Lifetime Transfers & Business Succession

If you own substantial real estate or securities, the establishment of a family company (Familiengesellschaft, e.g. a limited partnership or civil law partnership) is often the first sensible step.

• Objective: Assets are pooled within a company instead of being distributed among many individuals. This helps to prevent fragmentation (e.g. co‑heir communities) across generations.
• Flexibility: You can transfer company interests step by step, using the available gift tax allowances, while the underlying assets remain consolidated.

Since real estate often forms the core of private wealth, we use tried‑and‑tested models to protect the transferor:

• Reserved usufruct (Nießbrauch): You transfer legal ownership of the property but retain the right to use it or receive rental income for life. For sizeable properties, this significantly reduces the taxable value of the gift, and in turn often the gift tax.
• Right of residence (Wohnungsrecht): This right, registered in the land register, ensures that you may live in the property free of charge for life.
• Partial transfers and co‑ownership agreements: If you only transfer a share in a property (for example, to use tax allowances precisely), we safeguard you through a co‑ownership agreement, for instance by granting you a casting vote in case of disagreement, so that you retain the final say on management and use.

Transferring a business (e.g. a GmbH, GmbH & Co. KG or a professional practice) requires careful coordination between corporate and tax law:

• Targeted drafting of articles: We adapt articles of association so that shares can be transferred to the next generation without jeopardizing the company’s ability to act.
• Tax relief for business assets: In coordination with your tax advisors, we design the structure so that it fits the specific relief provisions for business assets under German inheritance and gift tax law. The aim is to ensure continuity of the business without forcing it to fund inheritance tax out of its liquidity.

For assets that are to be protected in the long term against fragmentation and individual access, a family foundation can be the tool of choice:

• “Perpetuity” character: The foundation legally separates the assets from the founder. The assets remain intact, while the beneficiaries receive distributions from the income. Due to this separation, the foundation assets are, after certain statutory waiting periods (typically four years), protected from access by the founder’s personal creditors.
• Protection against forced heirship claims: With timely planning, a family foundation can also be used to mitigate forced heirship claims and protect core assets from being eroded.

Whichever model you choose, protecting your position is paramount. We use targeted legal mechanisms to shield your assets:

• Maintaining decision‑making power: A gift does not mean losing control. Through disproportionate voting rights or carefully drafted management rules, we ensure that you retain strategic control even if the economic value has been transferred.
• Asset protection: We design agreements so that assets are protected from third‑party claims. This includes protection in case of divorce of children (excluding spouses‑in‑law from participation) and protection against creditors (safeguarding against attachments in the hands of successors).
• “Safety net” through claw‑back rights: We incorporate clear rights to reclaim assets in case of unforeseen events, such as the premature death of a beneficiary or serious family conflict.