A Strategic Guide for Wealth Protection and Succession Planning
High-net-worth individuals (HNWIs) and international families face an increasingly complex environment when it comes to structuring, protecting, and transferring wealth. In the European Union—where transparency rules, tax regimes, and cross-border regulation continue to evolve—two powerful vehicles stand out for asset protection and succession: trusts and foundations.
While both serve similar overarching goals—such as safeguarding wealth, supporting heirs, and ensuring continuity—they differ significantly in legal nature, governance, tax treatment, and applicability within the EU. This guide breaks down the key differences and offers insight into which may be right for your strategic needs.
What is a Trust?
A trust is a legal arrangement whereby a person (the settlor) transfers assets to a trustee, who holds and manages them for the benefit of one or more beneficiaries. Trusts are recognized under common law systems and have been a cornerstone of Anglo-Saxon wealth planning for centuries.
🔹 Key Features:
- No legal personality (the trust itself is not a separate legal entity)
- Private and flexible – not usually registered or publicly disclosed
- Governed by a trust deed and fiduciary duty of the trustee
- Often used for dynastic planning, tax mitigation, and protecting vulnerable beneficiaries
🔹 Common Uses:
- Asset protection and family wealth preservation
- Succession planning without probate
- Philanthropy and charitable giving
- Pre-immigration tax planning
What is a Foundation?
A foundation is a legal entity (typically under civil law jurisdictions) created by a founder who donates assets to pursue a defined purpose—either private (family) or public (charitable). Unlike a trust, a foundation has legal personality and is registered, often with regulatory oversight.
🔹 Key Features:
- Legal entity with independent governance (a board or council)
- Registered and regulated – offers legal certainty but less privacy
- May have beneficiaries, but is not obliged to benefit them directly
- Suitable for jurisdictions where trusts are not recognized
🔹 Common Uses:
- Long-term family wealth preservation
- Structured philanthropy
- Holding companies or high-value assets
- Supporting succession in jurisdictions hostile to trusts
EU Context: Legal Recognition & Practical Considerations
The EU is a hybrid legal environment. Some member states (like Ireland, Malta, and Cyprus) recognize trusts due to their common law heritage, while others (Germany, France, Spain) operate under civil law and may not legally recognize trusts—or do so with restrictions.
🔸 Trust-Friendly EU Jurisdictions:
- Cyprus (International Trusts Law)
- Malta (Trusts and Trustees Act)
- Ireland, UK (pre-Brexit), Netherlands (partial)
🔸 Foundation-Friendly Jurisdictions:
- Liechtenstein
- Austria
- Luxembourg
- Malta (dual recognition)
- Netherlands (Stichting)
Comparative Overview: Trusts vs. Foundations
| Feature | Trust | Foundation |
|---|---|---|
| Legal Form | Arrangement (no legal personality) | Legal entity |
| Governed by | Trust deed and trustee | Charter/statute and foundation council |
| Privacy | High (often private) | Medium-Low (registered, sometimes public) |
| Jurisdictions | Common law | Civil law |
| Regulatory Oversight | Low to moderate | High |
| Tax Treatment | Varies – often favorable | Varies – depends on domicile and use |
| Asset Protection | Strong | Strong, but more structured |
| Succession Planning | Very flexible | Good for multigenerational continuity |
| Suitable For | Families in common law jurisdictions | Families or institutions in civil law regions |
Strategic Considerations for HNWIs in the EU
✅ Choose a trust if:
- You prioritize privacy and flexibility
- You’re from a common law jurisdiction or operate in one (e.g., Cyprus, Malta)
- You want minimal regulatory oversight
- You’re planning for multi-jurisdictional asset protection
✅ Choose a foundation if:
- You require legal personality and regulatory clarity
- You reside in or have ties to civil law jurisdictions
- You want a clearly governed, transparent structure
- You’re building a charitable or family legacy
EuroCorp Insight: What We Recommend
At EuroCorp, we regularly advise private clients, family offices, and institutional investors on the optimal structuring of their wealth within and beyond the EU. Our Cyprus-based practice—with ties across Europe and offshore jurisdictions—gives us a unique vantage point.
We recommend:
- Trusts for clients seeking discretion, offshore flexibility, and efficient succession
- Foundations for clients requiring legal presence, civil law compatibility, or charitable aims
- Hybrid models, including foundation-holding trusts, when complex international exposure is involved
Each client scenario is different—and so is our solution.
Ready to Structure Your Wealth with Confidence?
Whether you’re considering a Cyprus International Trust, a Liechtenstein Foundation, or a bespoke multi-jurisdictional structure, EuroCorp offers tailored advisory built around your strategic needs.
Contact us today for a private consultation with our legal structuring team.
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