Foundation talk

[bizniz]

In the connection of this discussion you may mention bank names and even large consultancy firms if that is what you want, it's not against the forum rules. Only if you own a bank or consultancy firm or hold a position in such operations it will be considered self promotion or even spam as is not allowed!

Well after you wrote this, I linked to an article I thought was interesting on a site that has a paywall, even though the article was not behind the paywall. And I got a warning about it. I will just go back to not naming any names or posting any links.

does the panama foundation hold the bank accounts and brokrage accounts directly or is it better for a company inside the Foundation to hold the accounts. For example if there is a UAE freezone company inside the panama foundation would that make banking easier?

Adding layers usually makes banking more difficult. But there might be some other benefits to it, depending on your circumstances. Adding layers usually adds more priacy. Panama and UAE are not a good combination - Panama is not well viewed in UAE.

 

[singlelady90]

View attachment 2350
So who would be the BO in this Foundation? I'm the protector my kids age 6 and 9 are beneficiary and the founder and council are just nominees

Is there a way for the Founder or Council to make "bad" things and compromise the assets of the Protector?
How are dividends taxed in case the Panama foundation held 100% share into a LTD Company with a DBA State? how much with state without DBA?Witholding taxes?

 

[bizniz]

Well, let's get the right mindset - the assets belong to the Foundation. They don't belong to the Protector, Founder, Beneficiaries or anyone else. That is the whole point of a Foundation being a separate legal entity. So the correct question is "Is there a way for the Founder or Council to ... compromise the assets of the Foundation." The answer is probably yes, though of course they could expect to go to jail after that. The same applies if you put money in a bank - a bank employee could forge your signature and withdraw money. It's honestly not very likely, but it' s important that you choose your Council carefully.

I don't really get the second part of your question, but a Foundation is a legal entity just like a company. It is not taxed in any special way because it is a Foundation.

 

[singlelady90]

Well, let's get the right mindset - the assets belong to the Foundation. They don't belong to the Protector, Founder, Beneficiaries or anyone else. That is the whole point of a Foundation being a separate legal entity. So the correct question is "Is there a way for the Founder or Council to ... compromise the assets of the Foundation." The answer is probably yes, though of course they could expect to go to jail after that. The same applies if you put money in a bank - a bank employee could forge your signature and withdraw money. It's honestly not very likely, but it' s important that you choose your Council carefully.

I don't really get the second part of your question, but a Foundation is a legal entity just like a company. It is not taxed in any special way because it is a Foundation.

Thanks so much! I know Liechtenstein for reputation but what about Panama? Is not a Banana republic? Would you feel save to have all your money into a Panama foundations? Also how are dividiends taxed if the Foundation control operative companies who switch dividends into the Foundation?

 

[bizniz]

First of all, Panama's foundation law is based on Liechtenstein. Panama is a banana producing republic, yes... but it is one of the world's major financial centers too. The Panama Canal is of global importance.

I think you should judge the safety of your money based on the assets it is invested in, not the country of incorporation. If your Panama foundation banks in Switzerland, for example... then it is Switzerland you should be worrying about, not Panama... see my point?

As for your tax question... from which country are the dividends coming? That makes all the difference.

 

[369]

Adding assets to a panama foundation are final.Also they have public registers and based on some reading (no personal experience) some countries doesn't like foundations based in panama

 

[singlelady90]

OK Thanks.

What about this solution?

1. Trademark owner transfer all IP (Website, Trademark, Client List, Etc) into a Panama Foundation
2. Panama Fundaution provide licensing agreement to C-Corp controlled and directed by US Partner, this one will pay royalties to Panama Foundation
3. C-Corp open a Subsidiary in Europe, this one will also pay royalties to Panama Foundation
4. Trademark Owner has a limited company and provide service to EU Subsidiary (also for VAT reason and cost deductions)
5. Trademark Owner for reputation is also "Honor President in the US Company (On website and marketing material as well)

->Do you see any issue with this structure?
->How much will be taxed the royalties going into Panama from USA en EU (DBA e non DBA)?
->Do you see issue of piercing corporate veit if the Trademakr Owner is also Honor President of the C Corp?
-> How would you make sure the US Partners does not destroy the reputation, value, etc of the trademark?
-> How to make sure if US Partner sell and EXIT trademark owner is protected as well?
-> How trademark owner can legally pay taxes on income?what kind of position in front of foundation?

