Why Luxembourg Private Foundation?

Reduce liability with the Luxembourg Private Foundation

There are several possible solutions for high net worth individuals, and their families, who need to protect, administer and transmit assets to other family members.

Among them, the Luxembourg Private Foundation, is particularly suitable for HNWIs as it offers the opportunity to create contractual solutions designed to optimise estate and succession planning options.

Beware the pitfalls of inheritance tax

Wherever HNWIs and their families may reside, it is a given that inheritance tax remains one of the most contentious and problematic of all taxes. Unfortunately for many, inheritance tax can mean added distress at a time already marked by grief and trauma.

For example, over the course of the 2015/16 tax year, in the UK alone it is thought that approximately 40,000 families will experience the grief of losing a loved one while also having to worry about inheritance tax threatening the existence of something as important as a family property, family business or long-established way of life.

Fortunately, with vehicles such as the Luxembourg Private Foundation there are steps that people can take to reduce or eliminate their liability.

Adapting and responding to the challenges of the future

The Foundation works to do this by acting as an effective instrument of succession planning, ensuring that family businesses remain strong and that assets are passed from generation to generation along traditional lines without unnecessary liability. It can also work to ensure that family businesses are able to adapt and respond to the contemporary challenges – perhaps in attracting new capital – while preserving those essential elements that have characterised the business over the years.

This is done in many careful and legally sound ways – from separating economic ownership of family property from management of the family business to expressly providing for the specific needs of specific family members and other interested parties.

The Luxembourg Private Foundation is especially attractive because it is distinct from similar entities in that it has no shareholders, partners or members. Another attraction is the fact that it is a corporate structure, meaning that capital grants made during the lifetime of the founder are considered as having left the patrimony.

Plus, the Foundation has a distinct legal personality which allows "deconsolidation" of the settlor's assets. The estate can therefore be managed by a board of directors (in which the settlor can remain managing director) while being looked after by a board of protectors (which can be appointed by the settlor).

More information - please contact us

Links:

>> Wealth Structuring Advice

>> Structure and Vehicle Set-up and Administration

>> International Tax Advisory