Family foundations as part of succession

In our opinion, the Family Foundation will work very well as part of succession planning in family businesses, because a common problem in creating a succession strategy is that not all heirs of the company founder are interested in doing business in a particular area, in turn, the family assets are largely just in the assets of the business.

One of the main advantages of a family foundation is that it protects family assets from fragmentation and loss due to mismanagement of assets. At the same time, the family foundation will also be able to serve as an “investment mechanism” for the assets accumulated in it, as due to preferential taxation of the foundation’s profits, this will be a more favorable solution than, for example, investing the capital accumulated in capital companies.

Another advantage of this mechanism is that it will provide funding for the future for those not directly related to the family business – funding can be received by beneficiaries and their heirs.

The ability to accumulate assets in a family Foundation will prevent the division and fragmentation of assets among heirs – an instrument of succession that allows the actual preservation of the integrity of family assets.

In addition, the Family Foundation will allow the uninterrupted operation of the family business after the death of the owner (Founder) in accordance with his will, for example, the Founder will be able to include in the Foundation’s articles of incorporation the rules for making distributions to Beneficiaries, taking into account the conditions the fulfillment of which could condition the payment or the amount of payment of funds to them.

The solution in question will also contribute to the smooth transfer of assets into the hands of persons with appropriate qualifications and skills, so that the fate of the property and companies after the death of its founder (or long-term owner) will not be left to chance, and business development will not be affected by possible conflicts between heirs (Beneficiaries).