If you’re involved in the non-profit sector, you might have discussed how to create a trust or foundation for your charity. Many people get confused when they hear about “foundations” and “trusts.” For the most part, both work to the same end: providing funds for your cause. The question is, which one is right for you? Offshore financial services can help anyone looking to take their business internationally or protect assets from the government in their home country. Below you will learn the differences between trusts and foundations.
What Are Trusts and Foundations?
The trust and foundation structures are both used as vehicles to execute a plan that is usually financial. What they have in common is that they are often established by the same person or organization and used for the same purpose. Offshore financial services, such as trusts and foundations, are ideal legal entities for estate planning and securing assets.
A trust is an arrangement where the property is transferred from one person, or organization ( grantor), to another ( trustee) to be managed for the benefit of a third party ( beneficiary). The grantor makes the appointment of assets to benefit an individual or group of individuals. In addition, there may be multiple beneficiaries who may have different rights concerning the trust asset. Most people are looking into protecting their assets, and the best way is to make use of offshore financial services like a trust.
A foundation is an organization set up to support charitable activities. Foundations can be classified as either charitable or non-charitable. Most common are private non-charitable foundations. A private non-charitable foundation is generally defined as any organization that is not a public charity.
Types of Foundations
A public charity obtains its funds from many sources, including the general public. At the same time, a private foundation typically receives most of its funding from one source, such as an individual, a family, or a corporation. Family foundations can be either private or public charities. A private foundation receives most of its money from one source, an individual or family. A public charity receives money from multiple sources, such as government agencies, corporations, and individual donors.
If you want to create a trust or foundation, it helps to consult with an attorney who specializes in estate planning because there is substantial paperwork involved in creating a new entity. You’ll also want to work with an accountant or financial adviser, so you can determine which type of organization is best. Contact us today to receive more information.