Protecting your wealth and estate with an Anguilla Foundation

Protecting your wealth and estate with an Anguilla Foundation

The History of the Anguilla Foundation

The Anguilla Foundation is a versatile platform for Estate Planning and Asset Protection. The Anguilla Foundation finds its roots in the common law trust and, over the centuries, particularly thanks to the Liechtenstein, Austria and Panama models, has evolved into a unique wealth preservation vehicle, combining the benefits of both a trust and a company.

An Anguilla Foundation is distinguishable from a trust, in that it has the rights and duties exercisable by the trustees of a trust (but not by the trust itself) and is capable in its own right of transacting business and of entering into legally binding contracts. It has separate legal personality, the ability to hold assets in its own name and the ability to contract with third parties and to sue and be sued in its own name. But instead of having shareholders, as a company, a foundation holds the assets for the benefit of beneficiaries or purposes.

General Principles

A foundation is administered for the benefit of its beneficiaries and/or purposes in accordance with contractual principles. Such principles are more familiar in Civil Law jurisdictions, where people find it difficult to understand the concept of equitable rights and fiduciary obligations, inherent in the concept of trusts

In contrast to the position under an Anguilla trust, no beneficiary, object or purpose of an Anguilla Foundation has any right “in specie” against the property endowment of the foundation. Subject to the terms of the foundation’s declaration of establishment or by-laws, any assets of the foundation available for distribution to a beneficiary are not capable of being alienated or passed by bankruptcy, insolvency or liquidation, or liable to be seized, sold, attached, or otherwise taken in execution by process of law. Nevertheless, any beneficiary of an Anguilla Foundation may enforce the due administration of the foundation in accordance with the terms of its declaration of establishment and by-laws.

An Anguilla Foundation is irrevocable and not subject to any perpetuity periods. The foundation council may, however, decide to dissolve the foundation, if its purpose can no longer be realised or if there are no assets left in the foundation.

Pros and Cons

The concept of a foundation with separate legal personality is well understood in Civil Law jurisdictions. The main objective of The Anguilla Foundation Act is to enable Anguilla to provide a flexible vehicle for use by clients, especially those based in civil law countries, by offering a modern, lean and workable estate planning concept, with which they are much more familiar than they are with the Common Law trust concept.

Added to that, some of the unique features offered by the Anguilla legislation set the Anguilla Foundation apart as one of the most straightforward, yet sophisticated, foundation models available, and highly suitable for estate planning and asset protection.

Unlike trusts, where changes in trustees often involve highly contentious issues concerning the indemnities to which trustees are entitled, either on retirement or on distributions of assets, no such issues arise in the case of foundations, with consequent cost and time savings.

The legislative framework of the Anguilla Foundation renders it possible to hold assets for beneficial purposes that can be drafted to achieve almost any required result. This could include the mimicking of the non-voting depositary receipts sometimes provided for in foundations created under Dutch law, or a wide variety of other special purpose beneficial provisions.

Entrepreneurs seeking to provide for the welfare of successive generations of their family are frequently concerned to ensure that after their death their business is not broken up or sold. To achieve this, the use of a purpose trust to hold the shares, or possibly to hold a separate class of voting shares, has often been seen as a solution.

Likewise purpose trusts are frequently used to hold the shares in private trust companies established to manage the “family office”, managing the trusts and other personal financial interests for a particular High Net Worth family. In both these cases an Anguilla Foundation is likely to be seen as a more attractive alternative, providing, as it does, the additional insulating layer of corporate personality (the corporate veil). https://www.websterlawbwi.com

Harry Wiggin

Harry Wiggin

Webster Law
What you need to know about setting up an Anguilla Foundation

What you need to know about setting up an Anguilla Foundation

Setting up an Anguilla Foundation is almost as simple as creating an Anguilla Trust, with only a few more formalities for compliance purposes, but essentially not difficult. An Anguilla foundation is established by a natural or legal person making a declaration of establishment in writing, or by a single founder by will, and an initial property endowment of atleast US$10,000.

