When organizing an asset and transferring it to the next generation, a company structure is often used. Where until recently a partnership was advised as the main technique, today a private foundation is also a useful instrument. What exactly is a (private) foundation?
Next to an foundation of public utility (for example the Foundation against Cancer), which aims at the public interest, there is also a private foundation.
The private foundation also has a disinterested aim, but does not aim at any public benefit. The private foundation can be used in legal transactions in two ways: either as a certification vehicle or as a pure private foundation.
Private foundation as a certification vehicle
As a certification vehicle, the private foundation can be used to achieve a separation between the legal rights and the economic rights attached to shares. For example, the technique of certification offers the possibility to transfer the economic ownership of a (family) company or group of companies to the next generation, while the legal rights attached to the shares, such as the voting right at the general meeting, are still can be exercised by the transferors through the board of directors of the private foundation (retention). Even after the death of the transferors, the legal rights will be exercised by the board of directors of the private foundation. In this way, the Belgian private foundation can offer an alternative to a trust office foundation established under Dutch law.
A pure private foundation
A purely private foundation is not an issuer of certificates but a full owner of its assets. Contrary to the situation in which it acts as a certification vehicle, there is therefore no separation of legal and economic ownership of the contributed assets. The founder wishes to use all or part of his assets for the realization of a certain disinterested goal. This may relate, for example, to the promotion of the interests of certain persons (and their heirs), or the preservation of a family patrimony (for example, an art collection) over the generations.
You can find more information about the private foundation in the next issue of both VZW Actueel and Accountancy & Taxation. In these articles, Mr. Stefan De Plus, among other things, the characteristics of the private foundation.
Do not hesitate to contact us if you would like more information about the private foundation and its possible application in your situation.