Globally, foundations come in all shapes and sizes and can be used for a wide variety of purposes. In the context of wealth management, the objective of a foundation is much the same as that of a trust. The manner in which a foundation is established and run, however, is quite distinct from a trust.
Unlike a common law trust, a foundation is a legal entity more akin to a company and as such, it is usually entered onto the Companies registry in the jurisdiction concerned. Foundations are formed by a founder who provides the initial assets of the foundation, otherwise known as the endowment. This highlights another area where foundations differ from trusts in that the assets are held for the purposes set out in the foundation’s constitutive documents and are administered according to contractual rather than fiduciary principles. Whereas trust assets are held by a trustee, a foundation has a council which acts much like a company board and which is responsible for fulfilling the purpose of the foundation, although there are no shareholders. Beneficiaries have contractual rights to enforce the operation of the foundation in accordance with its constitutive document – rather than proprietorial rights in its assets.
Foundations can now be offered from a variety of international jurisdictions:-
- Isle of Man
It is worth noting that an Isle of Man Foundation can be structure to be compliant with sharia law.
For more information please contact us.