More than 100 Jersey foundations have been registered since the
Foundations (Jersey) Law came into force on 17th July 2009. While
that may not seem a great number over more than two years, the
Jersey foundation was born into a world of great turmoil and
uncertainty when confidence was low and there was reluctance to
create new wealth planning structures.
Foundations are also new to many of the intermediaries who
provide business to Jersey, and to the service providers, so there
has been a significant learning curve to be undertaken and during a
period of economic constraint. There also is uncertainty of tax
treatment in the UK and other important jurisdictions.
Despite all these obstacles and negative influences the Jersey
foundation has succeeded and registrations have been steadily
increasing, from 20 in the last 6 months of 2009 to nearly 30 in
the first 6 months of 2011 and 9 in March 2011 alone.
So who is using them and what for?
Not surprisingly because they are creatures of civil law, Jersey
foundations have found favour in civil law jurisdictions, but they
are also being used by clients from the Middle East and Far
They are being used instead of trusts for private clients, but
also in commercial arrangements as escrow holders or for
off-balance sheet transactions, and a number of charitable and
philanthropic foundations have been registered.
There are virtually no limits on what they can do and the lack
of duties to beneficiaries means that higher risk assets can be
held than with trusts.
In particular they are being used to own active trading
businesses for wealth planning and asset protection purposes but
with control of the businesses remaining with the family.
Guernsey is likely to introduce foundations during 2012, which
will have some significant differences, and we will be informing
you about them once the draft legislation is known.
In the meantime Advocates Richard Pirie and David Dorgan of our
Jersey office are acknowledged experts and have provided the
documentation for nearly a quarter of foundations registered to
date. We will be pleased to assist you.
The content of this article is intended to provide a general
guide to the subject matter. Specialist advice should be sought
about your specific circumstances.
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