structure, considering a life insurance wrapper, or simply exploring the benefits of Italy’s flat tax regime, we are here to guide you every step of the way.

📧 info@knotted.ch

📱 WhatsApp: +41 76 771 30 22

Make your move to Italy not only a lifestyle upgrade, but also a smart wealth protection strategy for your entire family.