Using Labuan Foundation for Real Estate Investment
Property investment is one of the best investment class to diversify your wealth for growth. Using Labuan Foundation for real estate investment is the smart way for protection especially for overseas properties investment. Proper planning provide you a clear exit strategy without hassle and problems with laws and regulations of other jurisdiction.
Each country will have their own rules for your beneficiaries to abide when claim the assets. With Labuan Foundation protected by Labuan Foundation Act 2010, the claim process is made simple. Labuan Foundation is a perfect asset building vehicle where Founder can have 100% in control.
In Section 11 of the Labuan Foundations Act 2010 stated that the Foundation is the owner, with full legal and beneficial title, of any property endowed to it. And that such property endowed shall cease to belong to the Founder. Neither does the Beneficiary become the owner of the property unless and until it is distributed according to the provisions of the constituent documents and the Act. The ownership of the Foundation assets is crucial, particularly for asset protection purposes.
Start Your Private Foundation @ Labuan for Real Estate Investment
Mr and Mrs Cheng, Chinese citizen already invested in various countries. They are also under Malaysia My Second Home program.
1. A piece of land worth RM15 million in Malaysia under Malaysia company joint venture with a Malaysian where Mr Cheng owns 49% shares
2. Two condominiums in Penang of RM800,000 and RM 1.25 million
3. 1 condominium in Singapore worth SGD 1.5 million
4. 3 condominiums in Thailand worth Thai Baht
5. 2 houses at Spain worth USD 1.85 million
He does not have any children. He wish to pass all his assets to his wife and mother upon his death. His will is made in China for his China assets only.
With no wealth succession planning in place, Mrs Cheng will struggle with these scenarios:
1. The succession of the Malaysia company shares.
2. What is the death distribution law for foreigners to claim the property for Malaysia, Singapore, Thailand and Spain? What is the procedure, how long the process and who to approach and total cost involved?
With Labuan Private Foundation in place, Mr Cheng will enjoy peace of mind, There will be no legal proceeding to claim the assets by the beneficiaries with 100% control on the management of the Foundation.
Steps to switch your current holdings using Labuan Private Foundation for protection:
A. Transfer company shares to Foundation name
B. Condominium in Penang worth RM 1.25 million to transfer to Foundation. The RM800,000 condominium will not be able to transfer to the Foundation as it does not meet the minimum threshold of RM 1mio.
C. Singapore and Spain properties to transfer to Foundation.
D.Have the Foundation to name the wife and mother as beneficiaries
E. Check all other assets including cash in Mr Cheng’s bank account if able to transfer to the foundation.
FAQ On Real Estate Investment using Labuan Foundation
Here is some commonly asked questions when Labuan Foundation is sued for Real Estate Investment:
You can make the transfer as long the jurisdiction which the assets was held permits you to do so.
Labuan Foundation will become the legal right to the assets. Hence, any further actions to it on disposal or management will be governed by the Charter or resolutions passed by the council members.
Assets of every kind corporeal or incorporeal, moveable, immovable, tangible, intangible
Legal documents or instruments of bank cheques, money orders, shares, securities, bonds, bank drafts and letter of credits.
During or anytime after the set up of the foundation. The properties must be unencumbered, free of creditor claims or liens.
Labuan Foundation is regarded as foreign entity. At such, the threshold per property will depends on the respective states, ie Kuala Lumpur property is RM 1million, Selangor is RM 2 million,etc
Once the founder endowed his properties they cannot be withdrawn back to him throughout its life time. Permission to sell is allowed as long as the charter permits it.
It is advisable not to start your overseas property investment without Private Foundation in place! Send us an enquiry to guide you how to set up Labuan Foundation to meet your objectives for your WORLDWIDE property investment.