A private foundation can hold together and protect the assets owned by business people and their families for future generations. The founders may have in mind the wealth their family members have accumulated over the years or the long-term operation of their business, but they may also establish a private foundation to ensure that their assets are properly managed and, of course, that their future existence is assured.
If significant wealth has been accumulated, its owner has a good reason to be concerned as to how this wealth could be preserved for future generations. Countries with highly developed capital markets provide several examples of major assets dwindling to nothing in inexperienced hands. It can be thus be ensured that if an unexpected death should occur, the heirs, who may not yet be fully ready or lack the experience for managing the assets, or whose lifestyle is unacceptable to the founder, will not run down their inheritance too soon.
Private foundations can effectively manage more complex investment portfolios that can accumulate in market economies too, and it is important to note that the assets of a private foundation can be removed from the inheritance cycle, which means that death taxes and duties can also be saved.
In order to accomplish the goals, the detailed charter of the foundation makes it possible to provide for the assets in a much more complex and flexible way than in case of a will. The founder of the private foundation can precisely determine, even for several generations, who will be entitled to the assets and under what conditions or to a particular part of the property as well as the benefits stemming from the income generated by it. The foundation can provide security for the assets since the system of payments and support and the associated conditions and guaranties can be freely adjusted. The board of trustees of the private foundation manages the assets and makes sure that the provisions of the charter and the founder are observed.