Trusts and foundations are very effective solutions for those seeking to preserve family wealth, protect their children’s interests or ensure confidentiality. Popular among high net worth individuals, these tools are more frequently used in a bid to avoid economical and financial risks and instabilities associated with the applicant’s country of residence.
Many countries worldwide adopt highly favourable laws which act as an incentive to establish a trust or foundation there. One of the main benefits of creating a trust or foundation is the avoidance of forced heirship rules, protection of assets against creditor claims and high levels of privacy regarding the assets held and the parties to the trust or foundation.
The choice of the suitable asset protection tool depends on country-specific laws and regulations applied to foundations and trusts. Trusts are usually used in countries of common law, whereas foundations are used in countries adhering to civil law.
Private foundations may be very similar to trusts in their function, ownership and control structures. They usually share common regulations, for instance via the OECD’s Common Reporting Standard for automatic exchange of information. However, private foundations do have to register and incorporate in many countries.