Foundations in the spotlight

KEY POINTS

• Nature of a Jersey foundation.
• Appeal to civil law jurisdictions.
• Effect of UK taxation on foundations.
• UK anti avoidance provisions.

Explaining the concept of a trust to someone living in a civil law jurisdiction is as problematic as trying to explain the rules of cricket to someone living in the United States of America. There are two major stumbling blocks.

The first is that the trust is not an entity nor is it a contract. Instead it is a relationship. When someone from a civil law country is considering transferring the bulk of their assets to a trustee that is not particularly reassuring.

The second is that although the trustees have legal title to the trust assets they are not available to the trustees’ creditors. As a result the trust does not fit...