Wealth and Succession
Strategically planned succession ensures the continued existence of medium-sized family companies but can entail significant emotional and personal challenges. That’s why forward-looking entrepreneurs with family-run businesses initiate the process at an early stage and have plans in place in case of an emergency. Our experienced lawyers and tax advisors oversee this process and help the family to find the optimum legal and fiscal solutions for successful corporate succession. This is attained by establishing clearly defined structures and responsibilities, the customised drafting of company and prenuptial agreements, as well as clear, unambiguous wills. Our solutions financially secure the owners’ retirement while facilitating a seamless transition to the next generation during their lifetime. In the event that there is no suitable successor within the family, we can advise on the transfer of family companies to third parties. In the event of a death, we are there to support the heirs and advise on their rights and duties as well as to handle any inheritance disputes.
Structuring succession in family-owned companies
The corporate law structuring and negotiation of rules on succession, including restructuring prior to planned succession, is a key focus of our work. We understand the issues that the competing interests of the family and the company can provoke. That’s why, before we begin, there needs to be a meeting with all those involved. After all, any conflicts need to be resolved in order for the handover to the younger generation to go smoothly. On the legal side, clear corporate agreements such as consortium and voting trust agreements, including master agreements, prenuptial agreements and matrimonial property clauses can all help. A family charter setting out the values, goals and role of the entrepreneurial family is also a good idea. Throughout all phases of succession planning, we evaluate and optimize the coordinated solutions from a taxation perspective and continuously monitor the tax benefits of any given solution.
Assets in succession planning and structuring
Regardless of whether succession relates to a company or a private individual, a forward-looking corporate and asset structure is crucial for succession planning. We help develop appropriate legal solutions for planning and structuring assets. With regard to inheritance and gift tax, we advise on asset restructuring and asset bundling, in particular in the form of asset management companies.
Lifetime transfer of assets
Assets can be legally transferred during a person’s lifetime in various ways. These include gifts, usufruct, sub-holdings, trust arrangements, life annuities, residential rights, mixed gifts and gifts on death. Our lawyers and tax experts can advise on the form and timing that is most appropriate in the specific context.
Wills and prenuptial agreements
It’s understandable that no one wants to think about death or divorce when things are going well but failing to do so can result in serious financial or family issues, especially for entrepreneurs with business assets or for partners in a GmbH, GbR or KG. Putting provisions in place in the form of a will in good time establishes clarity and governs the entrepreneurial legacy for spouses, life partners and children. A prenuptial agreement including provisions on the renunciation of inheritance and compulsory portions should also be signed at the time of marriage. It is vital that these important documents are legally watertight in order to avoid any subsequent conflict. Menold Bezler’s experts draft wills and inheritance contracts and review testamentary documents to ensure that the form and wording are correct. This also applies to cross-border arrangements and foreign assets.
Precautionary provisions: the emergency toolkit
How can the business continue to operate if an accident or sudden illness leaves the entrepreneur unable to work? This is when the ‘emergency toolkit ‘, which can also take the form of a (digital) folder or envelope, comes into play. Ideally, the toolkit comprises general and healthcare-specific powers of attorney, as well as living wills. This clarifies responsibilities and sets out important information. The provisions can be subjected to a stress test in the form of a “death rehearsal” and optimised as necessary. If no provisions have been made for such situations, our team can also issue “emergency wills”.
Foundations and non-profit status
Family foundations offer interesting opportunities for entrepreneurs to provide for the family in the long term while simultaneously preserving the family’s assets. A charitable foundation can combine charitable activities with family support. In the case of family businesses in particular, the combination of a foundation serving private interests with a charitable foundation is an option. The “double foundation” combines financial support for the family with philanthropic work, tax advantages and a strengthening of the company. Each form of foundation can be established during the founder’s lifetime or, alternatively, after their death on the basis of a testamentary disposition.
We advise heirs, legatees, beneficiaries of a compulsory portion and executors of wills on all issues relating to inheritance: estate structuring, estate inventory, certificate of inheritance, fulfilment of legacies, disclaimer or acceptance of inheritance, settlement of estates and estate distribution, execution of wills and determination of compulsory portion claims.
Contentious probate disputes
In addition to unspoken conflicts within the family, inheritance disputes are often rooted in an ambiguous will. The easiest way to avoid such disputes is to draw up a clear and unambiguous will at an early stage. If the parties involved agree to an out-of-court settlement, we provide support throughout the process of mediation or arbitration. If legal proceedings are desired or are unavoidable, we provide legal representation and conduct the proceedings, including proceedings in the event that a will has been contested or in the case of contentious probate proceedings. We assert and defend against claims under inheritance law, especially claims relating to compulsory portions.
Relevant areas of practices for Wealth and Succession