Trusts vs. Foundations: Which is the Best Wealth Protection Strategy for Expats?

Posted on: 16th April 2025 in Estate Planning

When you’re living and working abroad, managing your wealth can feel like navigating a maze. Different tax laws, inheritance rules, and privacy concerns can all make it tricky to protect your assets and plan for the future.

That’s where trusts and foundations come in. These two structures are among the most popular tools for international wealth protection. But which one is right for you as an expat?

In this article, we’ll explore what each option offers, how they differ, and how to choose the one that suits your lifestyle and goals.

What Is a Trust?

A trust is a legal relationship in which you (the settlor) transfer your assets to a trustee, who manages them on behalf of someone else—the beneficiaries. It’s widely used for estate planning, asset protection, and managing family wealth.

A trust isn’t a legal entity like a company—it’s more like a formal agreement. The trustee is legally bound to act in the best interests of the beneficiaries, following the rules you set out.

Trusts are common in common law jurisdictions like the UK, Jersey, the Cayman Islands, and the British Virgin Islands. They can be highly flexible, tailored to individual family needs, and are often private.

What Is a Foundation?

A foundation is a legal entity in its own right. It’s established by a founder and governed by a council or board, which oversees the foundation’s assets and ensures they’re used according to its stated purpose.

Unlike trusts, foundations can hold assets in their own name. They’re especially popular in civil law countries such as Liechtenstein, Panama, Malta, and increasingly in financial centres like the UAE (DIFC and ADGM).

Foundations are often used for managing family wealth across generations, charitable giving, and ensuring long-term control of assets.

Key Differences Between Trusts and Foundations

While both structures aim to protect wealth and manage succession, they function differently:

• Legal Status: A trust is a relationship; a foundation is a legal entity.

• Control: In a trust, the trustee has legal control. In a foundation, the founder or council retains greater influence.

• Privacy: Trusts tend to be more private, while foundations might require public registration depending on the jurisdiction.

• Beneficiaries vs. Purpose: Trusts typically name beneficiaries; foundations can serve either individuals or a stated purpose.

• Lifespan: Some trusts may have a limited duration; foundations can often exist indefinitely.

Pros and Cons for Expats

Trusts

Pros:

• Excellent for estate and inheritance planning.

• Highly customisable.

• Usually confidential and not publicly registered.

Cons:

• You give up direct control once assets are transferred.

• May not be recognised in civil law countries, complicating enforcement.

Foundations

Pros:

• Legal entity that can hold assets directly.

• Allows for more structured, long-term planning.

• Greater control for the founder through the foundation council.

Cons:

• More formalities, with higher setup and maintenance costs.

• May be subject to transparency requirements, depending on location.

Tax and Compliance Considerations

Tax planning is essential when choosing between a trust and a foundation—especially for expats who may have ties to more than one country.

• Your tax residency and that of your beneficiaries can significantly impact how your structure is treated.

• Global reporting rules like CRS and FATCA may apply, depending on your nationality and location.

• Trusts may not be recognised in civil law jurisdictions, which could affect how they are taxed or enforced.

To avoid surprises, it’s critical to seek advice from a qualified financial or legal advisor who understands cross-border taxation.

How Do You Choose?

Choosing between a trust and a foundation comes down to your specific needs, preferences, and circumstances:

• Do you want more privacy or more structure?

• Do you prefer flexibility or a legal entity with perpetual existence?

• Are you planning primarily for family, or do you also have charitable goals?

• Where do you live, and where are your assets located?

There’s no universal answer. The best approach is one that reflects your personal goals, values, and the legal and tax environment you’re navigating.

Final Thoughts

For expats, protecting your wealth isn’t just about numbers—it’s about peace of mind.

Whether you’re planning your legacy, protecting your family’s future, or giving back through philanthropy, both trusts and foundations offer powerful, tailored solutions.

What matters most is choosing the structure that fits your life—and making sure it’s built on sound legal and financial advice. If you’re not sure where to start, speak to one of our international planning experts.

We’ll help you find the right strategy to secure your wealth, wherever in the world life takes you.