Are you looking for ways to protect your financial freedom and wealth? Then you should read on to discover the difference between a trust and a foundation and how you can use them to protect your assets. While both trusts and foundations can protect your wealth, there are some important differences to consider.
What are foundations?
Foundations are often used as a hybrid between a trust and a company, and they are useful for preserving assets for the founder or beneficiaries. They are immune from seizure by creditors, exposes lawsuits, bankruptcy trustees, or any other third party. They may have tax exemptions and usually do not have annual reporting obligations. Foundations are also useful if you think you may have future liabilities from a divorce, for example, as they will protect the assets. You will not have to disclose any assets owned by the foundation to anybody as you legally are not the owner of those assets.
What are trusts?
In contrast, trusts have key participants, including the settlor who is the person setting up the trust, the trustee who is the legal owner of the assets, the protector who is the person that the settlor trusts the most, and the beneficiaries who are the people that will benefit from the trust in the future. Trusts are useful for separating yourself and any future litigation consequences from affecting your assets. Creditors cannot claim any of your assets, and a number of countries offer great opportunities for trusts with governing laws protecting your assets.
The benefits
Countries like Cook Islands, Kitts and Nevis, Belize, the Bahamas, and Singapore all provide great opportunities for trusts and foundations. The benefits are the same, including asset protection, confidentiality, and diversification of assets between different jurisdictions. Most jurisdictions do not recognize foreign judgments, and some countries have as little as one or two years of statute of limitations, while some can go up to six years.
The choice between a foundation or a trust really depends on the jurisdiction or your personal circumstances, or the types of assets you are trying to protect. Usually, the most effective way to integrate trusts or foundations into your asset protection strategy is to include a limited liability company in the structure as well. Trusts and foundations are a great way to protect your assets and your lifestyle from negative surprises caused by legislative changes that may have negative effects on your life.
Both trusts and foundations are useful tools for asset protection. They provide immunity from seizure by creditors, confidentiality, and diversification of assets between different jurisdictions. The choice between a foundation or a trust depends on personal circumstances, the jurisdiction, or the types of assets being protected. To maximize the benefits of these structures, including a limited liability company in the structure may be the most effective way to integrate trusts or foundations into your asset protection strategy.
