First Advisory Group
10 May 2022

The crucial question in estate planning:
Will or foundation?

An insight into probate and an exploration of the topic so that you can make the right decision.

It is part of a responsible and self-determined life to consider at an early stage what should happen to the assets you have earned. What purpose should it serve and in whose favour should it be used? Careful estate planning answers these questions and provides certainty that nothing is left to chance.

Based on the personal life situation, there are different options for the use of assets depending on the wishes. If, for example, the legal succession does not correspond to one's own ideas or if it is a question of the long-term security of the family or the continuation of a business, it is important to weigh things up carefully: Can the intended purpose be better guaranteed with a will or with a foundation? Both can be used to transfer certain assets to the next generation(s). A will is a testamentary disposition that only becomes effective upon the testator's death. A foundation, on the other hand, is usually established as a legal entity during one's lifetime. It is regarded as a legally and economically independent special-purpose fund, which is established by the founder's unilateral declaration of intent. Its supreme body is often the foundation council, which manages the foundation's assets in accordance with the statutes, the supplementary foundation deed and any regulations. It is subject to the duty of care of the ordinary and conscientious manager. However, it is also possible to appoint other bodies.

Motives for the establishment of a foundation
An essential basic idea for the establishment of a foundation is probably, as a rule, to allocate the assets to a specific group of beneficiaries or to a specific purpose. If this is to be done across generations and the assets are not to be fragmented but kept together and professionally managed, then the question raised is all the more justified. Unlike a will, which in the event of death only entitles or obliges the heir or heirs, the establishment of a foundation is determined by the motives of the founder. In the context of inheritance and estate planning, these can be of a very different nature: for example, the promotion of family (e.g. the support of family members), entrepreneurial and/or charitable purposes. An important role is often played by the preservation and increase of family assets as well as the sustainable safeguarding of the use of assets. Another reason may also be to protect the assets from the next generation and to ensure that several generations can benefit from them in the future.


When it comes to succession planning, there are thus various alternative courses of action, but also certain risks. Entrepreneurs, for example, face a major challenge, especially if there is no successor in the family and the decision on the continuation of the family business has to be made in the area of tension between personal goals and social responsibility as well as the preservation of the life's work. In this situation, as in many others, foundations prove to be a more advantageous alternative than wills. This is also because the founders can transfer the assets to specific beneficiaries or to a group of beneficiaries on a long-term basis, over several generations and subject to certain conditions. The foundation as a legal entity also ensures comprehensive asset protection and guarantees asset cohesion. The foundation's assets cannot be seized or claimed by any creditors of the foundation's participants if the founders or beneficiaries have no legal claim against the foundation's assets or income. Liechtenstein offers special protection here, since Liechtenstein courts do not enforce foreign decisions (the only exceptions are Switzerland and Austria) and the hurdles for foreign plaintiffs to initiate legal proceedings there are very high. The limitation periods for an objection to the establishment of a foundation by the founder's heirs are also shorter than in other jurisdictions. In addition, amendments to the foundation deeds are only possible within the framework of the law and only in compliance with the founder's will. The foundation thus enables the implementation of the founder's will with a high degree of legal certainty, even after his death.

Load bearing foundation

Foundations form a sustainable foundation for succession planning and thus for the sustainable use of assets in the future. This applies to both the non-profit and the private-benefit foundation. The latter is established for a wide variety of motives. Its character as an instrument for asset succession is exemplified where there are descendants and thus potential heirs. In such cases, the foundation proves to be an efficient way of settling the estate. However, other concerns are also pursued - the aforementioned succession regulation in the family business, for example. In this case, the foundation serves to shape the transition of the business and to preserve the assets of the business by transferring the company shares to the foundation.

If you are interested in the aspects addressed in this article and others related to estate planning, the specialists at First Advisory Group will be happy to provide you with advice and assistance. As a leading financial services company, we have been focusing on wealth advice and asset protection in Liechtenstein for decades.


The strengths of the Liechtenstein foundation at a glance:

- Long-term wealth preservation and cohesion over generations

- Protection of assets against access by third parties (asset protection)

- Protection of privacy

- Possibility to promote different purposes (private-benefit and/or non-profit)

- Professional implementation of the founder's will

- High legal certainty

Enrico Somma
Client Advisor
First Advisory Group


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