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| A Relationship of Confidence A Foundation or a Trust is first and foremost a relationship of confidence between people. In practice, a person, the Settlor, appoints one or more Trustees to manage all or part of his or her personal assets for the ultimate benefit of one or more beneficiaries, being it in a separate legal entity, the Foundation, or in accordance with a set of contractual rules for the Trust. Since it is a matter of privacy, the Foundation or Trust are not required to be officially registered. This ensures the watertight confidentiality expected by the client.
Our clients may not be happy to merely have an account in a safe haven. They may have additional requirements such as to ensure that the management of their property will not be interrupted on their death by probate or other formalities, to protect their assets against spendthrift family members or heirs or to protect parts of their assets against future creditors. A Foundation or a Trust may shelter its assets from changes in a country's legislation (e.g. nationalization, forced repatriation, introduction of exchange controls, expropriation) and from general political and judicial risk. A Foundation or a Trust may assist in planning a strategic reduction, deferment or even avoidance of various tax liabilities on personal assets and income. These objects are, due to their personal nature, in need of confidential attention to which we, as professionals in Liechtenstein, put all our commitment.
A Foundation or a Trust enables its Settlor to plan the distribution of his or her assets in accordance with his or her wishes, for example to forestall family conflicts about the sharing-out of an estate or to protect beneficiaries from their lack of experience or to provide for the essential interests as regards the education, health and career of certain family members.
Liechtenstein Trust Law is known to be liberal. It facilitates the designing of a structure in line with the clients' personal needs as regards estate planning, asset protection and tax considerations. The Foundations and Trusts can be set up in a discretionary or non discretionary form. They may be revocable or irrevocable. The Trust Law enables the setting up of a Family Trust in full confidentiality, but also as a Business Trust for commercial operations.
Foundations and Trusts are settled by the following parties: The Settlor: This is the Founder of a Foundation or a Trust, and may be a private individual or a legal entity. The Settlor assigns possession of assets to the Foundation or the Trustees of a Trust to or for the benefit of certain beneficiaries. The Trustee(s): Trusteeship is generally assumed by one or more individuals or legal entities. The Trustees are required to act in strict compliance with the wishes expressed by the Settlor in the Foundation's Articles and Regulations or the Trust Deed. Liechtenstein Trust Law ensures that entrusted assets are kept separate from the assets of the Trustees and that the later act solely in the best interest of the Beneficiaries.
The Articles or the Trust Deed are the instrument by which the Settlor lays down the Trustees' obligations as to the administration, the management and the use of the assets entrusted upon him.
Contrary to anglo-saxon countries, the Settlor of a Liechtenstein Foundation or Trust is not bound to any limitations with respect to the accumulation of income and the duration period. In addition, the Foundation or Trust documents may either be registered with the Public Register or deposited at the Princely Court only. The Settlor may also determine in the Articles of Foundation or the Trust Deed that any creditors of the Beneficiaries shall no acquire any beneficial interest by way of injunction, writ of execution or bankruptcy proceedings. This has proven to be a valuable tool to safeguard the Beneficiaries' interests.
Beneficiaries are named either directly by the Settlor in the Formation Documents or the Trust Deed or by the Trustees in an addendum complying with the Settlor's wishes. Beneficiaries may be individuals or legal entities, charitable institutions or any other bodies. The Settlor may also be a beneficiary.
In the Letter of Wishes the Settlor may express his or her wishes as to the administration, management and distribution of the assets. In practice, the Trustees will follow the provisions of such a Letter of Wishes, although they are not legally bound to it. This Letter of Wishes may be amended, supplemented and/or rescinded in accordance with the wishes expressed by the Settlor at any time.
The Funds are the body of assets assigned to the Foundation or the Trust by the Settlor. They can comprise real estate and assets located anywhere in the world. Income on such Funds may add to the value unless distributed to the beneficiaries.
In the Articles of Foundation or the Trust Deed a Protector may be appointed. The duties of a Protector are generally the supervision of the Trustees' management and the designation and exclusion of Beneficiaries. To avoid any conflict of interest, the Protector should preferably not be a Beneficiary. Individuals or legal entities may be appointed as Protector.
Foundations and Trusts incur a tax liability in Liechtenstein of 0,1% of the endowment capital or the Trust Fund, with a minimum of CHF 1000.- per annum.
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