The Foundation is a civil law concept, previously used for public and charitable purposes. Over a period of time, the usage of the foundation extended to private wealth management.
The foundation acts like a trust and functions like a company. It is as a separate legal entity but it has beneficiaries instead of shareholders. It can hold assets for the benefit of another person with provision for future maintenance.
Assets can be endowed to the foundation for any of the following purposes;
- Wealth and asset management
- Succession planning
- Investment holding
- Charitable and philanthropic purposes
- Holding of intellectual properties
- Efficient tax planning
Assets endowed to the Foundation become the property of the Foundation with full legal and beneficial title and are no longer considered to be the assets of the founder or a third party endowing the assets to the Foundation.
The founder of the foundation has the possibility to reserve certain rights and functions to himself or another person. The advantage is that because the foundation is a separate legal entity, it is not exposed to a ”sham” argument as opposed to the trust where it would with similar settlor reserved powers.
Beneficiaries are not the owners of the Foundation and the Foundation can be structured in such a way that the beneficiaries have no legal rights to its assets and no control over its decisions.