You can relax on the beach knowing your assets and your family are safe with a Belize foundation

Foundations are also a fantastic asset protection possibility.

It generally goes somewhat overlooked, and we are amazed that this happens. It combines the best of both worlds being a mixture between the IBC and the trust.

The foundation is similar to a trust in many ways. Usually, both achieve the same objectives and are attractive strategies for anyone interested in investing abroad and preserving their assets for future generations.

One of the key aspects of Belize´s law is that it protects the privacy of the documents involved in the creation and maintenance of the Foundation. Such privacy is one of the most attractive advantages of this type of structure. 

A foundation shares some elements of a company and a trust. In terms of organizational and legal protection, an international foundation is similar to a company. It is established in an analogous manner and receives the same type of privacy and protection. However, an international foundation is a separate legal entity that can be supervised by the taxpayer and is designed for its beneficiaries. In this, it is very similar to the way a trust works.

Thus, you get the best of both worlds with zero tax and corporate flexibility. We are not joking when we say Belize is the most underrated asset protection jurisdiction.

You can set up an international foundation in Belize to favor the beneficiaries, the founder, or even both parties. This flexibility makes this structure an attractive option for all types of individuals, investors, and even companies.

It is the hybrid between a company and a trust and an essential element in estate planning.

A clear benefit of an international foundation in Belize is how it contributes to the estate planning process. When starting the process, two aspects that may arise concern are the preservation of your assets and the ease of transferring them to your heirs. Both elements are possible through the Belize International Foundation.

Firstly, by transferring assets to the Foundation, they cease to be the property of the founder and are legally protected from threats like lawsuits or claims. Similarly, while they are under the Foundation, the assets are also not owned by the beneficiaries. As a result, they have time to expand, increase in value, or remain protected for as long as necessary.

For those who are beginning to think about protecting their future, this approach becomes crucial. You can plan the structure that will preserve your assets and enjoy the peace of mind of knowing that they are completely safe.

Tax Benefits of a Belize International Foundation

While there are many reasons to establish an international foundation in Belize, there is no doubt that tax reduction is a substantial benefit. High net worth individuals are exposed to prohibitive taxes if they don’t have an adequate tax planning strategy. Creating an international foundation reduces this tax exposure in an effective and legal way.

When you place assets in an international foundation, they cease to be yours. Consequently, you do not have to pay taxes on them. The same applies to the beneficiaries, so they are not taxed either, although this depends on where they have tax residency. In some cases, taxes may apply upon distribution of the benefits. 

In Belize, all assets you hold in your Foundation will be protected from a number of taxes, such as:

• Corporation tax
• Income Tax
• Withholding taxes
• Stamp duty
• Capital gains tax
• Inheritance taxes
• Tax on assets
• Earnings Tax

In short, an international foundation acts as a shield for its assets. As there is no taxation on them, they can increase their value almost without risk.

If you wish to restrict the financial erosion of your assets, an international foundation may be the ideal structure for you.

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How to set up a foundation in Belize

First things first: conceive a name for your Foundation. The name should not already be in use in Belize and should end with the word "foundation" or a variation of it.

You will then need to transfer your assets and draw up a foundation charter. This must include relevant details such as the designated beneficiaries, the purpose of the Foundation, as well as name and address of the registered agent.

Once you have prepared the bylaws, you can officially register your Foundation in Belize. Within 30 days of the application, your institution will be included in the Register of International Foundations. You will also receive an official registration number and obtain a Certificate of Establishment.

There are several key players in the establishment of a Belize International Foundation. Firstly, there is the founder, namely, the person who creates it. There may also be a foundation council consisting of several members. Then there are the beneficiaries. Finally, there must be a local registered agent or secretary of the Foundation operating from Belize.

What is the difference between an international foundation and a trust?

The International Foundations Act of Belize (2010) represents a valuable complement to the products that this country offers to international clients.

Historically, individuals from common law jurisdictions, such as Belize, have always used trusts to protect assets and establish estate or succession planning objectives. Trusts are also used for humanitarian purposes or other specifically stated purposes. In civil law jurisdictions, foundations are used for similar purposes and are considered a civil law alternative to trusts.

The fundamental difference between a trust and a foundation is that the latter consists of a legal entity that was created (and generally founded in the first place) by the founder and operated by the Foundation Council per the Foundation Charter, which must specify any legal purpose to be fulfilled, whether personal, humanitarian, or non-humanitarian.

The Foundation Council answers to the Foundation itself; in contrast, a trust represents only a relationship between the Trustees, the Settlor, and the Beneficiaries whereby the settlor transfers the property to be held by the Trustees for the benefit of the Beneficiaries, in accordance with the Deed of the Trust. The trust is not a separate legal entity. The Trustees are directly responsible for the Beneficiaries, who have the right to take legal action against the Trustees if necessary.

Foundations are becoming increasingly popular with international clients, and jurisdictions in major international financial centers are enacting legislation to regulate these types of structures. The new Belize legislation is based on recent legislation in Anguilla, Antigua, and the Bahamas, as well as previous legislation in Panama and the Isle of Man.

