There are a number of key areas where fiduciary (trust or foundation) structures can be of considerable benefit as part of an Estate Plan. These include:
- Succession Planning
- Protection of minors and vulnerable persons
- Asset Protection (claims, divorce, seizure etc)
- Business Continuity
- Tax Optimization
- Philanthropy
- Privacy
Rosemont can compare for you the differences between Trusts and Foundations. There are in fact many similarities between a Trust and a Foundation. Both may be set up during one’s lifetime (inter-vivos) or on death (testamentary) and can allow for the organisation of your estate during your life-time.
A trust has a Settlor, who may have reserved powers, a foundation has a founder, who may have rights reserved to them over the management of the foundation. One has a Trustee and the other a Council and officers. One is governed by the trust deed and the other by a charter and articles or regulations. Both have beneficiaries. However, the main difference between a Trust and a Foundation is that a Trust is not a legal entity. It is an “agreement” between the Settlor and the Trustee in which the ownership of the assets is transferred by the Settlor to the Trustee for the benefit of the beneficiaries named in the trust deed. There is therefore “split” ownership, legal ownership by the Trustees and the equitable interest held by the beneficiaries named in the Trust Deed.
A Foundation however, is a legal entity established through a private or public instrument known as the Foundation Charter and is registered in the Public Registry of the relevant jurisdiction. The administration of the assets is undertaken by the Foundation Council. Assets transferred to a Foundation become the assets of the Foundation, they cease to be the assets of the Founder and are not the assets of the beneficiary unless and until distribution to such beneficiary.
The governing law for a trust may be changed generally without any registration process, which is not the case for a Foundation. Some trust jurisdictions require the trust to be registered.
Rosemont can review with you the principal considerations in selecting a Trust or Foundation Jurisdiction:
Before establishing a fiduciary structure you should give careful consideration to choosing the most appropriate jurisdiction for the administration and long-term protection of trust structure. An important issue will also be choosing the right trustee which should depend on the skills, reputation and costs of the fiduciary company. The following points should be borne in mind:
- Local taxation
- Quality of laws
- Dispute resolution
- Regulatory environment
- Transparency
- Compliance rules
Rosemont can assist you to make the right Trust and Foundation structuring choices at the outset considering the following matters:
- Fiduciary entity form: Trust or Foundation, PTC, PTF, Vista, Reserved Powers Trusts, Purpose Trusts
- Type of settlement: Irrevocable, Revocable, Declaration of Trust, Testamentary
- Jurisdiction of Foundation or Trust (Proper Law)
- Location/Jurisdiction of Trustee, Council Members
- Choice of Trustee/Council Members
- Choice of Protector