One of Europe’s smallest countries, Liechtenstein is best known in the financial sector for its unique foundations, or Stiftungen, which have historically been a favourite of high-net-worth individuals and companies seeking the benefits of a tax haven. Although the precise laws and regulations governing these structures have changed over time, Liechtenstein foundations remain very popular and effective estate planning tools.
A Liechtenstein foundation is a special-purpose asset protection tool that serves as its own legal entity, making it more like a company (albeit without owners or shareholders) than a trust. It is permitted to engage in non-commercial or private-benefit activities, and the founder determines the conditions under which the beneficiaries can avail themselves of the foundation’s assets or income.
Conveniently for international families, Liechtenstein foundations can be founded by foreign nationals, who may reside in any country and exercise complete control over the foundation. The founder can also be the named as the foundation’s sole beneficiary, although it is important to remember that all assets are legally the property of the foundation itself.
Privacy is one of the main advantages associated with Liechtenstein foundations. Registration is voluntary, and the names of the founder and beneficiaries are never listed within public records. In addition, Liechtenstein only enforces foreign judgments in very specific circumstances, and does not require documentation to be revealed in pre-trial discovery.
In Liechtenstein, private benefit family foundations (as opposed to those created for public benefit reasons) are also exempt from taxation, making them particularly attractive for wealth preservation and estate planning purposes. However, it is important to note that taxes may still apply in the founder’s home country.
Expert guidance should always be obtained prior to forming a Liechtenstein foundation or any other estate planning framework.
Contact the Copaz team today for a consultation.