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About Offshore Foundations
Offshore Foundation Overview
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 and the Bahamas – who introduced Foundation legislation in 2004 to make it a leading common law jurisdiction contender 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 Deed of Incorporation, Articles of Association and Bye Laws. Foundations can be established for a fixed or indefinite period of time and can be used for charitable, commercial or for family purposes.
In the case of a Bahamian Foundation, a resident person or licensed Bahamian Corporate body must be appointed by the Founder as Secretary, and a Foundation Council or Governing Body including a Protector, can be appointed by the Founder to ensure that the affairs of the Foundation are carried out strictly in accordance with the Founder’s requirements.
Foundations are a very important component when structuring the ownership of family and corporate assets and are particularly important where Trusts are not generally recognized. 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
- Recognized 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
What assets can be held by an Offshore Foundation?
- 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
Offshore Foundations for Individuals
A Foundation is the solution for individuals who:
- Want to preserve their wealth against uncertainty; either political, economic or family related
- Want to transfer wealth to their heirs in a tax-efficient manner. They 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 centralized reporting
- Want to minimize or eliminate estate taxes arising on the death of the Founder
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.
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Different Types of Foundations
The Private Foundation has long been favoured by wealthy individuals and families as a vehicle for accomplishing their wealth and succession management strategies, corporate control and their charitable objectives.
Broadly speaking they fall into the following categories:
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Private
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For succession Management
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Corporate
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For continuity of control, pension and employee benefit schemes
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Charitable
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For the benefit of charitable organizations
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Special Purpose
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Donations serving a specific philanthropic purpose
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Whilst the above types offer specific objectives, Foundations can be established to embrace all purposes and objectives. The purposes are contained within the Foundation Charter and By Laws.
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Why choose Mutual Trust as your Foundation Provider
Choosing Mutual Trust to provide your foundation council
Once you have decided to set up an offshore Foundation, your first and most important decision is the choice of Foundation Council officers and you will want officers that will give you complete peace-of-mind.
The Benefits of selecting Mutual Trust to provide foundation council members:
- Independence – Mutual Trust has no conflicts of interest. Our Officers always act in the best interests of the founders and the beneficiaries of the Foundation. We do not compromise that position. Thus, independence from investment, legal or accounting advisors is critical and should be an absolute requirement by persons seeking to establish a Foundation
- Service – Mutual Trust looks to the long term, not the short term. Mutual Trust understands that its success is based on the maintenance of long-term personal relationships and trust
- Expertise – The provision of offshore Foundation services is not a purely mechanical and administrative role. Judgment and expertise are required. Foundation law is a complex and demanding area of the law. Mutual Trust has the requisite legal and accounting infrastructure to maintain a high level of professional expertise.
- Size and Substance – Mutual Trust has been providing fiduciary services for over 25 years. We are a professionally managed company. Compliance, corporate governance and the pursuit of quality are fundamental to everything we do. Our approach to business and client matters is prudent.
- Value - Many believe that the costs of establishing and administering an offshore foundation are prohibitive. It is true that many of the major banks and other financial institutions make sizeable charges for setting up an offshore Foundation and receive a percentage of the Foundation assets in annual administration fees. Our level of fees is generally much more reasonable and provides access to Foundation to those with relatively modest assets. As all cases are different, fees will be different, but they are probably a lot less than you thought.
- Jurisdiction – Mutual Trust has a dedicated unit within it’s Group, specializing in Foundation management and administration
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