With last year marking the tenth anniversary of the introduction of Jersey foundations into Jersey law, Grant Barbour, Managing Director - Private Client presents the final part of his series breaking down the key features, components and use-case of the popular Jersey foundation vehicle.
Part one: Key features of a Jersey foundation Part two: Examining the structure of a Jersey foundation Part three: What are Jersey foundations being used for? Succession and estate planning Part four: What are Jersey foundations being used for? Orphan structures for specified purposes
One of the most popular uses for Jersey foundations is in relation to philanthropy, owing to the vehicle's flexible nature that enables tailored solutions to individual philanthropic objectives. Some of the reasons why a Jersey foundation is a popular choice for philanthropic purposes include:
- Choice of objects: A Jersey foundation can be incorporated to pursue a client's chosen causes - causes that he or she is passionate about - whether or not they are technically charitable. The Foundations (Jersey) Law 2009 (the "Law") allows a Jersey foundation to be established for purposes which may be charitable, non-charitable or a combination of both. It is also possible to structure a Jersey foundation so that its objects combine both the pursuit of altruistic causes and benefit to people. This flexibility is clearly attractive and many Jersey foundations have been incorporated with philanthropic objects, either alone or in conjunction with objects for the benefit of people. Some examples to mention of Jersey foundations incorporated for philanthropic purposes are those incorporated with objects to hold heritage assets (such as artworks or buildings), to protect the environment, to provide funds for medical or scientific research, and to support education.
- Incorporated vehicle: A Jersey foundation exists as a legal entity which holds assets, and enters into contracts, in its own name. The ability to refer to a Jersey foundation as such - and, for example, to use the Jersey foundation's name when distributions are made – can be important for clients when considering how their philanthropic giving will work in practice.
- Ongoing involvement: One of the attractions of Jersey foundations for philanthropy is that they allow opportunities for ongoing involvement. For example, the founder can choose to be a council member (and so might participate in a giving committee, distributing the foundation's assets) or might be the guardian (with a monitoring role, to ensure that the council administers the assets and carries out its objects as required by the constitutional documents).
- Open profile: For some clients, it will be important that a Jersey foundation's existence is a matter of public record and that its charter can be viewed by conducting a search of the register of foundations. Where a structure is being established for philanthropic purposes, it can often be appropriate to establish and maintain an open profile and relevant information can be included in a Jersey foundation's charter (in addition to the mandatory provisions) to satisfy a client's objectives in this regard.
- Choice of name: Another important factor is that there is considerable flexibility as to the choice of name for a Jersey foundation, provided that it ends with the word "Foundation" or a foreign language equivalent. It is therefore possible to use a family name, or other name of personal significance, for a philanthropic foundation if that is desired or, alternatively, to choose a name which preserves the anonymity of the client.
The Jersey foundation: A decade of solutions
The number of incorporations and variety of uses seen to date, demonstrate that the Jersey foundation significantly adds to the structuring opportunities available to clients selecting Jersey as a jurisdiction. Whether for succession and estate planning, orphan structures for specified purposes or for philanthropy, these three broad categories of use have become well established and continue to grow and develop, utilising the flexibility offered by the Law.
It is clear that as we enter the 2020s, the Jersey foundation continues to be of interest to clients familiar with foundations, those wishing to take advantage of the features and flexibility offered by the Law and those looking to leverage Jersey's sophisticated private wealth management industry.
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.