Anguilla Trusts

The procedure for creating an Anguilla trust is simplicity itself and no different from the procedure for doing so in many Common Law jurisdictions. All that is required is the execution of a trust instrument appointing the trustee(s) and setting out the terms of the trust, coupled with the payment or transfer of a fund (which may be no more than nominal at the outset) to the trustee(s). There are no other formalities.

Setting up an Anguilla Foundation

The establishment of an Anguilla Foundation entails compliance with rather more formalities, but is essentially not difficult.

An Anguilla foundation is established by a natural or legal person making a declaration of establishment in writing, or by a single founder by will, and an initial property endowment of at least US$10,000. There is no requirement for separate articles of the foundation but provisions not required to be included in the declaration of establishment may optionally be included in separate articles or in the by-laws.

A foundation may also have separate by-laws, but their contents are not prescribed. They may be adapted to requirements and deal with any lawful matter compatible with the purposes of the Foundation.

The name of a foundation must end with the word “Foundation” or its abbreviation “Fdn.”, or the foreign language equivalent of the word “Foundation” or its recognised abbreviation in that language. It must not be the same as or similar to the name of any other legal entity registered, deposited or reserved under the laws of Anguilla unless such other legal entity consents in writing to the use of that name. And it must not be a name prohibited by regulations made under the Anguilla Foundation Act or any other law in force in Anguilla.

An Anguilla Foundation must either be registered (which renders it public) or deposited (which maintains its confidentiality). Anguilla Foundations established for estate planning and/or asset protection purposes will normally be deposited, unless they have a commercial purpose, in which case they are required to be registered. The Registrar (who is also the Registrar of Companies) maintains the Register of Foundations.

In the case of a registered foundation, if the Registrar is satisfied that all the requirements of the Act have been complied with, he registers the declaration of establishment, allocates to the foundation a registration number and issues to the registered agent a certificate of registration in respect of the foundation stating the date of registration of the foundation, the name of the foundation and its registration number.

If the Foundation Council has decided not to register the foundation (which is not an option if the foundation has a commercial purpose), the declaration of establishment of the foundation must be deposited with the Registrar, together with the prescribed fees. If the Registrar is satisfied that all the requirements of the Act have been complied with, the Registrar will allocate a deposit number to the foundation and issue to the registered agent a certificate of deposit. In the case of a deposited foundation, the Registrar may only disclose information concerning the foundation in very limited circumstances.

There is no requirement that any member of the Foundation Council must be resident in Anguilla, but if there is no resident member then the foundation must have a Secretary who is a resident registered person.
A foundation only acquires its legal personality and its validity and enforceability once it has been either registered or deposited.

Pros and Cons

If a foundation is the appropriate vehicle through which to achieve a particular objective, the formalities entailed in its establishment are unlikely to be a deterrent; indeed they should engender confidence in the process. One of the more innovative aspects of the Act is that the founder of an Anguilla Foundation may choose between registration or deposit of his foundation. This concept has, until now, been the exclusive preserve of Liechtenstein and one of the main factors responsible for the great success of the Liechtenstein family foundation. As mentioned, however, registration or deposit is a precondition to the validity and enforceability of the Anguilla Foundation.

It should be borne in mind, in the context of the formalities for the formation of Anguilla Foundations, that the procedures for the establishment of Anguilla Foundations can also be used for the purpose of converting trusts, formed either in Anguilla or elsewhere, to foundations. Furthermore, foundations already established outside Anguilla can be migrated or “continued” into Anguilla as Anguilla Foundations and Anguilla Foundations can be continued into a foreign jurisdiction as foundations subject to the laws of the new host jurisdiction. https://www.websterlawbwi.com/

Harry Wiggin

Harry Wiggin

Webster Law

Websterlawbwi.com