As we’ve discussed in a previous article a Foundation can be either have Beneficiaries or it can be set up as a Purpose Foundation
(Check this Link for access to the related previous article “What is a Purpose Foundation”: https://offshoreincorporate.com/what-is-a-purpose-foundation/ )
A “Beneficiary” (in the case of a Private Foundation) is a person who is designed ultimately to benefit financially from the set up of a/the Foundation.
A Private Foundation, at set up, can either nominate a beneficiary/s which could be a person (including a corporate body) or a class of person (“eg all the blood descendants of John Smith” ).
Alternatively a Foundation can be set up to fulfil a specific purpose or a set of purposes. Here are some examples of such Purposes: https://www.dropbox.com/scl/fi/39pdmedsponhn7jkxk2gp/SAMPLE-Charitable-Purpose-Foundation-Purposes.docx?rlkey=pcjerj28fbkogq35d8iiorx0n&st=k4rk2pgw&dl=0
Note a Foundation can also be set up to fulfil a simple purpose. For example we had a client recently set up a Purpose Foundation where the sole stated purpose was “to hold the shares of a Belize Company”.
To begin with, when setting up a Private Foundation, you need to decide whether your Foundation is going to be a Purpose Foundation or a Foundation with Beneficiaries.
If it’s going to be a Purpose Foundation you’ll need to specifically advise what the Purpose (or Purposes) is (are) going to be. If it’s going to be a Foundation with beneficiaries you need to tell us who the initial beneficiaries will be. (Minimum 1)
In essence you’re either happy to you see your name/your family member’s names listed as beneficiaries from the outset. Or you’re not.
If your plan is to set up a Seychelles Foundation – & given the Seychelles Foundations Act specifically provides that (when a Sey Foundation owns assets) the Foundation is classified as both the legal AND beneficial owner of any asset that it owns/holds – potentially there may not be any legal issues with you/your family members being named as beneficiaries. That said we are not experts in the acquisition/property/insolvency/tax etc laws of every country; hence if you have any doubts or concerns about whether being named as a Beneficiary is going to have any legal consequences in your home country you should probably consult with a local specialist Lawyer on this point.
It should also be noted that if your Foundation begins life as a Purpose foundation it can mutate/morph later and become a Foundation with Beneficiaries. But it cant work the other way. A Foundation that is initially set up with Beneficiaries can’t later on change and become a Purpose Foundation.
In short, if your main aim is to ensure that your name doesn’t’ appear as a Beneficiary of the proposed Foundation then you will want/need to set up your Foundation as a “Purpose” Foundation.
Would you like to know more? Then please Contact Us:
info@offshorecompaniesinternational.com
DISCLAIMER: OCI is a Company/Trust/LLC/LP/Foundation Formation Agency. We are not tax advisers or legal advisers. You are advised to seek local legal/tax/financial advice in regards to your local reporting/tax requirements before committing to set up or use an Offshore Company or other entity.
