The successful design and implementation of corporate succession particularly affects owner-managed medium-sized family businesses. Practice shows that less than half of the companies in Germany have developed a structured handover concept. This can result in significant dangers for the company if the owner has to leave the company earlier than planned. That is why the early regulation of company succession is one of the compulsory entrepreneurial tasks of every owner-managed company.
Private asset succession
In the context of private asset succession, it is primarily a matter of structuring a harmoniously coordinated transfer of assets in the family circle, which is largely determined by the ideas of the transferor and also by the following objectives:
- Avoidance of later inheritance disputes or avoidance of claims for compulsory portions and supplementary portions of individual heirs
- tax optimization or avoidance of subsequent tax burdens.
Achieving these central goals ensures the highest possible asset preservation for those involved. To achieve this, the successive transfer of assets during one’s lifetime can be a possible design recommendation. A partial transfer of assets during one’s lifetime must, however, appear economically and tax-wise and always be in line with the personal ideas and supply needs of the transferor.
Interdisciplinary consulting approach
The corporate succession as well as the private asset succession concerns a multitude of interlinked entrepreneurial, tax and legal issues.
Company succession concept = the result of a concept of various specialists tailored to the individual case. If necessary, we fall back on a network of specialists (lawyers, notaries, property experts)
When developing a succession concept, the following questions must be answered primarily:
- Family-internal / external succession?
- Lifelong succession / succession in the event of inheritance
- with / without management participation of family members?
- Free, partially paid and fully paid transfer operations?
- Protection of the transferor through ongoing supply fees, usufruct regulations or purchase price payments?
Succession planning is a compulsory task for every company. The subject of planning is, on the one hand, the selection of the successor, care for the relatives and, in particular, the avoidance of disputes, because a lack of consideration of these aspects can also endanger the company. On the other hand, precise legal and tax planning is unavoidable.
As a law firm with a high proportion of medium-sized family businesses and wealthy private individuals, we deal intensively with the subject of corporate and asset succession planning. Preparing his company, himself and his family for a meaningful and successful succession solution is a great challenge for many entrepreneurs.
Early advice to medium-sized companies with regard to corporate succession is an existential issue for the German economy. Without a long-term concept, the continued existence of your own company will be jeopardized, the staff will become insecure and the creditworthiness of the company with the banks will be questioned: One of the most important rating points under Basel II is securing the company’s succession. Succession advice includes the development of a long-term succession concept, the initiation of an entrepreneur’s will, coordination with the articles of association and the minimization of the tax burden.
Our law firm works out a suitable concept with you and accompanies you in its implementation. Timely succession planning is one of the most important tasks for long-term and successful company security and development.
We support you in all phases with our tax, business and human competence. If necessary, we are supported by cooperating experts – such as lawyers or notaries.
- Analysis of the company situation
- Evaluation and options for action
- Individual tax advice on transfer agreements
- Implementation of private and business interests in handovers
- Support and advice on company sales and partial sales
- Design of successive anticipated succession in the company
Inheriting – especially larger assets – is a much complex matter and requires intensive and comprehensive legal and tax advice. There is enormous tax and economic structuring potential in regulating the succession of assets as early as possible during one’s lifetime. This must be exploited in order to minimize or even avoid the impending tax burden of the asset transfer.
Our advice serves to secure business and private assets across generations and helps to prevent unpleasant disputes in the event of inheritance. Our objective here is to actively minimize the tax burden by taking advantage of legal and tax structuring options as well as early planning of asset succession.
In principle, almost every state has its own national inheritance law. If, in times of intensifying globalization, the legacy has international contact, the question of which inheritance law is applicable increasingly arises. Foreign contact does not only exist if assets are located abroad, such as the inheritance of a place of residence abroad.
Rather, there is already a foreign connection in mixed national marriages if the foreign partner dies and assets are inherited domestically.
International inheritance often involves various tax and legal peculiarities that must be observed. Against the background of our expertise and experience with international inheritance cases as well as our membership in the international network i2an, we have been advising clients intensively and successfully in cross-border matters for years.
As part of comprehensive tax advice by our specialized consultants, any cross-border difficulties and problems are identified in advance and a solution is found. The aim is to minimize the tax burden of a succession plan or inheritance with an international dimension and to avoid possible double taxation. The early formulation of sensible regulations can ensure that relatives are not unnecessarily burdened with inheritance and tax difficulties in the event of inheritance.
We would be happy to advise you comprehensively and individually on all questions relating to international inheritance law.
Our services in the area of corporate and asset succession advice
- Status quo analysis: Examination of corporate and testamentary estate regulation and creation of a latent inheritance tax scenario
- Analysis of existing tax risks and detection of further weaknesses
- Valuation of corporate and private assets (real estate, investments) according to inheritance tax and other recognized valuation methods
- Development of an individual asset and succession plan
- Development of tax-oriented arrangements in the context of anticipated inheritance (lifelong asset transfers, asset transfers to foundations, etc.)
