Foundations are an integral component when structuring the ownership of family and corporate assets. Foundations have been in existence for over a 100 years. A Foundation is similar to a corporate entity in so much as it is a separate legal entity in its own right, yet offers protection and continuity derived from the use of trusts. A Private Investment Foundation does not normally engage in commercial transactions, but simply “holds” assets. As a legal entity in its own right, without members, directors or shareholders a Foundation is established to reflect the wishes of the founder, who can be either a natural person or corporate entity. The founders’ wishes are contained in the Foundations charter and regulations. Foundations can be of more benefit than trusts to residents in common law jurisdictions. Foundations are recognised in all common and civil law jurisdictions.
A Foundation is more robust to challenge than a trust. If a judgement creditor attacks the assets of the Foundation, the law of limitation applies.
The founder appoints a “protector” known as the supervisory body, this can be a natural person or body corporate. The responsibilities of the protector are specified in the foundation charter, which include, but are not limited to, the supervision of the foundation council.
A TYPICAL FOUNDATION STRUCTURE
ASSETS TYPICALLY HELD BY A PRIVATE INTEREST FOUNDATION:
- Life insurance policies
- Property and real estate
- Intellectual property
ADVANTAGES OF A PRIVATE INTEREST FOUNDATION:
- Confidentiality of founders wishes
- Asset protection
- Wealth protection
- Provision for beneficiaries
- Recognised in all common and civil law jurisdictions
- Avoidance of forced heirship rules
- International tax planning
- Inheritance and estate planning
- Protection against third party litigation
A PRIVATE INVESTMENT FOUNDATION IS A BENEFIT FOR:
- Successful International tax planning
- Preservation of wealth against political, family or economic uncertainty
- Consolidation of ownership of assets
- Maximizing benefits of assets for beneficiaries
- Inheritance and estate tax planning