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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 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
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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 maximise 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 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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