Family foundations are increasingly recognized as effective tools for asset protection and succession planning. Based on my extensive experience advising clients on both Polish and Liechtenstein foundations, I address the 10 most frequently asked questions.
1. What is a family foundation?
A family foundation is a legal entity that manages assets contributed by a founder for the benefit of designated beneficiaries according to rules established in the foundation’s statutes.
2. How does it protect assets?
Once assets are contributed to the foundation, they belong to the foundation as a separate legal entity. This separates personal assets from business risks, creditor claims, and inheritance disputes.
3. Poland or Liechtenstein?
Poland offers lower costs but less stability. Liechtenstein offers nearly 100 years of stable law, a specialized judiciary, and stronger privacy protections. For genuine long-term protection, Liechtenstein is preferable.
4. What assets can be contributed?
Virtually any asset: cash, real estate, shares, intellectual property, art. The key is proper valuation and transfer documentation.
5. Who controls the foundation?
The Foundation Council (board) manages the foundation according to the statutes. The founder may retain certain reserved rights but should not maintain full control (this undermines the protective purpose).
6. Who are the beneficiaries?
Beneficiaries are designated by the founder and may include family members, charitable causes, or other persons. The scope of beneficiary rights is defined in the statutes.
7. What are the tax implications?
Tax treatment varies by jurisdiction and the beneficiaries’ countries of residence. In Poland: CIT exemption on permitted income, 15% CIT on distributions. In Liechtenstein: minimum annual tax of CHF 1,800, no tax on distributions at Liechtenstein level.
8. Can creditors reach foundation assets?
Generally no, if the foundation was properly established and assets were not contributed fraudulently (to avoid existing creditor claims). The actio pauliana challenge period varies by jurisdiction.
9. What are the ongoing costs?
Poland: relatively modest (annual reporting, accounting). Liechtenstein: higher (minimum CHF 5,000-15,000 annually for administration, audit, and compliance).
10. How long does establishment take?
Poland: several weeks (KRS registration). Liechtenstein: 2-4 weeks after completing documentation and KYC/AML checks.
Paweł Osiński
Attorney, expert in family foundations and asset protection