Foundations

Foundations

A foundation is a popular entity for use in estate planning and wealth structuring, especially for individuals resident in civil law jurisdictions which do not recognise or may be unfamiliar with, the concept of trusts.

Jersey Foundations, Private Family Foundations, Corporate Foundations, Charitable Foundations & more.

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Fiduchi has been helping clients establish Foundations in Jersey for over a decade. Whether for asset holding, wealth preservation or charitable purposes. Our director-led teams will assist you with the establishment of a new Foundation, or transfer an existing Foundation to Jersey.
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Estalishment of a Jersey Foundation - How Fiduchi can help

The formation process of incorporating a Jersey Foundation is similar to that of a Jersey company, as a foundation in Jersey is also an incorporated body. It requires an application to Jersey’s Registrar of Companies for incorporation / registration. Applying to form a foundation is a regulated activity, requiring a person holding a Jersey trust company business licence to act as formation agent.

Fiduchi is a regulated provider of trust and company services, and therefore experts in being able to assist you in the incorporation of your Jersey Foundation.

At Fiduchi we take a pragmatic approach to ensure your interests are safeguarded. Our director led teams will assess your needs to ensure we take into consideration all your requirements and provide you with the best advice and service required.

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What is a private foundation?

People often associate the word ‘foundation’ as being used to describe an organisation or entity for charitable purposes. However, its legal structure may be a company, a trust or even a partnership. In Jersey a foundation could be described as a hybrid between a trust and a company. The Jersey Foundations law enables the establishment of a foundation having the features and characteristics of either more a trust or company.

Private foundations are intended to preserve family assets which have already been acquired, and in many jurisdictions, including Jersey, they are prohibited from engaging directly in commercial trading activities unless those activities are incidental to the attainment of its objects. The objects may be charitable, non-charitable or both, and may benefit a person or class of persons and/or be set up for a specific purpose. As soon as a foundation is established it becomes independent from its founder and has its own legal personality. In a corporate context, a foundation offers many interesting possibilities, and the range of structuring options are extensive. Companies and foundations from other jurisdictions can migrate and convert to a Jersey foundation.

Unlike a company a private foundation has no equivalent to subscribers or shareholders and, unlike a trust, beneficiaries have no equitable interest in the foundation’s assets. The foundation’s guardian serves a somewhat similar oversight function to a trust’s protector (or a Jersey purpose trust’s enforcer), and the role of founder is similar to that of a trust’s settlor – the founder being the originator of the foundation.

The management functions of a Jersey foundation is performed by its Council. The foundation council must have a qualified member – a person licenced by Jersey’s financial services regulatory authority.

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Why use a Foundation?

The flexibility of a private foundation and the protection it can provide against external claims represent distinct advantages over a traditional trust. The following are some of the principal uses of a foundation:

  1. A general holding vehicle for valuable assets, including traded securities, shares in family businesses and rental property;
  2. To hold assets to avoid forced heirship claims;
  3. Asset protection;
  4. To act as settlor or trustee of a trust, or be a substitute for a private trust company; and
  5. Charitable purpose.
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Foundations in Jersey and other jurisdictions

Each jurisdiction has its own law on private foundations and, although similarities exist when considering setting up a foundation the law of the chosen jurisdiction must be reviewed in detail as there are differences between them.  

In most jurisdictions, the law merely provides the facility for setting up a private foundation, and it is the constitutional documents (the charter and regulations) that contain the particular provisions required by the founder. This allows for an extremely versatile and flexible vehicle to be created to suit the specific needs of an individual.

Careful professional drafting of these documents is required to ensure the founder’s wishes are clear and that the council fully understand the founder’s intentions.

Things to consider before establishing a Jersey Private Foundation

Before incorporating a Jersey Private Foundation, you should consider the below points to ensure that it conforms to the Foundations (Jersey) Law 2009:

  • A foundation may not directly acquire, hold or dispose of immovable property in Jersey or engage in commercial trading that is not incidental to the attainment of its objects;
  • On incorporation of the foundation, the qualified person becomes the qualified member of the council;
  • Reasonable steps are required to be taken to ensure the foundation’s accounting records are prepared and kept, but there is no requirement for statutory filing; and
  • Any questions that arise in respect of a Jersey foundation must be determined by Jersey Law without reference to the law of any other jurisdiction.

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Foundation terminology explained

The Founder:

Heir agent or lawyer. There is no requirement for the foundation to be endowed with assets when it is initiated, and the provider of any future additions of assets does not become a founder.

Qualified Person:

A person registered under the Financial Services (Jersey) Law 1998 to carry on a trust business who applies to the Registrar for incorporation of a foundation.    

