When you hear the word "foundation" your immediate correlation is probably "charity." But in the Bahamas, the definition has evolved from the classical philanthropic sense and foundations have become a formidable instrument to assist with private wealth planning.

The Bahamas Foundations Act, 2004 (later amended in 2007) relating to the appointment of a foundation agent, foundation council and the rights of a beneficiary, is a relatively little-known private wealth vehicle. Over the years, we have seen that certain instruments originating from common law jurisdictions may not be recognized in civil law jurisdictions, but foundations are a dependable option due to their non-recognition, meaning they're not subject to forced heirship statutes applied by civil law countries.

Foundations are often referred to as a "hybrid," a term used because this instrument has attributes of a trust as well as a company.

Here are the similarities of a foundation to a trust:

Trust

Foundation

Has a settlor

The founder is similar to the settlor

Settlor can have reserved powers

Founder can have reserved powers

Can be revoked

Can be revoked

Can be amended

Can be amended

Must have objects (assets)

Must have objects (assets)

Must have beneficiaries

Must have beneficiaries

No perpetuity period

No perpetuity period

May have a protector

May have a protector

After death of the settlor, probate is not necessary

After death of the founder, probate is not necessary

 

And here are the similarities of a foundation to a company:

 

Company

 

Foundation

 Is a legal entity  Is a legal entity
 Incorporated at the Registry  Established at the Registry
 May have Officers  May have Officers
 Board of Directors  Council Members are similar to Directors
 Can be audited  Can be audited
 Memorandum & Articles of   Incorporation  Charter is the equivalent to the Memorandum & Articles of Incorporation

Coupled with the Bahamas' stable regulatory framework, foundations are an untapped and practical private wealth option. Get in touch with an expert below to learn more.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.