Private Foundations in Russia: Are They an Alternative to Trusts and Foreign Personal Foundations?
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Key takeaways:
- On 1 July 2021, Federal Law No. 287-FZ “On Amendments to Part One and Part Three of the Civil Code of the Russian Federation” (the “Law on Private Foundations”) was adopted in Russia which introduces lifetime private foundations as a form of structuring family assets and inheritance planning.
- This is an attempt to create a mechanism in Russia similar to the concept of foreign trusts, private foundations (including Stiftung) and other related structures. The Law on Private Foundations defines the assets that can be contributed to the foundation, the structure and the scope of the documents governing its operations, possible composition of its governing bodies, beneficiaries’ rights, and guarantees of the creditors’ rights, including possible subsidiary liability of the settlor and the foundation under the obligations of each other.
- The Law on Private Foundations will take effect on 1 March 2022. In Russia, it is important to ensure that the adoption of the Law would encourage the development of the market of professional asset managers to provide incentives to the beneficiaries to create private foundations in the Russian jurisdiction taking into account quality management of the family assets.