Trusts and Foundations provide means by which to protect both your assets and your loved ones, both now and in the future. When deciding which one to pursue, it comes down to what the Trust or Foundation is to be used for, and what assets it will hold. The use of Trusts in the context of succession and wealth planning as well as philanthropy is well established, while Foundations are only just starting to gain momentum, and are being increasingly used as structures for succession planning.
The question we often get asked is: ‘which should I use?’ Here, we take a brief look at how Trusts and Foundations differ.
What is a Trust?
In essence, a Trust is a legal arrangement where one or more people, or a company (Trustees) controls money or assets (Trust property), which they use for the benefit of one or more people (beneficiaries). The person or party that provides the assets of the trust and determines the rules is called the settlor, donor, or grantor.
Trusts enable you to:
- Provide for children or family members who lack financial experience or are unable to manage their assets
- Provide for the management of your assets should you become unable to do so yourself
- Avoid probate and transfer your assets immediately to your beneficiaries upon death
- Reduce estate taxes or provide liquid assets to help pay for them
At Turner Little, we recommend you take the time to evaluate carefully what you are trying to accomplish and then consult a firm that is experienced in estate planning. We have considerable experience in this field, and understand that a well written Trust can provide peace of mind for both you and your beneficiaries for years to come.
What is a Foundation?
Foundations are legal entities that can engage in business, trade, property, enter into contracts, open bank accounts and hold assets. A foundation is created by a founder, who makes the initial gift to the Foundation. A Foundation Council then runs the Foundation, and consists of several people acting as Trustees, who carry out the requirements of the Foundation according to the Foundation Charter and Law.
Foundations are instrumental in achieving confidentiality, and can be set up for specific purposes, whereby a group of people can be beneficiaries without a specific person or particularly family named.
Foundations are used for:
- Asset protection and estate planning for family or business purposes
- Business Foundations, as a holding entity
- Increased confidentiality and discretion
- Their ability to legally separate assets from personal holdings
- Philanthropic reasons for the benefit of social and charitable groups
There are a few subtle differences that can mean one may be preferable in certain circumstances than the other, but ultimately it comes down to personal preferences of the individual establishing the Trust or Foundation. The key is that both foundations and trusts are extremely useful structures in the context of wealth and succession planning and philanthropy.
At Turner Little, we have years of experience, delivering proactive, professional guidance on the setting up and running of Trusts and Foundations. Our specialist team of experts will deal with matters pragmatically and sensitively, taking the time to meet with clients and discuss their individual objectives in detail, in order to provide solutions that are uniquely tailored to their individual needs. For more information or to understand which would be most beneficial to you, contact us directly.