The burden to shift fortune from one person to the other is not the same outside of the European Union, what automatically translates into a more sympathetic tax environment. The entrepreneurs have much more room to plan the proper situation to run their business. In the European Union, it is more and more the tax man who drives the business of the entrepreneurs, and the results of this are clearly seen with a rather negative result.
There might be an obligation to declare a beneficial interest in trusts or foundations. If a trust/foundation is properly structured as a discretionary structure, there is no beneficial interest. If control by settlor can also be avoided, it may also be a "anti-monopoly" planning instrument?
Foundations can be used for purely private-benefit purposes (e.g. to cover the costs of education, learning, equipment and support, etc.) or for purely common-benefit purposes (e.g. to support and promote charitable, artistic, scientific and social work) or to control the management and the successor directors of a company. They can also be used for partly private-benefit and partly common-benefit purposes.
Trusts can be used in a similar way and benefit from more flexibility. It is even possible that the trustees are no longer resident in Liechtenstein. In order such a Liechtenstein trust is registered, a legal agent is needed.
Asset protection: Creditors of the founder/settlor
The collective person or special endowment must be set up at a time when the founder/settlor can provide economic backing for the foundation/endowment. Creditors may assert their claims for a maximum of five years.
Founder's/settlor's heirs
The set-up for asset protection is promoted by private international law (Liechtenstein Act on Private International Law, IPRG). Claims by a person entitled to a compulsory portion in the estate to supplement that portion, brought against a Liechtenstein collective person or special endowment, must be eligible under the applicable law of succession; they must also be admissible under the law applicable to acquisition of the assets. The law of Liechtenstein can often be chosen to govern the acquisition of assets by the collective person or special endowment. Under the law of Liechtenstein, claims to supplement a compulsory portion of an estate can only apply against gifts made in the two years prior to the death of the testator.
Beneficiaries's creditors
Founders of family foundations may provide that the creditors of beneficiaries may not remove their freely acquired benefit entitlement or justified expectation, or individual claims deriving from these, by means of security proceedings, debt enforcement or bankruptcy. Such provision can only be made for mixed family foundations where the respective entitlement serves the objects of the foundation.
Set up
There are several possibilities to transfer assets to family members or business partners. You can do it during your life as a lifetime gift, upon death as an estate with or without a will (handwritten or not) or through the establishment of a foreign trust from countries like Liechtenstein.
The documents (foundation statutes or trust deeds) are not really very much of difference from country to country. So the document is not the key issue to which country to shop around for the right document. There must be other questions and answers to take out the proper structure.
Possible questions are:
- Where will my assets be which should be brought into the foundation/trust?
- How many people have to decide/resolve the transfer of assets into the trust?
- Where will I and my family members live now and in future?
- Will the place of living be important as to the structuring of the trust deed?
- If yes, how important is it to have an independent trustworthy trustee having a long track history?
- How internationally focused should my trustee be?
- Will the set up of a trust be a part of (pre-)nuptial agreements, and if yes, how flexible should the respective country be on this?
- Should my business be continued if I can no longer decide, and if yes, do I want to plan who continues the business? Do I want to make sure that the right directors of the business are appointed?
- How important is it to me to have trustees with international knowledge, who are responsive, who have a certain distance from my home country for independence, who take a global approach considering my ideas?
- How important is it to have trustees who have knowledge on estate
- transfers for more than just one generation?
The more the client needs consultancy and a globalized approach for the set up, the more this speaks for trustees from regulated places like Liechtenstein where trustees must be licensed and are supervised by the Financial Market Authority.
Why use of a foundation/trust?
An investment or management of a structure, will, in basic terms, involve an individual (founder) holding, directly or indirectly, the majority of the shares in a company. The first observation to make is that individuals, being human beings, are not well-suited to owning assets because of what may happen to them. Where an individual holds most of the shares of a company, the consequences may be severe, ranging from chaos and uncertainty to complete paralysis of the management of a company. Such possibilities are often overlooked, and, therefore the use of a foundation or trust for continuance may be advantageousl
Allgemeines Treuunternehmen (ATU) is active in the asset protection since 1929, so for more than 83 years.
