trust & foundation
A trust is a legal entity which involves an individual (the ‘Settlor’) transferring legal title of assets to another person (the ‘Trustee’) to hold for the benefit of one or more persons (the ‘Beneficiaries’) which may include the settlor. The assets held in the trust fund are not legally owned by the trust but by the trustee, and the trustee must put the interest of the beneficiaries above his own.
Our Swiss trustee company “Serenity Trustee SA” provides all the advantages of traditional trust jurisdictions with the reliability and political stability of Switzerland. It offers you proximity to your trustee, the reassurance of trust law recognition and the facility to summon the trustee before a Swiss court.
A foundation is a legal entity created for a specific purpose, defined by the founder. Swiss foundations are usually directed towards a purpose of public interest such as culture, art or philanthropy. Assets are donated to the foundation and are managed by a council in accordance with the will of the founder.
Private family foundations can be an alternative solution to trusts when considering wealth and succession planning, depending upon the personal circumstances of the family.
Candeo benefits from over 30 years of experience in the creation and management of private family foundations.
Candeo can comprehensively manage all aspects of the creation of a Swiss foundation, including its approval by Swiss authorities and its tax ruling.
Alternatively, Candeo can provide a protectorship function when an external trustee or foundation board is appointed.
A trust is a legal entity which involves a person (the Settlor) transferring legal title to assets to another person (the Trustee) to hold for the benefit of one or more persons (the Beneficiaries), which may include the Settlor. The assets held in the trust fund are not legally owned by the trust but by the trustee, and the trustee must put the interest of the beneficiaries above his own.
The extent to which a trust is a suitable instrument for your asset and succession planning is determined by your life choices and family situation.
You should ask yourself a number of questions before making a decision. For example, would you like to be able to dispose of certain funds during your own lifetime? Should distributions only be made to your children? And if only to your children, in what amounts and at which junctures of life? Alternatively, should distributions be earmarked for a specific purpose?
A trust can offer considerable advantages such as protection against creditors and tax optimization. It allows you to take consideration of geographical and legal peculiarities and can help the family assets to remain cohesive over a long period of time.
A trust can be used for the following purposes:
- Protection of the family legacy
- Maintenance of family wealth over generations
- Asset protection
- Protection for spendthrift heirs and beneficiaries
- Prevention of asset dispersion
- Privacy and confidentiality
- Avoidance of probate formalities, facilitation of succession procedures
- Simplification of cross-border investment holdings
It is certainly true that an evaluation of the costs and benefits is recommended before setting up a trust. However, in most cases the ongoing costs of administering a trust deliver healthy proportional savings which are directly attributable to the intervention of a professional trustee. As an example, your trustee will negotiate advantageous banking and legal fees on behalf of the trust.
During the past few years, trust laws have undergone major changes worldwide. Today, with careful advice and structuring, financial assets can be held in trust alongside real estate, shares in companies and even operating companies.
The primary intent of entrusting assets to a trustee is to transfer the legal ownership of those assets to the trustee and, at the same time, to determine which people are to be the sole beneficial owners of those assets. It is therefore correct that the legal ownership is transferred, but at the same time the person who effects the transfer can remain a beneficial owner alongside, for example, his or her children. One can also take steps that provide the possibility for a re-transfer of assets, or that provide other means of control to ensure that assets are handled exclusively in accordance with the original wishes of the founder.
The Settlor and other beneficiaries can also be involved to a certain extent in the management of the assets.
First of all, it does not mean that you necessarily have to have a trustee in that jurisdiction or that your assets are held in the Bahamas, Jersey or the Isle of Man.
However, it does mean that a trustee holds assets on your behalf and that the rules under which he does so, and the documents drawn up when the trust is formed, are based on the laws of that jurisdiction, e.g. Jersey.
At the same time, the trustee may be physically located in Switzerland, for example.
We work with leading local law firms in each jurisdiction, for example in the Bahamas, Jersey and Isle of Man, to ensure that we always meet local standards.
In the case of more complex structures, for example where there are questions regarding American or British tax law, we work alongside leading international law firms and tax consulting firms with whom we have longstanding experience.
We would also be happy to consult with your legal and tax advisors.
Switzerland recognizes the existence of trusts in its law and also regulates the legal treatment of trusts. Nevertheless, there is no trust under Swiss law (yet) and so Swiss trustees use foreign trust law.
Professional Swiss trustees are subject to strong regulatory control to ensure that they handle the assets entrusted to them in an orderly and legal manner. In the event of disputes, the beneficial owners have a second legal recourse, namely before Swiss courts.
The geographical location of Switzerland at the heart of Europe makes it easy to arrange more frequent personal meetings with your trustee.
