Establishing a Charitable Trust or Foundation
Whether it makes sense to establish a charitable trust, private foundation, or consider another approach requires careful consideration.
The trust with the strongest case law histories and statutes are those in the Cook Islands and Nevis. There is a short statute of limitations on fraudulent transfers of one to two years. Even if the asset conveyance challenge happens immediately, the opponent must show the transfer was done to deny that particular creditor access to trust funds. The creditor must prove its case beyond a reasonable doubt. Similarly, with a foundation, in order to enjoy asset protection, you will need to have council members who are outside your country of residence, such as in Nevis, Cook Islands or Panama. You may hold the manager role initially.
Trusts versus Foundations: Understanding the Differences
A foundation is particularly attractive for clients from civil law jurisdictions, which normally do not recognize any distinction between legal and beneficial ownership. A foundation owns any property transferred to it by the founder and is managed in accordance with a charter and rules. Once a trust is established, the legal ownership of trust property will vest in the trustee, who has a fiduciary duty to hold and manage the trust fund in the best interests of the beneficiaries. In contrast, a founder can retain significant control over a foundation’s assets and activities, subject to the rules set out in its constitution.
Making the Decision: Trust or Foundation?
Ultimately, choosing between a trust or foundation will depend on your personal preferences. You should weigh up your options with help from experienced advisors and consider your charitable and estate planning goals. It may come down to what you want to gain from your investment, who you want it to benefit, and what the assets will be. At Turner Little, we have years of experience in delivering specialist advice, professional guidance and help to those wanting to set up a trust or a foundation. We understand that no two circumstances are the same, so we listen to your objectives and offer unique solutions tailored to you and your succession plan.