Offshore Foundation

Foundations have been in use since the late 1930s. Historically, the Foundation's primary use was to provide protection for assets as well as confidentiality.

Foundations have since become well known, and are acceptable in many civil law jurisdictions where Trusts are less well known.

OFFSHORE FOUNDATIONS: A DEFINITION

Foundations were introduced approximately 100 years ago in Western Europe. Their use for estate and asset planning started in Liechtenstein in the early part of the 20th Century. Foundations have since become popular across the globe, especially in civil law jurisdictions where the concept of 'Anglo Saxon Trusts' is less well known. Foundations can be established in many countries including Panama, The Netherlands Antilles, the Bahamas and the Isle of Man – who introduced foundation legislation in 2004 and 2011 respectively to make them the leading common law jurisdictions for the domicile of foundations. A foundation is a separate legal entity, without members or shareholders, and is generally established to reflect the wishes of the founder, who may be an individual or a corporate entity. These wishes are contained within the Foundation's Charter and Regulations. Foundations can be established for a fixed or indefinite period of time and can be used for charitable, commercial or for family purposes.

Foundations are a very important component when structuring the ownership of family and corporate assets and are particularly important where trusts are not generally recognised. They are in many respects similar to corporate entities but afford the protection and continuity derived from the use of trusts.

PRACTICAL USES OF OFFSHORE FOUNDATIONS

Private relationship: For example, the founder’s wishes are not publicly registered
Wealth protection
Recognised in all common and civil law jurisdictions
Holding assets which can be passed on from one generation to the next (estate planning)
Inheritance tax planning
Avoidance of forced heirship rules
Maintenance of corporate control
Separation of voting and economic benefits
Employee share option schemes
Pension funds
Art collections
Charitable purposes
An important tool in international income, capital gains and estate tax planning
Used by corporations for employee benefit plans, retirement and stock option schemes, insurance plans and special financing arrangements

TYPE OF ASSETS HELD

Shares and stocks in both quoted and private companies
Investment portfolios
Real and intellectual property
Bank deposits
Life assurance policies
Most other types of asset

IS AN OFFSHORE TRUST SOLUTION RIGHT FOR ME?

A foundation is the solution for individuals who:

Want to preserve their wealth against uncertainty, political, economic or family
Want to transfer wealth to their heirs in a tax-efficient manner
Want to plan their estate to maximize the benefits of their wealth for family members and others
Want to transfer wealth to their heirs in accordance with their wishes and not in accordance with the laws of the country where they live
Want to consolidate the ownership of assets owned throughout the world in one location
Want centralised reporting
Want to minimise or eliminate estate taxes arising on the death of the settlor

WHY ESTABLISH A FOUNDATION OFFSHORE?

When a foundation is established in a suitable offshore jurisdiction, provided that residents of the offshore jurisdiction are excluded from receiving benefit from the foundation, then there will be no local taxes applicable to the assets and income of the foundation.