Jersey Foundations: A flexible solution for wealth preservation and succession planning

As family wealth becomes increasingly international and family structures continue to evolve, many individuals are seeking flexible solutions to preserve wealth, support succession planning and establish effective family governance. For clients in Asia and across the globe, Jersey foundations can provide an attractive alternative or complement to traditional trust structures.

What is a Foundation?

A foundation shares characteristics of both a trust and a company. Like a company, it is an incorporated legal entity governed by a council in accordance with its charter and regulations, and benefits from limited liability. The individual who establishes the foundation is known as the founder, similar to the settlor of a trust.

Although a foundation can have beneficiaries, it differs from a trust in several important respects. Beneficiaries do not hold a beneficial interest in the foundation's assets and are not owed fiduciary duties by the foundation itself. Unlike a trust, there is no separation of legal and beneficial ownership.

The foundation concept is often particularly appealing to clients from civil law jurisdictions, where it may be more familiar and easier to understand than a trust structure.

Key Benefits of a Foundation

A foundation is established by a founder in a similar manner to the creation of a trust. It is governed by a council, which may include the founder and other family members. The council acts in accordance with the foundation's charter and regulations and performs a role comparable to that of a company's board of directors.

One of the key advantages of a foundation is its flexibility. The founder may reserve certain powers and can also serve as a council member and/or guardian. This enables a high degree of involvement while maintaining a clear governance framework.

The charter and regulations can be tailored to reflect the founder's values, objectives and long-term vision. As a result, foundations are particularly well suited to:

• Facilitating the orderly transfer of wealth across generations.
• Establishing clear family governance arrangements.
• Preserving family-owned businesses and strategic assets.
• Providing flexibility in how assets are managed and distributed.
• Supporting long-term succession planning objectives.
• Charitable and philanthropic purposes

A guardian is appointed to oversee the foundation and ensure that the council carries out its duties in accordance with the charter and regulations. Similar to a protector or enforcer in a trust structure, the guardian provides an additional level of oversight and protection to help ensure that the founder's wishes are fulfilled.

For families with ownership interests in private businesses, a foundation can be particularly effective. Shares in a family business can be held within the foundation for the benefit of designated family members, subject to criteria determined by the founder. Unlike certain trust structures, concerns regarding diversification of assets are generally less prominent, making foundations an attractive vehicle for maintaining concentrated family business holdings while supporting orderly succession and long-term wealth preservation.

Why Choose a Jersey Foundation?

Introduced in 2009, Jersey foundations provide an additional structuring option for clients seeking long-term asset protection, succession planning and family governance solutions.

Jersey is recognised internationally as a well-respected and highly regulated financial centre, offering a stable legal and regulatory environment. Jersey foundations combine the benefits of a corporate entity with the flexibility often associated with private wealth planning structures, making them a valuable option for many families and entrepreneurs.

Equiom has extensive experience in establishing and administering foundations for wealth preservation purposes. Foundations continue to be particularly attractive to clients across Asia, where they are often viewed as a familiar and effective solution for managing family wealth and facilitating intergenerational succession.

Our Jersey office works closely with colleagues in Hong Kong and Singapore to help ensure that each foundation aligns with the founder's objectives and family circumstances. This collaborative approach enables clients to benefit from local expertise, cultural understanding and convenient time-zone support, while enjoying the advantages of a structure established in a respected offshore jurisdiction.

How Equiom Can Help

Whether you are considering a foundation as an alternative to a trust or as part of a broader succession planning strategy, our experienced teams in Jersey, Hong Kong and Singapore can help assess the most appropriate solution for your family's needs.

Should you wish to learn more about Jersey foundations, please contact our Hong Kong or Jersey team for a confidential, no-obligation discussion.

This article has been carefully prepared, but it has been written in general terms and should be seen as broad guidance only. This article cannot be relied upon to cover specific situations and you should not act, or refrain from acting, upon the information contained within this article without obtaining specific professional advice. Please contact Equiom Group to discuss these matters in the context of your particular circumstance. Equiom Group, its partners, employees, and agents do not accept or assume any liability or duty of care for any loss arising from any action taken or not taken by anyone in reliance on the information in this article or for any decision based on it. 

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