A TRUST OR FOUNDATION

TRUST VS FOUNDATION

Por Gabriel Aguilar
gabriel.aguilar@laglex.com

 Historically a trust as a structure has been mainly used in common-law countries and still not always understood and appreciated by representatives of civil-law countries. They prefer to use foundations for different purposes as an alternative to Trust. The main difference between these structures is in the right to control them. A Trust must be fully controlled and managed by a trustee form the best interests of the Trust beneficiaries; once the assets are transferred to a Trust, a settlor no longer has any control over them. Every Foundation, in turn, has a Protector, who is generally a person connected to a Foundation founder (settlor) and therefore may have a certain influence on the development process and management of a Foundation. Moreover, a Foundation is allowed to have a bank account, in contrast to a Trust, where a trustee fully operates the capital. A Foundation is a separated legal entity and generally names a beneficiary for a socially responsible purpose, such as a charitable organization. Its owner its not registered in any public registries for the simple reason that a Foundation does not have an owner. Once such a Foundation owns shares of a particular company, such a corporate entity, becomes fully confidential as well. Foundations are effective structures for inheritance and holistic tax optimization purpose. Therefore, a Foundation when properly structured and incorporated in the appropriate jurisdiction for any special need and objectives can provide you the benefits of a commercial company, not-non-profit organization and trust. It will ensure confidentiality as well as effective assets protection and management opportunities.

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