The real reason for Jersey and Guernsey foundations
Now on what foundations actually are: one offshore promoter put it like this:
"Trusts are . . . tools of the rich used to stay rich and deny people access to their funds. . . . Foundations were designed not by the rich but by the super rich to protect their assets insulating them from seizure and confiscation. These asset protection tools are so good they should be illegal but they are not illegal."In short, trusts separate out the legal ownership of an asset from the beneficial owner - thus creating a wall between the person who enjoys the assets (the beneficial owner) and the actual legal owner. Essentially, this wall can then be used for creating secrecy, for foxing tax authorities and creditors, and much more.
Now foundations are a little different (see here, for quite a good, if rather dry and legalistic, overview) A foundation owns assets, along with a set of instructions as to how the assets should be used, but the foundation itself has no owner. So there will be no ownership records anywhere - because they don't exist. As another offshore promoter puts it:
"Think it was hard to find out your information, for your enemies, in Panama before? Now they are dealing with a foundation that doesn’t have any information about it anywhere!"Now on foundations, Tax Research makes an important point.
I was talking to someone of considerable expertise on tax haven / secrecy jurisdiction issues about Jersey and Guernsey foundations. He pointed out the real reason for them, and I quote:For more on trusts, click here. And for more on the untrustworthiness of trusts -- a problem which applies to foundations too - click here. Oh, and for a reminder of the mind games these places are playing, click here.I read your piece about foundations. A point you might consider – the main reason for the foundation law was to avoid fiduciary responsibility. A number of court decisions in Jersey held trustees responsible for the activities of the corporations they controlled. Obviously this increased trustee risk to a very high level. When a foundation is involved the new foundation law absolves the agents creating and managing them from responsibility.Now it makes sense!
Foundations are about screwing the client as well as the rest of the world.
It’s obvious when seen that way.
But then I admit, I’m always amazed that anyone trusts offshore practitioners. When their whole business model is based on deception of various sorts, why would you trust them? I know I wouldn’t. It would irrational to do so, and for once I think rationality has a real roll to play.