With last year marking the tenth anniversary of the introduction of Jersey foundations into Jersey law, in a series of articles Grant Barbour, Managing Director - Private Client breaks down their key features, components and use-case.
Owing to their flexibility, significant numbers of Jersey foundations have been incorporated as orphan structures for specified purposes, whether to own certain assets, or to perform particular roles.
Orphan structures for specified purposes
Private Trust Companies (PTCs) - Jersey foundations are increasingly being used as a modern way to hold the shares in PTCs which act as trustee of one or more family trusts. Prior to the introduction of the Foundations (Jersey) Law 2009, PTCs in Jersey were typically owned by charitable or non-charitable purpose trusts. The foundation can be an attractive alternative for those clients who are not comfortable with the prospect of a professional services provider acting as trustee of a family trust and have incorporated a PTC for that reason. If a trust is used to own the shares of a PTC, the question will again arise as to who is to be the trustee of that charitable or non-charitable purpose trust: with a foundation owning the PTC, this issue does not arise.
A Jersey foundation can also be incorporated to act as the trustee itself, in place of (or as) the PTC. The PTC business exemption from registration under the Financial Services (Jersey) Law 1998 (pursuant to which PTCs are able to operate) is equally available to foundations. This option simplifies the structuring as it involves just one vehicle (the foundation) rather than two (the PTC and the vehicle which owns the PTC).
Other examples - Other examples to mention are of foundations being incorporated to hold the shares in a company which acts as a protector of a trust, an enforcer of a non-charitable purpose trust, a council member of a foundation, or a general or limited partner of a limited partnership. Alternatively, a foundation can also be incorporated to discharge any of these roles itself.
The final part of the series will analyse why Jersey foundations are a popular vehicle for philanthropic purposes.
Be it for succession and estate planning, as philanthropic entities, or for more specific purposes, we work with you to create a bespoke solution to meet your specific structuring needs, utilising over 50 years' experience in private wealth planning. Find out more about our foundation services here.
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.