The Foundation Of Your Wealth: A Wealth Management Structure Available To All

Author:Mr Hiu Chee Fatt
Profession:Labuan IBFC Inc Sdn. Bhd.

Members of the public often associate foundations with either a high profile tycoon or an extremely rich dynastic family that has chosen this wealth management tool to give back to society or expound a needy cause, for example the Bill and Melinda Gates Foundation; one of the bastions of philanthropy worldwide.

There are also foundations which are used as vehicles to manage family wealth, ensuring successive generations are catered for by their fore fathers, much like a common law trust and then there are foundations that hold companies and businesses, and run like a corporate body, with a board and a management committee.

So what is a foundation? How does it work and are foundations a mainstay of the hyper rich only?

Foundations are civil law structures and can be viewed as a hybrid of a trust and a company. These characteristics allow foundations to offer all the asset protection features of a trust and yet structured to operate much like a company, with an independent entity and its own legal personality.

How would you like to have your own foundation that protects your assets, serves as estate planning tool and investment holding vehicle?

Vehicles like a foundation allows the founder a lot of flexibilities, such as building a legacy for future family members, ensuring the aspiration of the founder is carried through to future generations, preserving family's wealth, fulfilling family members aspiration and so on. Indeed the terms of a foundation are endless. As the management of the foundation is in independent hands of the Council of the foundation, which operate very much like the board of directors of a company , there is bound to be less conflict of interest as is sometimes seen in typical trusts, especially where trustees are appointed from among the ranks of beneficiaries.

So how do I set a foundation up, is a tedious and expensive process?

To a limited extent and in most countries, the setting-up of foundation does require a huge amount of initial property or asset injection before it can be operational. In addition, sometimes an extensive amount of paperwork is required and regulatory approval must be received even before the foundation is operational. Additionally, in many traditional jurisdictions, the setting-up of foundations are limited to charitable purposes only.

However these arduous and restrictive requirements are not applicable in Labuan International Business and Financial Centre (Labuan IBFC). As such, more people...

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