Family foundations can be used in inheritance planning to ensure the operational continuity of a business, prevent the break-up of the estate, and avoid or reduce the often cumbersome and complicated inheritance proceedings. They are not a one-size-fits-all solution and their creation requires a lot of prior thought and preparation.

What we can do for you?

We will:

  • help choose the type of foundation that suits your purpose
  • draw up a foundation deed that reflects your needs and expectations and is statutorily compliant
  • prepare the necessary corporate documents
  • walk you through the business reorganization process, including restructuring and mergers, in order to structure the business assets ready to be transferred into the foundation
  • keep the foundation accounts and manage its tax affairs
  • draw up financial reports
  • provide expert tax advice in the event of any doubts in the course of managing the foundation
  • apply for the relevant tax clearance certificates
  • audit the affairs of the foundation and issue a report
  • administer the liquidation process in the event of the foundation being wound up

Pros

  • The right legal tools in the hands of the settlor to ensure proper planning and execution of succession proceedings and consolidation of family assets
  • Distribution of foundation proceeds to the beneficiaries in a tax efficient way
  • Settlor flexibility to have a material influence on setting up the foundation, devising the succession strategy, naming the beneficiaries, laying down the rules for satisfying the beneficiaries, and drawing up guidelines for the foundation investment decisions
  • Effective foundation operation and fulfillment of its objectives in accordance with the settlor’s wishes

 

Setting up and managing a family foundation

Legal aspects
  • carry out due diligence of the business, verify the ownership of the settlor’s assets and define family members’ roles in running the business and the foundation (succession strategy)
  • recommend the foundation objectives, its optimal structure and rules of operation, define and draft the beneficiary rights
  • prepare the business and the family members for the creation of the foundation, help reorganize the business, provide relevant training.

 

Tax aspects
  • explain the tax implications of running a family foundation
  • compare the tax regime applicable to the current asset structure and that of the family foundation
Legal aspects
  • draw up the foundation deed or will for the purpose of setting up a family foundation
  • draw up bespoke articles of association which take account of the succession strategy
  • provide legal advice and prepare any documents necessary to move the assets into the family foundation
  • make an inventory of the settlor’s assets
  • prepare the necessary documents setting out the duties and powers of the governing bodies
  • register the foundation in the family foundation register

 

Tax aspects
  • prepare the foundation deed ensuring it contains any necessary tax solutions
  • assess the income tax and VAT implications of transferring assets to the family foundation
  • provide advice on taxation of domestic and international investment flows as part of the foundation operations
Legal aspects

Records kept by the foundation

  • prepare the necessary succession strategy documents setting out the duties and powers of the governing bodies: board of management, supervisory board and the general meeting of the beneficiaries

Professional advice to existing family foundations

  • carry out legal due diligence of the foundation’s operations, management and business objectives and help amend its articles of association and succession strategy plans based on the risk areas identified

 

Tax aspects
  • assess the foundation’s current performance and management of its tax affairs
  • determine the tax regime applicable to the beneficiary income paid by the foundation, taking into account the settlor’s and the family trust’s share of the assets
For accounting issues, please contact an MDDP Outsourcing experts

 

In tax-related matters, please contact  MDDP experts

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