- Design of a coordinated corporate succession (successive succession taking into account the old age security of the senior)
- Preparatory structuring of the assets to optimize inheritance tax and avoid income tax disadvantages in the event of inheritance (taxable disclosure of hidden reserves)
- Legal form optimization in the run-up to corporate succession
- Tax advice on inheritance and inheritance disputes, financing of inheritance tax
- Support in all tax, economic and organizational issues relating to the going concern
- Developing a proposal for the most favorable legal form for the succession
- Advice on tax issues relating to the drafting of wills and anticipated succession in close coordination with the provisions of the articles of association
- Analysis of existing succession arrangements (e.g. entrepreneur’s wills) with regard to tax implications
- Tax assessment of existing pension plans
- Assessment of financing arrangements and negotiations with credit institutions
- Examination of any precautionary measures in the case of cross-border company successions (residence of the testator or heir abroad, foreign business assets)
- Anticipated Succession
- Inheritance and gift tax returns
- International succession arrangements and inheritance cases with an international dimension (residence of the testator or heir abroad, assets abroad)
- Asset Protection
- International inheritance and gift cases
- Cross-border asset transfers
Advisor to advisor
Expertise and support for professional colleagues
Due to our many years of experience in actively advising companies and private individuals with cross-border activities and income, we have particular expertise in the area of corporate and asset succession. We have been supporting professional colleagues who have drawn on our extensive specialist knowledge and experience for years.
We see ourselves here as a sparring partner and staff position for colleagues. We take on special issues or advise on corporate succession as well as inheritances and gifts in a trustful manner and while maintaining the protection of the mandate.
We work for you or your clients in individual cases and projects defined by you. Of course, we leave it up to you and your clients to determine to what extent and to what extent you disclose data and information to us, or whether we should assess an anonymised situation in the sense of an abstract assessment.
Strict mandate protection and confidentiality are a matter of course for us and have guided our activities for many years.
The use of foundations in the context of asset succession planning is becoming more and more important. Foundations are made to last. Assets are earmarked for the fulfillment of the statutory purpose of the foundation (company maintenance, charitable purpose) and transferred to a foundation with legal capacity or a non-legal foundation.
While non-profit family foundations are mainly used in the entrepreneurial sector due to their objective of continuity and asset preservation, the use of non-profit foundations regularly follows other motives. In the case of a transfer of assets to a charitable foundation, the potential founder finally foregoes certain assets both for himself and for the next generation. Together, all initiators of this form of foundation are characterized by their actions geared towards the common good. In practice, however, both types of foundation can also be combined with one another, e.g. if part of the assets is intended for the long-term preservation and security of the family and the “dispensable” part is intended to benefit the common good.
The primary target group of charitable foundations are wealthy testators without their own descendants as well as testators who want to dedicate their assets or parts of them to the common good.
Non-profit family foundations serve the cross-generational continuation of entrepreneurial investments and are particularly considered if there is no suitable successor for the active continuation of the company within the family.
Family foundations and charitable foundations differ fundamentally in their tax assessment. Tax advantages can be achieved for both the founder and the foundation primarily through the use of charitable foundations.
However, the use of a non-profit family foundation also offers interesting tax aspects and can therefore, under certain conditions, represent a recommended alternative to the regular transfer of assets.
Our services in detail:
- Development of an individual and tax-optimized foundation concept taking into account the individual goals of the founder,
- Examination of the appropriate legal form (foundation with legal capacity, non-legal trust foundation, non-profit GmbH) as well as development of a long-term foundation statute,
- Establishment of the foundation and coordination with the responsible authorities (tax office and foundation supervision),
- Development of a sustainable and tax-optimized asset structure for the foundation as well as ongoing tax advice and support (accounting and tax declaration).
We are happy to help set up and run a foundation and support you in all relevant areas of law.
Asset protection means protecting assets from being accessed by creditors, ex-spouses, persons entitled to a compulsory portion or the tax office.
Entrepreneurial activity, financing, divorces, inheritance, etc. carry the risk of liability access by creditors such as Banks, the tax office, ex-spouses or persons entitled to a compulsory portion. Appropriate precautionary measures must be taken in good time so that business assets, and in particular private assets separate from them, are exempt from liability in the event of an emergency.
These arrangements for asset protection are also called “asset protection” in Anglo-American. Asset protection is not a separate area of law but an interdisciplinary structure that requires the cooperation of specialized lawyers, specialist lawyers and tax advisors.
There are numerous legally permissible arrangements for asset protection that are suitable depending on the circumstances. In practice, in addition to family and inheritance law, there are also regular corporate law measures to exclude and reduce liability. Assets can also be transferred or family companies can be set up.
Associated tax issues are always associated with the structuring of asset protection. We advise our clients in the context of asset protection and the resulting measures with regard to tax law and, if applicable, accounting law implications.