16 November 2022 - When it comes to wealth preservation, one of the biggest challenges facing matriarchs and patriarchs is how to overcome generational changes while preserving the family, its patrimony and their harmony.
There comes a moment in time in which the heads of a family feel the need to start shaping their plans for the future, and structuring their wealth transfer.
The process of arranging for generational handovers is complex and unique to each family, but one of the vehicles increasingly preferred by those coming from civil law countries is a Private Foundation established in Curaçao.
Private Foundations are gaining popularity as opposed to other solutions, such as trusts, for a number of reasons.
Firstly, because these are mainly structured as legal entities. These vehicles allow for the safeguarding of assets held under them from a variety of risks, and can cover several generations. Such advantage, combined with their ability to serve as holding entities for international investment structures, make them very attractive.
Operating as separate legal structures and having the ability to hold possessions and liabilities in their own name, Private Foundations can also benefit from profit tax exemption as long as they do not directly carry a commercial business.
Furthermore, contributions of assets made into them by non-residents are not subject to gift tax, and neither are distributions made by Private Foundations to foreign beneficiaries, making them a very interesting tool to consider.
Families contemplating the use of such a vehicle should also be aware that both individuals and legal entities may establish a Private Foundation, with certain individuals being able to remain holders of powers vested in them as founders, reflected in a deed of incorporation. Founders find comfort in the idea they can express their aspirations for the future through a letter of wishes, allowing them to shape the generational transfer for their beneficiaries.
As experts in family business and entity life cycle management, Citco Corporate Solutions has a detailed understanding of planning needs around the world, and provides pragmatic estate planning solutions to clients.