 

[Shplorg]

We also recently opened a Private Banking account in USA for a Serbian endowment - that is a good structure but not cheap of course.

Can you discuss a rough estimation of the costs involved for this? I'm interested.

I always like to hear figures for scenarios like this because it starts to paint a picture for me when I compare examples in various jurisdictions.

 

[JohnLocke]

I always like to hear figures for scenarios like this because it starts to paint a picture for me when I compare examples in various jurisdictions.

second that...

Can you elaborate, if you setup a foundation in Panama (or anywhere else) will you be the owner of the foundation or will you just be the founder?

 

[GlowAndFlow]

This thread made me find the forum So I thought Id share what I now about the procedure in the Cayman Islands for an alternative structure known as Foundation Company.

In the CI to the best of my understanding the founder and the director of a foundation company can be the same person as in a company. The same laws in this case apply to companies and to foundations. Also it seems one person is all thats required, in addition to a secretary.

The exact difference between a foundaton and a foundation company eludes me somewhat.
But the later seems to be much easier to set up and does not require a traditional council.

You can read more here:
https://www.zedra.com/news-events/news/what-is-a-cayman-foundation-company/https://conyers-cdn.scdn5.secure.raxcdn.com/wp-content/uploads/2021/02/Foundation_Companies-CAY.pdf
The problem for me and I assume most is how this helps in regards to taxation.
In regards to asset protection it does seem to be a fine solution though.

Im trying to learn/understand how anyone could or could have benefitted from any of these structures if their/your country has taxation on capital gains/foundation beneficiaries and has agreements with the banks where you ultimately will deposit the funds you can use from any one of these foundations mentioned in the thread.

I can see the benefit in terms of longterm financial planning (not having to pay tax every year until you withdraw funds) and for purposes of corporate structuring. But nothing more direct.

Am I wrong?

 

[maxmoney]

seems you hit the nail on the head. Yet there are lot's of people setting up a foundation for various purposes as an game changer of their retirement or long term investment plans, children and other family.

 

[GlowAndFlow]

seems you hit the nail on the head. Yet there are lot's of people setting up a foundation for various purposes as an game changer of their retirement or long term investment plans, children and other family.

I had the impression that the very wealthy were somehow effectively tax-free banking from these tax havens, especially prior to various automated sharing agreements came in place (but also now as well?) and I can´t really figure out how that was done, even in theory.

Maybe I just misunderstood all the scandals.
So the main benefit was always long-term financial planning?
In the end, it seems one always gets taxed on the full sum when ever you take it out/use it, right? Unless you move to these places in a permanent capacity somehow.


It just makes it easier and cheaper to build that capital?

 

[berbo]

I was looking for some info on a IOM foundation. This appears to be a jurisdiction which recently introduced the possibility of a foundation ( 2012) As the OP indicates there is little info on this matter on this forum. Most providers in other jurisdiction give an indication of price for the set up of a foundation. I could not find a single provider that gives some indication on the cost for setup/maintenance?? Just in case, I would like to hear from your experience , if any.

 

[JohnLocke]

I could not find a single provider that gives some indication on the cost for setup/maintenance??

Did you try to contact some of such providers you are mentioning? Most likely don't want to share their pricing on public forums!

 

[Sols]

I was looking for some info on a IOM foundation. This appears to be a jurisdiction which recently introduced the possibility of a foundation ( 2012) As the OP indicates there is little info on this matter on this forum. Most providers in other jurisdiction give an indication of price for the set up of a foundation. I could not find a single provider that gives some indication on the cost for setup/maintenance?? Just in case, I would like to hear from your experience , if any.

