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Family wealth and succession

The foundation as a bracket over family wealth and shareholdings: generational change within the foundation structure, family roles and conflict prevention among beneficiaries.

The private foundation is often used as a bracket over family assets and business holdings. It is meant to keep assets together, prevent conflicts among heirs and provide for continuity across generations.

At the same time the foundation is a demanding tool. It works well where the founder family understands the structure and lives with it in the long term. We support foundations from the drafting of the declaration to the second and third generation.

The foundation in the family

Family foundations regulate not only assets but also roles: who has influence, who receives distributions and who controls the board? A clear allocation of these roles is often more important than tax details.

Especially in the transition to the second generation family foundations run into pressure. The founder generation shaped the foundation, the following generation lives with the results. Structural anchors in the declaration (advisory board, family council, rotation) prevent much later dispute.

Business succession through the foundation

The foundation can be used to keep business holdings together, prevent a break-up of the group of shareholders and ensure long-term continuity. This is particularly interesting for family businesses without a natural sole successor.

Critical is a clear demarcation between operational management of the business and the strategic level of the foundation. The foundation should not run the business but hold it as a shareholder.

  • Keeping business holdings together across generations
  • Clear division between operational management and foundation
  • Family council or advisory board as a place for the family voice
  • Rules for conflicts among beneficiaries in the foundation declaration

Alternatives to the foundation

The foundation is not the only way to structure family assets. Family partnerships, family constitutions or shareholder pools can achieve similar effects. The foundation is particularly strong where a permanent, ownerless entity is desired.

We compare the alternatives before committing to a foundation. Ongoing costs and administrative burden are significant with the foundation.

This overview reflects the Austrian legal position under the Private Foundation Act (PSG) and does not replace advice in the individual case. The specific circumstances of your foundation are always decisive.

Frequently asked questions

What clients often ask.

From which assets does a family foundation make sense? +
Usually only from assets in the mid single-digit millions. Below that the running costs weigh heavily. Family partnerships or family constitutions can be more suitable then.
Can the operating business be run directly by the foundation? +
It should not be. The foundation should hold the business as a shareholder, not run it operationally itself. Operational management belongs in the company, strategy and control lie with the foundation as owner.
What role does the family council play? +
The family council is typically an informal body of the family for coordinating positions before formal foundation resolutions are taken. It has no direct authority but can significantly reduce conflicts.
Can the second generation change the foundation? +
Only within the framework provided by the declaration. Without a reservation, later changes are hardly possible. That is why the declaration should already anticipate the transition to the following generations.
Related topics

This may also be relevant to you.

Formation and foundation deed

Setting up with a clear architecture: foundation deed, supplementary deed, governing bodies and asset endowment drafted so the foundation delivers what the founder intended.

Founder rights, amendment and revocation

Reserved founder rights secure influence: amending the foundation declaration, revoking the foundation and the limits where several founders are involved or rights have lapsed.

Beneficiaries and information rights

Beneficiaries have rights: information about the foundation, inspection of the foundation declaration and remedies when the board blocks or distributions stop.

Conflict in the foundation, a blocked board, information denied?

In foundation law, structure, deadlines and evidence decide. Call us directly or write to us, callback within one business day.

+43 662 6280000 [email protected] Book an initial consultation (72 euros)

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