The case

Both the National Council and the Council of States have agreed to an extension of the competences of family foundations in Switzerland. The Federal Council has been instructed to submit a bill to Parliament to lift the ban on family maintenance foundations.

Source: www.parlament.ch (German) and Swiss newspapers

The commentary

There are two sides to the coin: On the one hand family foundations should also be able to use the new tool in estate planning and asset planning in the future. So far, the purpose of Swiss family foundations has been limited by law to but a few possible benefits: education, equipment and support for family members and the like. Pure maintenance foundations or profit foundations are, at present, not permitted.

Under the new extension, based on a motion submitted by Thierry Burkart, this would change. In his motion Burkart drew attention to how foundations are managed under Liechtenstein law or trusts, stating that many Swiss families switched to foreign foundations when they wanted to pass on an estate to descendants in a “measured” way. Burkart added that the Swiss ban on maintenance foundations was no longer in keeping with the times and it was about time that this ban was lifted.

When considering above arguments one cannot help but also point out that the the initiative to introduce trusts into the Swiss legal system was rejected at the time, with tax aspects playing a role when the initiative was turned down. At the time it was argued that the ban on pure maintenance foundations could not be lifted in isolation and without making further adjustments, and it was added that this could only be achieved as part of a comprehensive revision of foundation law.

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