A Liberia Private Foundation is basically a non-resident legal entity established to hold and manage assets. Foreigners can own 100% of the foundation. Assets are donated by the Donor (Founder) and become assets of the private foundation. The Donor designates Beneficiaries and proposes how the assets will be managed in a private document known as the “Letter of Wishes”.
Based upon European laws regarding private family foundations, the Liberian Private Foundation added unique features for a more flexible, modern, and affordable private estate planning platform. Liberia law considers private foundations as separate legal entities which are not permitted to trade. However, they can hold assets such as corporate shares, investment accounts, bank accounts, trusts, real estate, and other assets. The Private Foundations owns all of its held assets.
Liberian Private Foundations are governed by the Liberian Associations Law (1977, as amended through 2002), called the “Private Foundation Law”. This law is based on the Austrian Private Foundation law of 1993. Also, United Kingdom’s Registered Trust law and the Registered Business Company law were adopted in 2002.
Unlike a typical common law trust, the Private Foundation’s beneficiaries cannot end the foundation after the death of the Donor (Founder) and sell the assets. A Liberia Private Foundation requires limited public filings, and never discloses the names of the Donor and Beneficiaries.
Background
Liberia is a Western African nation designated as a democratic unitary presidential republic with an elected president and legislature. English is its official language.
Benefits
A Liberia Private Foundation has the following benefits:
• 100% Foreign Ownership: There are no restrictions regarding the nationality or residence country for the Donor and Beneficiaries.
• Asset Protection: Liberia Private Foundations provide global asset protection.
• Privacy: The names of Beneficiaries are not part of the public records.
• No Taxation: Non-resident Beneficiaries obtain payments from the Foundation tax free in Liberia. However, U.S. taxpayers and others subject to worldwide taxation must declare all income to their tax authorities.
• Perpetual: The Donor establishes the termination date or not.
• Estate Planning: All assets may be distributed to the Donor’s heirs upon his/her death or remain in the Foundation for the benefit of future heirs according to the Donor’s wishes.
• U.S. Dollar: The U.S. Dollar is accepted all over Liberia including government offices.
• English: English is the official language.
Foundation Name
Since Liberian foundations are separate legal entities they must have a name which is not similar with other Liberian legal entities. There are no requirements as to what words or abbreviations must be at the end of a foundation’s name, but many choose to include the word “Foundation” to avoid confusion as to its purpose.
Registration
The Liberian Corporate Registry registers all private foundations. However, The Foundation’s operative documents are not filed in the Registry so they remain private.
Endowment
A Memorandum of Endowment establishes the Private Foundation where assets are irrevocably transferred to the Foundation for the purpose of managing them for designated Beneficiaries. The word “Irrevocable” means that once the Foundation takes ownership of the gifted assets, the Donor cannot change the ownership. Endowment is a gift. The donor does not receive any type of payment or compensation for the gifts. The Foundation becomes a separate legal entity which owns the gifted assets.
Purpose
The Memorandum specifies the purpose for the endowment and may include how the assets are to be managed, but must exclude any commercial activities along with banking or financial services activities. However, buying and selling assets is not considered a commercial or trading activity. The Private foundation may engage in activities deemed necessary for the management of the assets. Foundations can become corporate shareholders, but not an officer or director, in a trading company (corporation).
Donor
One or more donors are permitted with no restrictions as to their nationality or residency which can be from any other country. A Donor cannot be the Secretary or an officer for the Foundation. However, Donors can be a member of its Supervisory Board if one is appointed. In addition, a Donor can be a Beneficiary.
Beneficiaries
One of the main functions for a Liberia Private foundation is to provide Beneficiaries with income obtained from the gifted assets. The donor is permitted to provide written guidelines regarding how the Foundation is managed along with designating the specific Beneficiaries and what payments can be made to them and when.
The Beneficiaries names will not be included in any filings with the government’s Registry.
