Private client
Labuan trusts and foundations
A Labuan foundation is a legal entity that combines a trust's asset protection with a company's governance; a Labuan trust is a relationship where a trustee holds assets for beneficiaries. Which suits you depends on how much control you want to keep.
There is a growing need to take proactive steps to protect personal, business and family wealth from the impact of business ventures breaking down, succession disputes and misappropriation of assets. This is often done through trusts and similar asset-holding vehicles such as foundations.
The choice of both vehicle and jurisdiction is vital, as is a deep understanding of the family and the governance issues involved. Labuan trusts and foundations are increasingly popular structures for families — but the structure has to work for you and your personal circumstances.
Equally, your interests may suit a more commercial structure such as a Labuan partnership or a Labuan company. In some complex cases a tailor-made structure might combine all of these elements. As a licensed trust company, we can act as trustee — not merely advise on who should.
Trust or foundation — the practical differences
| Legal nature | A trust is a legal relationship between settlor, trustee and beneficiaries. A foundation is a separate legal entity in its own right |
|---|---|
| Control | A foundation generally gives the founder more control — the founder may sit on the council. A trust vests legal ownership in the trustee |
| Governance | A foundation is managed by a council appointed by the founder; a trust by its trustee |
| Asset protection | Foundation assets are legally owned by the foundation, insulating them from claims against the founder. Both structures serve wealth preservation and succession |
| Duration | A foundation may exist in perpetuity or for a defined period. Labuan trusts commonly run to 100 years |
| Registration and cost | A trust is generally quicker and less costly to establish, with fewer formalities. A foundation is registered and more formal |
| Governing statute | Labuan Trusts Act 1996 for a trust; Labuan Foundations Act 2010 for a foundation. A trust derives from common law, a foundation from civil law |
| Registration with Labuan FSA | Optional for a trust; mandatory for a foundation |
| Who may act as trustee | A Labuan trust requires a trust company licensed by Labuan FSA to act as trustee. A trust may also be created by unilateral declaration by the trustees |
| Validity | A trust must satisfy the three certainties — of intention, of property and of objects |
| Supervision | A trust may appoint a protector or enforcer; a foundation appoints a supervisory person |
| Liability | Trustees carry unlimited liability in respect of the trust. A foundation's liability is limited to the value of its net assets, though its administrators are personally liable to the founder and beneficiaries |
| Beneficiary information rights | In a trust, beneficiaries are ordinarily entitled to information and are owed fiduciary duties. A foundation's articles may be drafted so that beneficiaries have no right to information and council members owe them no fiduciary duties — which is why a foundation often suits volatile or high-risk assets |
| Forced heirship and foreign judgments | Forced heirship rules, and foreign claims or judgments, are unenforceable against both a Labuan trust and a Labuan foundation |
| Tax | 0% under LBATA for the holding of assets. Not taxable under LBATA unless the vehicle owns real estate outside Labuan, in which case the Income Tax Act 1967 applies |
| Economic substance | Applies to both, depending on activity. For a trust the trustees organise it; a foundation complies itself — and a foundation officer is treated as a full-time employee under a directive issued by the Inland Revenue Board |
| Secretary and audit | A Labuan-based secretary is not required for a trust but is required for a foundation. An audit is prudent for a trust, and required for a foundation where the substance requirements are not complied with |
What a trust or foundation costs
Statutory fees are set by Labuan FSA. Professional fees below are indicative starting points — the drafting fee in particular depends on how complex the family arrangement is. We quote in writing before any work begins.
- Trust — statutory registration (Labuan FSA)
- USD 300, one-time. Registration is optional for a trust
- Foundation — statutory registration (Labuan FSA)
- USD 300 one-time, plus USD 300 annually
- Trust — establishment
- From USD 5,000
- Trust — annual
- Asset-based, from USD 10,000
- Foundation — first year
- From USD 4,100
- Foundation — annual thereafter
- From USD 2,600
- Legal drafting — Deed of Trust
- From USD 20,000
- Legal drafting — Charter and Articles
- From USD 20,000
A trust's annual fee is asset-based, so a large or complex estate will sit above the starting figure. Where economic substance applies, the employee and operating-expenditure minimums are additional — note that for a foundation, an officer counts towards the full-time employee requirement.
How we help
- Advising on whether a trust, a foundation, a partnership or a company best fits your circumstances
- Establishing Labuan trusts and Labuan foundations
- Acting as trustee — we hold the Labuan FSA trust company licence
- Ongoing administration, records and reporting
- Coordinating with your existing legal and tax advisers in other jurisdictions
Frequently asked questions
Which is better, a Labuan trust or a Labuan foundation?
Neither is universally better. A foundation gives the founder more direct control and is a separate legal entity, which suits founders who want governance certainty. A trust is quicker and cheaper to establish with fewer formalities, which suits a straightforward succession or asset-protection objective. We have written a longer comparison in our articles.
Can you act as trustee, or do we need a separate trustee?
We can act as trustee. HMR Konsultan (Labuan) Ltd. is a trust company licensed by Labuan FSA under licence LT0072 — that licence is what permits us to hold the trustee role.
Can a foundation last indefinitely?
A Labuan foundation may exist in perpetuity, or it can be set up for a defined period.
Speak to us
We are the licensed trust company, so the advice and the filing come from the same place.
Talk to our KonsultanSources
The primary documents this page relies on, linked to the authority that issued them. If one has moved, tell us and we will correct it.
- Labuan trusts — Labuan FSA overview of the structure (opens in a new tab)
Labuan FSA · Regulator
Labuan FSA's own description of the trust structure and its governing Act.
- Labuan foundations — Labuan FSA overview of the structure (opens in a new tab)
Labuan FSA · Regulator
The foundation alternative, described by the regulator.
- Acts administered by Labuan FSA — including the Labuan Companies Act 1990, the Labuan Business Activity Tax Act 1990 and the Labuan Financial Services and Securities Act 2010 (opens in a new tab)
Labuan FSA · Legislation
Last reviewed 4 August 2026
Whilst considerable care has been taken to ensure the information contained within this page is accurate and up to date, no warranty is given as to the accuracy or completeness of any information and no liability is accepted for any errors or omissions in such information. The information given in this page is based on our present understanding of the current laws, guidelines and regulations and may therefore be subject to change without notice.
Ready when you are
Talk to the firm that holds the licence.