Governance of a Liechtenstein foundation

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A Liechtenstein foundation lasts only as long as its governance works. The deed of foundation sets the framework, but the daily decisions are taken by the foundation council and, where provided, supervised by a protector or control body. Families who understand these roles from the start avoid most later disputes.

The foundation council

The foundation council is the executive body. It manages the assets, decides on distributions within the limits of the foundation documents and represents the foundation externally. Members owe duties of care and loyalty to the foundation and act according to its purpose. Liechtenstein law generally requires that at least one member of the governing body of such an entity holds a qualification under the Liechtenstein Trustees Act, which in practice means that a licensed professional sits on the council.

Family members can also serve on the council. Their presence improves knowledge of the family's needs, but it also increases the risk that the foundation is seen as controlled by the founder.

Protector and control body

Many foundations appoint a protector or a collegial body with rights of consent, for example before distributions, changes to the by-laws or the replacement of council members. Private-benefit foundations are generally not subject to the Liechtenstein Foundation Supervisory Authority, which is why the founder can provide for a control body or appoint an auditor to check that the assets are used in accordance with the purpose. Charitable foundations are subject to state supervision and have specific audit requirements.

By-laws and letters of wishes

The deed of foundation is filed or registered, while the details are usually laid down in supplementary by-laws, which remain private. They name the beneficiaries or classes of beneficiaries and set out rules for distributions, succession on the council and the rights of the protector. A letter of wishes adds non-binding guidance, for example on education funding or the age at which children should receive larger amounts. It helps the council to exercise discretion in the spirit of the founder, although the council remains bound only by the documents and the law.

Avoiding sham structures

A foundation may be disregarded if the founder in reality treats the assets as his own, gives binding instructions on every transaction and the council merely executes them. Courts and tax authorities in several countries have looked through such structures. Proper minutes, real discussion of decisions and a clear separation between the founder's private finances and the foundation's accounts are the best protection.

What pays off in practice

Choose council members carefully and ensure they genuinely exercise judgment.
Update the by-laws and letters of wishes after births, marriages and changes of residence.
Record decisions properly so that the foundation's independence can be shown at any time.

How Ressos Legal helps

I advise founders and families on the design of foundation documents and on governance reviews of existing structures. Contact me for a first conversation.

For general information only. This article does not constitute legal or tax advice, does not replace advice on an individual case and creates no lawyer-client relationship. It reflects the legal position as of October 2026.

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Dr Alexander Ressos, TEP

Rechtsanwalt/Attorney-at-Law

I am a Swiss attorney-at-law and also admitted as a solicitor in Hong Kong and in England & Wales, with almost 25 years of experience.

Together with my multilingual team, including Chinese, Japanese, Korean, Russian, Ukrainian and French native speakers, I advise companies and their owners from around the world on the full range of banking, corporate, commercial and tax law matters in Switzerland, including international tax planning, fiduciary services, and legal family office services including immigration & relocation or real estate investments. My practice has a particular focus on clients from growth and frontier markets in Greater China, Central Asia and the Caucasus, the rest of Asia, the Middle East, Africa and Latin America, and I equally advise clients from Europe and North America. Through an affiliated Swiss trust company, we also take care of the incorporation and ongoing administration of their companies and other structures, including accounting, tax returns and corporate secretarial services, and I serve as a professional director where required. With the support of a network of first-class cooperation partners, I also implement solutions worldwide.

My approach is to act as a trusted advisor who works directly with decision-makers, on an equal footing: I start from what you want to achieve and shape every structure, contract and tax decision around your commercial goals and how it improves your after-tax return. As “lawyers who make it happen”, my team and I stay involved until your company is set up, your structure is in place and your transaction has closed, and we remain available for any follow-on work that may be required. You benefit from bespoke solutions and personal attention, and sound, friendly and practical advice. We are not the lowest-cost provider in the market, nor do we intend to be; our aim is to deliver well-founded, proper solutions and excellent value for money.

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