This new legislation attempts to bring together the most important points of all the above-mentioned legislations. Therefore, the principles that apply will be easy to recognize for international clients who are used to working with foundations.

The International Foundations Act applies only in the case of non-resident visitors to Belize. The Founder and each of the Beneficiaries must be non-resident visitors. In Belize, the Foundation cannot include, either directly or indirectly, any ownership interest in real estate.

What else should I know about a Belize international foundation?

• An International Foundation formed in Belize is a separate and independent legal entity. It can hold assets in its own name and subject to its charter and bylaws. The Foundation Council can invest the endowment or any portion of it as it sees fit and for as long as it sees fit. Belize Foundations can engage in business, trade, buy, sell and own property of any sort (including real property and intangible property), sue and be sued, enter into contracts, and open bank accounts.

• It may not engage in business in Belize except to the extent that any such business activities are necessary to support the main purpose of the Foundation.

• A Belize Foundation must be registered to be valid and enforceable and, upon registration, the Foundation is issued a Certificate of Establishment. However, the registration does not require submission of the Foundation Charter and those foundation filings that are made with the Registrar are not open for inspection by any person that is not associated directly with the Foundation (except the Court or its appointees). Registration must be renewed annually for the Act to continue to apply to a foundation.

• A foundation and any transfer of assets to it are irrevocable. However, it may be dissolved by the Foundation Council under certain circumstances, including the expiry of its term or upon the written request of the founder and all current beneficiaries. The Foundation Charter may also be amended by the unanimous consent of the Foundation Council.

• A foundation remains valid even if the founder retains or acquires an interest or benefit from the Foundation, or if he is appointed as beneficiary. However, the founder may not have the power to manage the Foundation Council nor retain any control over the endowment of the Foundation. Likewise, the founder shall not have any power to dissolve the Foundation or amend its charter, with such powers reserved to the Foundation Council.

• Belize law contains an anti-alienation clause, prohibiting any restraint on or control over any interest in a foundation or its endowment by a founder or beneficiary such as:

• • anticipation of income or principal,
  • operation of foreign law,
  • claims of any creditors or claimants against the founders or beneficiaries, or
  • a spouse of a founder or beneficiary.

• Any beneficiary may enforce the administration of a foundation according to its terms, bylaws, and the law. A Beneficiary may also renounce his interest in a foundation, whether or not he has previously received any benefit from it.

• A Foundation must have a Foundation Council:

• • It must have a minimum of one member.
  • Members may be natural or legal persons.
  • At least one member of the Council must always be resident in Belize.
  • A member cannot be a beneficiary of the Foundation.

• A Foundation must have a Secretary who is permanently living in the country, he must be an authorized person and may be the Registered Agent of the Foundation.

• Foreign foundations can move to Belize and continue as a foundation under Belizean law. Likewise, a Belize foundation may be transferred to another jurisdiction.

If you want more details about the International Foundations in Belize, you can read the 2011 Act here

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Key features

Indefiniteness: It may be established for any stated period or for an indefinite period.

Multiplicity of founders and beneficiaries: A foundation may have one or more founders and one or more beneficiaries. Any or all of them may be either natural persons or other legal entities.

Non-recognition of foreign judgments: Foreign law is disregarded concerning the validity of the Foundation or the contribution of property to a valid Belize foundation. This provides asset protection from creditors who may claim against the assets transferred to the Foundation without the intent of defrauding. Under Belize law, both foundations and trusts enjoy very strong asset protection against civil law proceedings.

Tax-free: A Belize foundation is exempt from all forms of tax in Belize on assets or income originating outside of Belize. It is also exempt from the payment of stamp duty for any non-Belize assets. It is exempt from any exchange control regulations.

No need for financial records: According to the law, a foundation shall keep "such accounts and records as its foundation council considers necessary or desirable in order to reflect the financial position of the foundation."

No need for charitable purposes: A foundation created for both charitable and non-charitable purposes qualifies as a charitable foundation even if the non-charitable purposes are the primary purposes of the Foundation or if a majority of distributions are made to non-charitable beneficiaries.

Protector: The Foundation Charter may provide for a Protector of the Foundation who may have a wide variety of powers, rights, duties, and responsibilities concerning the Foundation. The protector must not be a member of the Foundation Council.

What can we do for you?

The Belize International Foundation regime seeks to provide a robust yet simple law that combines understandability with strong protection. Coming from a common law jurisdiction, the Act replicates a civil law foundation without unnecessary complications. The Belize foundation, in a way, can be considered a hybrid between a Trust and an IBC.

Thus, the Belize foundation is one of the best vehicles for asset protection, and it´s preferred by investors from both civil law and common law jurisdictions.

And, as usual, we can help you. We work with some of the top asset protection experts in Belize, which can help you set up your Foundation quickly and swiftly.

We offer all primary services regarding your Foundation, from drafting the charter and registration to acting as a secretary or local foundation council member. We also offer additional tax and asset protection advice.

All you have to do is contact us right now!