A vehicle for holding assets and managing investment, and an honest test of whether it fits.
A foundation whose board does not genuinely meet, whose decisions are taken elsewhere, and whose minutes are written retrospectively is a foundation on paper. Examined, it is liable to be treated as though it were not there.
A vehicle can be entirely effective under local law and still be disregarded by a country applying attribution rules to whoever funded it or benefits from it. Local effectiveness is necessary and not sufficient.
Establishing a vehicle that later has to be undone costs more than never establishing it, and the unwinding itself can trigger consequences in more than one jurisdiction.
Before any establishment work, an assessment of whether the stated objective genuinely requires this vehicle. This stage is designed to be capable of concluding that it does not.
Board composition, decision rules, reserved powers and the record-keeping that will evidence them. This is settled before establishment, not afterwards.
Constitutional documents, board appointment, registration and the associated filings.
Governance that is actually run: meetings held, decisions recorded contemporaneously, and the cross-border treatment revisited as circumstances and law change.
“The foundation owns it, so it is outside my estate.”
Only if control genuinely passed. Where the founder retains extensive powers, several jurisdictions treat the assets as never having left, which defeats the entire purpose of the arrangement.
“We can write up the minutes when we need them.”
Records created retrospectively carry little weight and can make a position worse rather than better. Governance evidence is worth what it is worth because it was made contemporaneously.
“It is recognised here, so it works.”
Local effectiveness is necessary and not sufficient. Another jurisdiction connected to the founder or the beneficiaries may apply attribution rules and look straight through the vehicle.
The Private Fund Foundation is a distinctive feature of the Dutch Caribbean legal landscape and it is frequently discussed in terms of what it permits rather than what it requires. The requirements are the part that determines whether it works. A foundation whose board never meets, whose decisions are taken elsewhere, and whose records are assembled retrospectively is a foundation in form only, and it will be treated accordingly when examined.
The cross-border treatment is the second area where expectations and outcomes diverge. A vehicle can be entirely effective under local law and still be looked through by another jurisdiction that applies its own attribution rules to the person who funded it or the person who benefits from it. The relevant question is never how the vehicle is treated here in isolation. It is how it is treated in every place that has a claim on the assets or the people connected to them.
For those reasons the establishment work is deliberately preceded by an assessment that can conclude the vehicle is not appropriate. Establishing a foundation that later has to be unwound is more expensive, and considerably more difficult to explain, than not establishing it.
The governance point is worth labouring because it is where these arrangements actually fail. Establishment is a discrete piece of work with a clear end. Governance is continuous, unglamorous, and easy to defer, and deferring it produces no visible consequence for years. The consequence arrives all at once, when a bank asks for board minutes, a counterparty runs due diligence, or an authority examines the arrangement, and at that point the record either exists or it does not. It cannot be created retrospectively with any credibility.
Anti-abuse provisions add a second dimension. Arrangements are increasingly assessed not only against the letter of the rules but against whether their dominant purpose was to obtain a tax advantage. That assessment looks at the commercial rationale, the substance behind the vehicle and the surrounding circumstances. A structure with a genuine non-tax purpose, properly documented at the time, is in a materially different position from one whose only discernible rationale is the tax outcome.
Every Private Client engagement opens the same way: a fixed fee review of your current position, delivered as a written memorandum with risks and opportunities ranked and a recommended path. No open ended discovery.
