Features of personal funds
Who can set up a personal fund?
A personal fund is a nonprofit organization established during the life of the owner of assets (it is an inheritance fund in case of establishing after his / her demise). Only the owner of the assets or his / her spouse, if joint property is contributed to the fund, can be the founder.
When a personal fund is established (except for an inheritance fund), assets with an assessed value of at least RUB 100 million must be contributed.
A personal fund’s assets and the founder’s liability
During his / her life, an owner of assets may contribute these assets to the fund, and the fund (except for an inheritance fund) will bear subsidiary liability for the founder’s obligations with these assets for three years after the fund’s establishment.
In addition, the founder of a personal fund will bear subsidiary liability for the fund’s obligations if the fund’s assets are insufficient.
The structure of a personal fund’s management
The structure of a personal fund’s management is similar to the structure of other Russian nonprofit organizations: a sole executive (any individual or legal entity appointed in accordance with the personal fund’s charter, except for the personal fund’s founder), a supreme collegial executive body and a board of trustees.
The beneficiaries of a personal fund may be any individuals or categories of individuals who will receive all or a part of the fund’s total assets, including in the event of circumstances that may or may not occur. They are appointed by the fund’s founder or the fund’s management.
The founder himself may be a beneficiary if so stipulated in the fund’s charter.
The beneficiary’s rights are not transferrable to other individuals, including in the event of succession or inheritance.
Nevertheless previously Russian tax law did not specifically regulate the taxation of personal funds, their founders and beneficiaries. The taxation of assets contributed to a fund during its establishment also remained unregulated: funds' profits were taxable at the general rate of 20%, whereas beneficiaries paid taxes on assets and payments received from the fund at the rates of 13%/15% - 30%. For these reasons, personal funds were not popular in Russia.