As the number and value of assets increase, the need arises for their proper structuring and protection. Traditionally, structuring private assets involves meeting the following requirements:
When building an ownership structure, it is worth taking into account the type of assets, their geographic location, value, purpose, and a number of other criteria. Traditionally, holding companies, trusts, or family foundations are used for the purposes of international structuring of private assets.
One of the most effective tools for structuring private assets is a family foundation established in the Principality of Liechtenstein. Such a foundation has all the characteristics of a legal entity and combines certain features of a company and a trust; however, unlike a company, it has no shareholders, being an independent bearer of rights and obligations, and it may also hold bank accounts and property in its own name. This distinguishes it from a trust, where the trustee itself acts as the legal, but not the beneficial, owner of the property transferred into trust, holds bank accounts, issues powers of attorney, acts as claimant or defendant in court, etc.
The foundation is a separate pool of assets that acquires legal entity status by decision of its founder. When establishing a foundation, the founder transfers their assets to the management of the foundation's board (the executive body) for the benefit of a circle of persons (beneficiaries), who will subsequently receive income from the management of these assets. Thus, the founder relinquishes ownership of the property and transfers it in favor of the foundation. The foundation's board has only the right to dispose of the property, but does not acquire ownership rights over it. Beneficiaries, in turn, do not receive the right to dispose of or own the property, but have the right to receive income from the foundation's activities (beneficial right). This conditional separation of rights ensures the protection of assets, preventing their alienation by third parties — whether through a court decision or an attempted hostile takeover. For example, assets transferred to the foundation cannot be alienated as part of the subsidiary liability of the founder or beneficiary.
In addition to financial assets, other material contributions may also be placed under the foundation's management — company shares, movable and immovable property, jewelry, or works of art. The fact that a foundation has been established is only indicated in the Register of Foundations of the Principality of Liechtenstein, which is closed to public access. Specific information about the founders' names is not entered into the Register of Foundations, which provides an additional layer of confidentiality for the ownership structure. Proper structuring of the foundation can allow the names of founders or beneficiaries to be kept confidential, protecting the assets from outside interference, including from government authorities (for example, requirements for declaring CFCs or foreign income).
Foundations can be used for various purposes, but they are not intended for conducting everyday commercial activities for the purpose of making a profit. However, such restrictions on the type of activity do not apply to companies that are wholly or partly owned by the foundation. A family foundation is not subject to general oversight by the authorities or other bodies, and such a foundation is also not required to submit a balance sheet or undergo an audit.
In Liechtenstein, it is possible to apply the special Privatvermögensstrukturen (PVS) tax regime — as a result of which, provided there is no active commercial activity, the foundation is fully exempt from taxation and is only required to pay a fixed annual flat-rate tax of CHF 1,200, regardless of the amount of income received. Thus, the tax burden on the structure can be reduced to a minimum.
A family foundation can be used not only to address current needs, but can also become a tool for succession planning and the transfer of family assets as an inheritance, thereby ensuring their preservation. Liechtenstein's legislation regulates the activities of family foundations quite flexibly and allows them to be established with maximum consideration of the founders' interests and objectives. The law defines only general requirements, while the foundation's operating mechanism is set out individually in its charter.
Today there are numerous risks that can lead to the loss of assets, regardless of their geographic location. A properly structured ownership arrangement is the key to safe and effective ownership. The team of experts at Solex Group will be glad to help you organize the structure and provide ongoing support for it.
Keywords: asset protection, family foundation, Liechtenstein, trust, bank account.
- creating preventive mechanisms that prevent the loss or alienation of assets;
- ensuring confidentiality of ownership;
- optimizing the tax burden on assets and the income derived from their realization.
When building an ownership structure, it is worth taking into account the type of assets, their geographic location, value, purpose, and a number of other criteria. Traditionally, holding companies, trusts, or family foundations are used for the purposes of international structuring of private assets.
One of the most effective tools for structuring private assets is a family foundation established in the Principality of Liechtenstein. Such a foundation has all the characteristics of a legal entity and combines certain features of a company and a trust; however, unlike a company, it has no shareholders, being an independent bearer of rights and obligations, and it may also hold bank accounts and property in its own name. This distinguishes it from a trust, where the trustee itself acts as the legal, but not the beneficial, owner of the property transferred into trust, holds bank accounts, issues powers of attorney, acts as claimant or defendant in court, etc.
The foundation is a separate pool of assets that acquires legal entity status by decision of its founder. When establishing a foundation, the founder transfers their assets to the management of the foundation's board (the executive body) for the benefit of a circle of persons (beneficiaries), who will subsequently receive income from the management of these assets. Thus, the founder relinquishes ownership of the property and transfers it in favor of the foundation. The foundation's board has only the right to dispose of the property, but does not acquire ownership rights over it. Beneficiaries, in turn, do not receive the right to dispose of or own the property, but have the right to receive income from the foundation's activities (beneficial right). This conditional separation of rights ensures the protection of assets, preventing their alienation by third parties — whether through a court decision or an attempted hostile takeover. For example, assets transferred to the foundation cannot be alienated as part of the subsidiary liability of the founder or beneficiary.
In addition to financial assets, other material contributions may also be placed under the foundation's management — company shares, movable and immovable property, jewelry, or works of art. The fact that a foundation has been established is only indicated in the Register of Foundations of the Principality of Liechtenstein, which is closed to public access. Specific information about the founders' names is not entered into the Register of Foundations, which provides an additional layer of confidentiality for the ownership structure. Proper structuring of the foundation can allow the names of founders or beneficiaries to be kept confidential, protecting the assets from outside interference, including from government authorities (for example, requirements for declaring CFCs or foreign income).
Foundations can be used for various purposes, but they are not intended for conducting everyday commercial activities for the purpose of making a profit. However, such restrictions on the type of activity do not apply to companies that are wholly or partly owned by the foundation. A family foundation is not subject to general oversight by the authorities or other bodies, and such a foundation is also not required to submit a balance sheet or undergo an audit.
In Liechtenstein, it is possible to apply the special Privatvermögensstrukturen (PVS) tax regime — as a result of which, provided there is no active commercial activity, the foundation is fully exempt from taxation and is only required to pay a fixed annual flat-rate tax of CHF 1,200, regardless of the amount of income received. Thus, the tax burden on the structure can be reduced to a minimum.
A family foundation can be used not only to address current needs, but can also become a tool for succession planning and the transfer of family assets as an inheritance, thereby ensuring their preservation. Liechtenstein's legislation regulates the activities of family foundations quite flexibly and allows them to be established with maximum consideration of the founders' interests and objectives. The law defines only general requirements, while the foundation's operating mechanism is set out individually in its charter.
Today there are numerous risks that can lead to the loss of assets, regardless of their geographic location. A properly structured ownership arrangement is the key to safe and effective ownership. The team of experts at Solex Group will be glad to help you organize the structure and provide ongoing support for it.
Keywords: asset protection, family foundation, Liechtenstein, trust, bank account.