Letter of Wishes
The Letter of Wishes is written by the Donor and remains a private internal document and never to be filed in the government Registry. The Donor can include guidance in how the Foundation will be managed and can amend the Letter of Wishes to change the Beneficiaries. While the Donor’s wishes are heeded, the Letter of Wishes is not an official document exerting control over the Foundation and the donated assets.
Initial Assets
The Foundation’s Initial Assets must have a value of at least $10,000 USD. An Officer of the Foundation (appointed in the Memorandum of Endowment) must sign a Certification of Initial Assets and file it with the Registrar who issues a Certificate of Endorsement of Statement of Value of Initial Assets.
Memorandum of Endowment
There are two methods for the formation of a Foundation, a Will or a Memorandum of Endowment. The following is a three step process for the Memorandum of Endowment:
1. The Memorandum of Endowment is filed with the Registrar;
2. A Registered Agent is appointed; and
3. A Certificate of the Registrar will be issued.
In the case of formation by a Will, the Executor of the estate will act as the Donor by appointing officers and registering the Foundation where the Foundation appoints the officers in compliance with the Act and the Memorandum of Endowment. The Registrar will issue a Certificate of Endorsement of Statement of Value of Initial Assets as explained above.
Mandatory Terms in the Memorandum of Endowment
The Memorandum of Endowment must contain the following information:
1. Foundation name;
2. Foundation objectives;
3. Donor’s name and address, if a legal entity the place and number of registration;
4. Foundation’s Liberian registered address along with the name and address of the registered agent (LISCR Trust Company required);
5. Donor’s physical address for service of process and legal notices;
6. Initial Assets Statement;
7. Designation of Beneficiaries;
8. Duration of the Foundation; and
9. Foundation’s Secretary’s name and address.
Management
The Donor prepares and signs Management Articles which is submitted the Foundation documents filed with the Registry. However, the Registry does not file the Management Articles and returns them to the Foundation attached to the Certificate of Endorsement of Documents issued by the Registry.
Officers
Foundations must have at least three officers where at least two are natural persons. Beneficiaries cannot be officers. One officer will be the Secretary (a legal entity is permitted). The names of the officers will be filed with the Registry. There are no restrictions on nationality or residency for the officers. Officers determine distribution of income and capital in accordance with the donor’s instructions.
The Donor appoints the initial officers who manage the Private Foundation which may be guided by a Supervisory Board. The donor has the power to remove the officers and direct the distribution of income from the Private Foundation. Donors are usually anonymous but can watch over the Private Foundation’s administration by appointing her/himself to the Supervisory Board.
Supervisory Board
A Supervisory Board may be appointed consisting of at least three natural persons. The Donor can be one of its members. The Board will assist with managing the Foundation. The Board will act as the Protector of the Foundation (like a Trust Protector). Auditors may be appointed to the Board.
Annual Return
An annual return must be filed with the Registry by the Foundation and signed by the Secretary. The annual return confirms all information previously filed with the Registry and proper accounting standards have been implemented. Annual returns are not part of the public records.
Taxes
A Foundation’s earnings are tax exempt. There is no gift tax to be paid when the Foundation is registered. However, payments made to the Beneficiaries may be subject to their domicile tax authorities. U.S. citizens and others residing in countries taxing global income must declare all income to their tax authority.
Initial Capital
The initial capital must not be less than $10,000 USD in cash or value of donated assets.
Registered Office and Agent
Every private foundation and legal entity in Liberia must have this Registered Agent: LISCR Trust Company and their office can be the registered office for the foundation.
Time for Registration
Liberia Registry for a Private Foundation can be completed in one business day.
Shelf Foundations
Due to the uniqueness of the Letter of Wishes, Private Foundations are not available for purchase as shelf foundations.
Conclusion
A Liberia Private Foundation has the following benefits: 100% foreign ownership, asset protection, privacy, no taxation, perpetual life, estate planning tool, U.S. Dollar acceptance, and English is the official language
