Distribution of foundation assets to another foundation or trust—powers of the trustees and claims based on unjust enrichment

The article deals with fundamental questions regarding the distribution carried out by a Liechtenstein foundation to another foundation and/or trust instead of a direct distribution to the beneficiaries. In principle, this phenomenon partly falls under the concept that is labelled as ‘decanting’ within the private client law community. One of the key advantages of foundations as compared to other instruments is the high level of stability combined with very limited instruments to change the purpose as well as the beneficial interest. As with trusts, the ‘decanting’ in the field of the private foundation practice seems to be a method to adjust the set-up of the vehicle, leaving old provisions behind that might no longer be compatible with the changed circumstances of the founder’s/settlor’s family. The article deals with the different legal issues involved, such as the ultra-vires-doctrine as well as the relevant issues of unjust enrichment. Finally, the author gives guidelines for practitioners by discussing the recent developments in Liechtenstein case law.