Foundations Explained
Understanding Isle of Man Foundations and Their Benefits
When it comes to wealth structuring, succession planning, and asset protection, trusts and foundations are two of the most widely used vehicles. But while many have heard of them, even legal and financial professionals do not always fully understand the key differences or when one structure may be more appropriate than the other.
Trusts vs Foundations – Jurisdictional Differences
Trusts are a common law concept, with origins dating back to the Crusades.
Foundations, by contrast, are rooted in civil law jurisdictions, where they are the preferred structure.
In recent decades, the Isle of Man Foundation has emerged as a flexible, internationally recognised vehicle bridging the gap between trusts and companies.
What is an Isle of Man Foundation?
An Isle of Man foundation is a separate legal entity, capable of holding assets, entering into contracts, and suing or being sued in its own right. Unlike a company, a foundation has no shareholders. Instead, it is governed by a council, guided by its objects and rules and often established for succession planning, family wealth protection or asset holding.
Key Differences
Foundation vs Company:
Governed by a council, not a board of directors.
No shares or ownership interests.
Cannot directly trade, except where incidental to its objects.
Foundation vs Trust:
The foundation is the legal and beneficial owner of its assets.
Liability rests with the foundation, not trustees.
Beneficiaries do not have a direct claim to assets.
Roles in a Foundation
Founder – establishes the foundation.
Registered Agent – must hold a Class 4 licence with the Isle of Man FSA.
Council – manages the foundation’s assets and objects.
Enforcer (if required) – oversees non-charitable objects.
Beneficiaries – may be appointed but do not hold equitable ownership.
Typical Uses of a Foundation
Business succession planning.
Wealth management and family provision.
Legal separation of assets from personal estates.
Holding shares in private trust companies.
“Orphan” structures for securitisation or distressed asset refinancing.
Holding yachts, aircraft, or other wasting assets.
Probate avoidance and confidentiality.
The Isle of Man Foundation combines elements of both companies and trusts, making it a highly flexible tool for clients across both civil and common law jurisdictions.
For more information or tailored advice on Isle of Man Foundations, please contact us