Family foundations have a long history in Switzerland and a narrow framework. Anyone expecting foundations along Liechtenstein lines, which can be used largely freely for the family, will be disappointed by Swiss law. The Swiss family foundation is an instrument for specific purposes, not a general wealth vehicle.
Permitted purposes
Under Article 335 of the Swiss Civil Code, assets can be tied to a family to cover the costs of education, endowment or support of family members, or similar purposes. This means benefits in particular life situations: education, the start of working life, marriage, hardship. A foundation that pays beneficiaries ongoing funds for general living expenses without such conditions is considered an impermissible maintenance foundation under case law.
Commercial register and supervision
For a long time family foundations were exempt from commercial register entry. Since the implementation of the FATF recommendations in 2016 they must be registered; existing foundations had until the end of 2020. Unlike classic foundations, family foundations are not subject to state foundation supervision. Responsibility for adhering to purpose and statutes therefore lies with the foundation board, and errors often only surface in a family dispute.
Family foundations and the TJPG
Foundations are exempt from the transparency register under the TJPG. That does not mean nobody asks about the beneficiaries. Banks and financial intermediaries establish who founded the foundation, who sits on the board and who benefits, in practice using Form S. Companies held by a foundation may themselves be subject to reporting.
Foreign foundations and trusts
Because of the narrow Swiss framework, families often use foreign foundations, Liechtenstein ones in particular, or trusts. For administration this means different legal systems, different registers and different rules for establishing beneficial owners within the same family. Our cross-border UBO article shows why a single threshold is not enough.
Operational duties
A family foundation needs board resolutions, documentation of every distribution with reference to its purpose, accounting and a current list of beneficiaries. These records belong to the family’s mandate, not a separate folder, because they are needed for consolidation and succession questions.