In addition, Switzerland, with its renowned political, legal and economic stability and unique history of independence, is an ideal location to offer your assets truly long-term protection.
The geographical proximity to many of the world’s leading banks and a large pool of highly qualified professionals are further advantages.
In most cases, this is possible and we have a wealth of experience with which to assist you once we review your existing trust documents.
Estate planning vehicles offer significant advantages, provides a valuable amount of flexibility and are very useful to plan end ensure transmission of wealth to future generations. Long term planning is key, providing stability in instable times. Most common reasons for using a planning vehicle may vary, and may include, creating and protecting a legacy , control of wealth and probate savings.
A will (also called testamentary will) is a legally enforceable document. It governs the way in which a deceased persons wealth and assets are distributed. It is effective when transferring estate and other legal matters after one’s death however, drawbacks include probate, lack of confidentiality and legal costs.
More sophisticated estate planning and succession tools are available. Similar to a will, a Trust governs the way in which wealth is transferred to a next generation. If a will requires transfer of property upon death, property may be transferred to a trust during one’s lifetime. It specifies exactly how and when assets are to be passed to a predefined class of beneficiaries after the death of a Settlor. Unlike a will, a trust does not fall within the reach of probate or probate court. There are no legal or estate transfer costs involved making it an efficient way to control the passing of an estate.
A properly constructed trust arrangement can also help protect an estate from heir’s creditors, forced heirship rules, abusive claims or from spendthrift beneficiaries and who may be not ready to manage and preserve wealth.
Less popular, Private Foundations are very similar to trusts and share the same functions and mechanisms. They differ only in a few ways but offer identical levels of protection and are used by families as an effective estate planning tool.
In some cases, it may be required to appoint a Protector (Individual or Corporate). Generally speaking, his / her role is to oversee the actions taken while being involved in the day to day activities keeping Beneficiaries’ best interests in mind. Powers conferred upon a protector vary and may include (but not limited to) removal and appointment of trustees or board members, change of jurisdiction, approval of distributions and power to approve certain investments to name a few.
Additionally, a Successor Protector may also be appointed when certain conditions are met or at a predefined date (ex; death of current protector or when current protector reaches a certain age). In some cases, it may also be useful to appoint a Protector committee or Protector Board (usually comprised of three individuals) whereby a majority must give its consent before any actions may be taken.
Where Serenity Trustee SA acts as trustee (or Candeo as Board Member for a Foundation), it is often a close family member, financial advisor, family lawyer or a trusted person who is appointed as Protector or a member of The Protector Committee. Trusts and Foundations where fiduciary services are not provided by Candeo and / or Serenity may benefit from Candeo’s independent protector services. Advantages of appointing an independent and professional Protector lies in that Beneficiaries may benefit from the experience, expertise and knowledge gained by Candeo for the past 45 years as independent fiduciary services provider.
Philanthropy & Non-Profit Projects
An individual or company may wish to setup a structure for the benefit of philanthropic and nonprofit programs and projects and to promote various causes. Support, funding and grants may be available and applied towards education and youth support, community and general welfare, environment, and any other nonprofit causes with the intention to contribute to a more sustainable future.
Candeo may assist and setup Foundations in various jurisdictions. Foundations registered in Switzerland are particularly well suited for philanthropic and nonprofit purposes. Serenity Trustee SA can help setup charitable trusts and other forms of nonprofit entities. Please contact us for more information.
BVI Share Trusts
A BVI Share Trust is a form of trust which allows a settlor to continue to manage and operate the business of a company while retaining all income and shareholder voting rights during his lifetime. It is designed to act as a simple succession planning tool and avoids going through the process of probate in the BVI. Under VISTA legislation (Virgin Islands Special Trust Act) the Trustee is no longer bound to follow the “prudent man of business” rule and therefore removes the Trustee’s duty to monitor underlying companies. The trust is fully revocable during the Settlor’s lifetime.
Private Trust Company (PTC)
The PTC acts as Trustee of one or more Trust structures.
Foreign Grantor Trusts
A Foreign Grantor Trust (“FGT”) is a form of trust described in the US tax code as a trust with a non-US Settlor (the “Grantor”) and with US beneficiaries. This is particularly interesting whereby, during his lifetime, the Grantor is deemed to be the owner of the trust assets from a US tax perspective. Generally speaking, an FGT is therefore not subject to US taxes. The trust must be revocable and the sole right to income and gains must be attributable to the Grantor. Estate planning and succession in the US may become quite complex. We leverage on our extensive network of carefully selected leading US law firms to ensure that your estate and succession planning goals and objectives are met and wealth protected.