Why Labuan Foundation Wealth Management Vehicle for Malaysians
There is no need to go elsewhere!
There is no Private Foundation available onshore for Malaysians High Net Worth Individual (HNWI). Hence, given a choice, most Malaysians will prefer to set up a wealth management tool that they can have full control and Labuan Private Foundation is the best choice. It is the only Private Foundation in Asia protected by Foundation Act! Labuan Private Foundation was introduced in 2010 with the Foundation Act, since then the growth has been phenomena with to-date, over 70% of the Labuan Private Foundations are owned by Malaysians!
7 main reasons contributed for Labuan Private Foundation growth @ Labuan Jurisdiction:
1. Due to OECD CRS, the choice shifted from other jurisdictions for their wealth management vehicles to own back yard has been increasing. This smart move is wise to avoid tax scrutiny and other implications.
2. Change from current Trust to Labuan Foundation for more control and flexible for future expansion to full pledge family office for their wealth protection.
3. Malaysian are becoming more and more affluent, with rapid increase of people with significant amount of wealth. Higher demand for knowledge about new wealth management techniques and tools have been sorted after. If the conventional method is used, there may be severe consequences not favorable to their beneficiaries in the long run.
4. More and more Malaysians are engaging in cross border activities/transactions. tyo diversify and increase their income. Going abroad carries a risk. If there is no structure in place, the business will be exposed to a risk.
5. Increase in Family Run businesses – multiple parties/generation! In a family run business, with the new members in-laws, and grown up children will eventually join the business. If there is no structure in place to govern the differentials, there are bound to have conflicts.
6. More and more people prefer to have full control of their family wealth succession than rely on third party service such as Trustee, etc.
7. Well crafted Private Foundation has the ability to protect legacy for long lasting generations. With each generation with different management style, there maybe a risk losing his/her legacy and if there is no structure in place, or a seamless transfer of power or control, the best way is to run as Family Office.
8. Demand for a family office operation increasing, this is due to increase in family feuds, disputes between the sibling, family members and even among family members.
9. There is no Private Foundation is available within Malaysia local law except Labuan Foundation
10. The cost of running is higher with the use Trustee service compared to Labuan Foundation which is minimal.
11. Having a will is not feasible and the messiness around the court thru probate upon your death can bring much agony to your beneficiaries.
How does Founder control the Labuan Private Foundation?
4 ways allows Founder can retain full control in Labuan Private Foundation as follows:
1. Founder can retain his control over the Foundation by stipulating in the constituent documents the management of the Foundation’s assets and the manner in which the Foundation is to be run accordance to his wishes. This can also include dictating the method of running the Foundation by his successor/successors after his demise.
2. The constituent documents can be made to allow the Founder to reserve wide powers to all to himself.
3. Foundation can be a lean structure where only officer, which is himself and beneficiaries being appointed. No council are required.
4. Founder can be made one of the beneficiaries of the foundation as he wishes.
Feel free to contact us for more information on Labuan Foundation how it can fully benefit you and your family!