That's normal for structures such as foundations. They are bespoke services, not off the shelf like incorporation often is.

 

[Jerry1911]

as you will not have direct access to the bank account yourself.

I saw on some websites that it's possible to appoint the founder as an investment manager of the foundation. Would this increase/create the risk of foundation being declared a sham entity/structure?

My logical understanding is that the more control the founder has (including, but not limited to being an investment manager), the bigger the chances are that the foundation gets disregarded in a court.

 

[Sols]

I saw on some websites that it's possible to appoint the founder as an investment manager of the foundation. Would this increase/create the risk of foundation being declared a sham entity/structure?

Hard to say for sure but I'd say it at least doesn't make things better if you want to try to convince someone that the foundation isn't just your own wallet.

Not all foundations are set up for the purposes of reducing tax or ironclad asset protection. Some people use them for structuring wealth or assets for inheritance purposes, charity, achieving a specific goal, so on and so forht.

My logical understanding is that the more control the founder has (including, but not limited to being an investment manager), the bigger the chances are that the foundation gets disregarded in a court.

Exactly. There are always tons of surrounding circumstances and details to consider. But you're right.

 

[Jerry1911]

Hard to say for sure but I'd say it at least doesn't make things better if you want to try to convince someone that the foundation isn't just your own wallet.

So that being said, instead of being an investment manager (and perhaps a sole signatory), does it make more sense to be a protector and a bank account signatory together with one or more professional councillors (where both need to approve a transaction)? Is that kind of arrangement common?

I understand there are multiple options here, some probably even safer, such as perhaps having view only access to the bank account as the Founder.

P.S. if the person setting up the foundation (so basically the founder) wants the councillors to register a limited company as a wholly owned subsidiary of the foundation, and perhaps wants to be appointed as a director of that company, how would that process look like?

 

[Sols]

So that being said, instead of being an investment manager (and perhaps a sole signatory), does it make more sense to be a protector and a bank account signatory together with one or more professional councillors (where both need to approve a transaction)? Is that kind of arrangement common?

Generally speaking, being protector is fine but being a bank account signatory is a bad idea.

It's important to look at what the protector is supposed to do as well as what the protector actually does. Not all protectors are the same, so it's hard to say for sure.

If you set up the foundation for the purpose of maintaining wealth for the benefit of your children, being a protector is probably not going to cause any problems, so long as all you do is make sure that the councillors follow the charter. But if you're effectively taking the role of a councillor, you risk blurring the lines.

I understand there are multiple options here, some probably even safer, such as perhaps having view only access to the bank account as the Founder.

View only access is reasonable if you are protector, or if the charter permits such transparency for the founder.

P.S. if the person setting up the foundation (so basically the founder) wants the councillors to register a limited company as a wholly owned subsidiary of the foundation, and perhaps wants to be appointed as a director of that company, how would that process look like?

Write it into the charter of the foundation, either that a specific company is to be formed or that the purpose of the foundation shall be to incorporate companies for X, Y, Z purpose. You can use your position as protector to ensure the councillors follow the charters and form the company. The same goes for appointing the foundation as director.

 

[Jerry1911]

Thanks for this information. Right now I'm looking at an irrevocable discretionary foundation and I've contacted a few CSPs already (waiting for them to get back to me at the moment).

If you set up the foundation for the purpose of maintaining wealth for the benefit of your children

Goals are:
- to be able to endow personal funds to the foundation on a monthly, quarterly or yearly basis - with clear source of funds of course,
- to be able to reinvest these funds within the foundation tax free without triggering tax consequences onshore,
- for a court not to be able to claim that these funds (i.e. assets of the foundation) are mine (this I assume depends on the statute of limitations, among other things),
- or that the foundation is a sham (hence why I'm looking at an irrevocable one),
- while the beneficiaries would be my future unborn children along with a charity (or similar), in case for some reason I end up not having any.

In addition to this I want to be able to create subsidiaries in case of future potential business endeavours.