Guardian:

The guardian may share with the foundation council the responsibility for the control of the foundation and they must act in good faith and the best interests of the beneficiaries. Overall the role is supervisory to ensure the foundation council follow the requirements of the charter and regulations. The founder can also be the guardian.

Beneficiaries:

The objects of a foundation may be to benefit a person or class of persons, or the regulations may prescribe for discretionary appointment by the foundation council. A beneficiary has no interest in the foundation’s assets until they are distributed even if the constitutional documents specify the beneficiary by name and his entitlement. Beneficiaries are not entitled to receive information unless the foundation documents provide otherwise. If a beneficiary becomes entitled to a benefit under the charter or the regulations and the benefit is not provided, the beneficiary may seek an order of the Royal Court ordering the foundation to give the benefit. A founder can be a beneficiary.

Foundation Council:

The council must consist of one or more members (individuals or corporate bodies) one of which must be a qualified person (the qualified member). It has powers of management similar to the powers of a board of directors of a company. The members of the Council owe their fiduciary duty to the foundation itself. The founder can be a member of the foundation council.

The Charter:

The charter is a public document. It specifies the name, the objects for which it has been established (which may be charitable, non-charitable or both), details of how it will be endowed, and details of it's winding up if known.  It may contain further information regarding beneficiaries and purpose but to preserve confidentiality, it may instead refer to the regulations.  

The Regulations:

This document is private and is the equivalent of a company’s articles of association. The regulations must establish the council to administer the assets and set out how decisions are to be made.

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Foundations in Dubai

The Dubai International Finance Centre implemented a Foundation Law in 2018 providing an alternative for clients with family businesses and other assets in the Middle East. A DIFC foundation has an unlimited lifespan and must be registered with the DIFC Registrar of Companies. Its constitutional documents comprise the foundation charter and its by-laws (if issued). Although the foundation must have a registered office in the DIFC at all times, its actual administration may take place elsewhere.

Although similar to other jurisdictions, a couple of features are unique to the DIFC foundation regime. The law contains exceptional asset-protection and firewall provisions to safeguard assets from forced heirship or creditor claims based on foreign law, as long as the disposition of the assets was valid under DIFC laws. It may issue securities, including depositary receipts concerning the assets of the foundation.

Testimonials

"THANK YOU TO OUR GUARDIANS!

I would like to extend a BIG thank you to the Fiduchi team for taking such good care of me and my business. It's reassuring to know that there are some guardian angels out there to look after us."

Founder & CEO - SUPERLUXE Events

"Thank you very much for your professional assistance (and patience) in helping us transfer our shares and assets into the new Trust. I know that it has taken longer than expected. Still, your professionalism and continued support have helped us achieve the desired outcome."

Chairman and CEO

"My sincere thanks for the assistance you have provided the advisory committee by coordinating directly with the charity to formalise an agreed donation plan."

Private Client (Charity)

"Many, many thanks for your hard work and speed at setting up our client's Private Investment Company in just 24hrs! Your flexibility and communication throughout the whole process have been appreciated, and the feedback has been tremendous......

Thank you."

Major UK Law Firm

"Thank you, everyone, for delivering this significant re-structure to our family assets and within a very tight timeframe.

Great to get this finalised!"

Mr. C - Private Client

"THANK YOU TO OUR GUARDIANS!

I would like to extend a BIG thank you to the Fiduchi team for taking such good care of me and my business. It's reassuring to know that there are some guardian angels out there to look after us."

Founder & CEO - SUPERLUXE Events

"Thank you Fiduchi for the design and implementation of our corporate pension scheme. Your expertise combined with technological platforms, have allowed us to create a bespoke retirement savings product which allows our employees. Throughout the whole process you have proven to be professional, skilful and enjoyable partner to work with."

Mr. R E - Managing Partner - H Ltd.

"We consider Fiduchi an important strategic partner of ours. Over the years they have proven themselves to be professional and extremely thorough. Combined with this professionalism, they are always a pleasure to deal with and we are pleased with their service levels."

Mr. P.E, Managing Director, W Ltd.

“I am very impressed with the professionalism and efficiency Fiduchi Limited demonstrated during the establishment of our employee benefit trust. They coordinated the process seamlessly and provided us with valuable advice and guidance to ensure compliance with our regulatory and legal responsibilities. Throughout my engagement with the team, I have found them to be approachable and easy to work with.”

Mr. P.B. FE Ltd.

"Thank you for helping us with the establishment of our real estate fund."

Startup Fund Manager

"Thank you so much for helping my client register their vessel with the Red Ensign Group and all the other advice and support you provided!"

Trusted advisor to Yacht Owner.

"Fiduchi's yacht team provides a first-class service! In particular with assisting us with our crew banking requirements and payroll services. Whenever we need assistance, they are just a phone call away!"

Superyacht Captain

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