13 April 2022

Foundation vs. Trust

  • Articles
  • Legal
  • Tax
  • Inheritance / Succession
  • Structuring / Relocation

What are the main differences between the two instruments?

In Switzerland, foundations are well-known instruments to allocate assets to a specific purpose, e.g., a family foundation or an ecosystem-foundation. Trusts, on the other hand, are common in Anglo-Saxon countries. Currently, the Federal Council aims to implement a legal basis for the establishment of a Swiss trusts.

What are the differences between a foundation and a trust? Are foundations and trusts suitable for a decentralised autonomous organisation (DAO) or for estate planning?

The following overview shows the most important differences between these two instruments:



Foundation has an own legal personality

Trust has no legal personality

Foundation (as the legal entity) is the owner of the foundation's assets

Assets are fiduciarily owned by the trustee (civil owner of the assets)

Allocation of the assets for a special purpose

  • Purpose may be modified restrictively
  • Allocation of assets is always irrevocable
  • Swiss family foundations ensuring the maintenance of the family with annual maintenance allowances are prohibited

Allocation of the trust assets in the beneficiaries’ exclusive interest

  • Power to amend trust may be provided for in trust instrument
  • Allocation of assets may be made in a revocable manner (revocable trust)
  • Possibility of unlimited family support and maintenance

A time limitation of the foundation is principally not possible

A time limitation of the trust is possible

Rather rigid limits on the structure

Different ways of structure

Beneficiaries have no enforceable claim (generally)

Beneficiaries have an enforceable right to proper administration

Supervision by an authority

Supervision by a civil court (supervisory jurisdiction)

Foundation is an independent tax subject as a legal entity

Trust is not an independent tax subject (depending on the structure, different tax consequences result)

Foundation must be registered in the commercial register (transparency)

Trust does not have to (and cannot) be registered in the commercial register (non-transparency)

Less flexible instrument for asset structuring and risk allocation

Flexible instrument for asset structuring and risk allocation

This overview represents general differences - deviations in individual cases are possible

MME's foundation and trust team will be happy to advise you on all questions relating to the establishment and planning of trusts and foundations.

We look forward to hearing from you.