Family foundation

A family foundation is a new legal tool that can be attractive for organizational and taxation reasons as well as due to relationship between board members or beneficiaries it creates. A family foundation makes it possible to separate and secure private assets from assets related to business activity and transfer the former to the foundation. It is also exempt from taxation on account of its operation, and relatively low taxed if it pays benefits to beneficiaries. Importantly, a family foundation does not have to serve socially or economically useful purposes, but allows other purposes specified by the founder.

Advantages of a family foundation:

• possible transfer of assets to successors while departing from the standard rules of inheritance, which involve problems such as the dispersion of assets or the need to pay a legitim by the heirs;
• an attractive alternative to a holding company or a property insurance company (which, apart from certain exceptions, does not conduct business activity), without additional taxes or public levies, such as social insurance contributions. It is more advantageous than the structures created thus far under the so-called Estonian CIT regime, allowing reinvesting;
• more confidentiality compared to companies, due to the fact that the registration files of a family foundation can be viewed only by the founder, a member of the family foundation's body, its beneficiary and a person with a legal interest;
• flexibility in shaping the rules of corporate governance. The founder decides about the rules of appointing and dismissing members of the family foundation's governing bodies, and the powers and duties their members will receive.The founder also appoints the beneficiaries and decides about the amount and form (monetary or non-monetary) of the benefits and the time and conditions under which they will be received by individual beneficiaries of the foundation (including the founder);
• extremely favourable tax preferences concerning property taxation, business activity and benefits.

Our offer

We can help you create a family foundation, plan and reorganise private and corporate assets (including companies) and transfer them to the family foundation. As a family foundation is usually associated with a group ofindividualsrather than the founder only, we consider it very important to correctly define the mutual relations between the family foundation and individual persons affected by its existence.

Therefore, our help and support are addressed to:

• people who consider a succession, i.e. withdrawing from active participation in business and transferring property or securing the family (heirs) financially in the event of an unforeseen accident. Our experience shows that such a plan is worth preparing, regardless of how soon you are planning your withdrawal;
• people who do not consider succession at the moment but want to reorganize their assets. If this is your case, family foundation may be an attractive option;
• other people, especially the families of the founders, who would like to be involved in these procedures with an independent advisor.

We will design the foundation according to your needs, depending on which group you belong to, who is in your family and outside it (e.g. key employees) and what you want to transfer to yourself or other people.

If necessary, our partner companies can advise on economic, business and relational aspects of the foundation.