Family foundation

Family foundations can be used in inheritance planning to ensure the operational continuity of a business, prevent the break-up of the estate, and avoid or reduce the often cumbersome and complicated inheritance proceedings. They are not a one-size-fits-all solution and their creation requires a lot of prior thought and preparation.

What we can do for you?

We will:

  • help choose the type of foundation that suits your purpose
  • draw up a foundation deed that reflects your needs and expectations and is statutorily compliant
  • prepare the necessary corporate documents
  • walk you through the business reorganization process, including restructuring and mergers, in order to structure the business assets ready to be transferred into the foundation
  • keep the foundation accounts and manage its tax affairs
  • draw up financial reports
  • provide expert tax advice in the event of any doubts in the course of managing the foundation
  • apply for the relevant tax clearance certificates
  • audit the affairs of the foundation and issue a report
  • administer the liquidation process in the event of the foundation being wound up

Pros

The right legal tools in the hands of the settlor to ensure proper planning and execution of succession proceedings and consolidation of family assets

Distribution of foundation proceeds to the beneficiaries in a tax efficient way

Settlor flexibility to have a material influence on setting up the foundation, devising the succession strategy, naming the beneficiaries, laying down the rules for satisfying the beneficiaries, and drawing up guidelines for the foundation investment decisions

Effective foundation operation and fulfillment of its objectives in accordance with the settlor’s wishes

Setting up and managing a family foundation

1.Assess the purpose of setting up a family foundation and its needs

Tax aspects Legal aspects
  • explain the tax implications of running a family foundation
  • compare the tax regime applicable to the current asset structure and that of the family foundation
  • carry out due diligence of the business, verify the ownership of the settlor’s assets and define family members’ roles in running the business and the foundation (succession strategy)
  • recommend the foundation objectives, its optimal structure and rules of operation, define and draft the beneficiary rights
  • prepare the business and the family members for the creation of the foundation, help reorganize the business, provide relevant training.

2. Set up the foundation

Tax aspects Legal aspects
  • prepare the foundation deed ensuring it contains any necessary tax solutions
  • assess the income tax and VAT implications of transferring assets to the family foundation
  • provide advice on taxation of domestic and international investment flows as part of the foundation operations
  • draw up the foundation deed or will for the purpose of setting up a family foundation
  • draw up bespoke articles of association which take account of the succession strategy
  • provide legal advice and prepare any documents necessary to move the assets into the family foundation
  • make an inventory of the settlor’s assets
  • prepare the necessary documents setting out the duties and powers of the governing bodies
  • register the foundation in the family foundation register

3. Ensure effective family foundation operations

Tax aspects

Legal aspects
  • assess the foundation’s current performance and management of its tax affairs
  • determine the tax regime applicable to the beneficiary income paid by the foundation, taking into account the settlor’s and the family trust’s share of the assets
 Records kept by the foundation
    • prepare the necessary succession strategy documents setting out the duties and powers of the governing bodies: board of management, supervisory board and the general meeting of the beneficiaries
Professional advice to existing family foundations
    • carry out legal due diligence of the foundation’s operations, management and business objectives and help amend its articles of association and succession strategy plans based on the risk areas identified

4. Family foundation accounting

Areas of accounting covered 

  • develop and implement the family foundation accounting system;

  • keep day-to-day accounting records in accordance with accounting standards;

  • ensure compliance for tax and accounts reporting purposes;

  • draw up statutory financial statements for the foundation;

  • file annual declarations and reports for statistical purposes;

  • complete VAT returns, keep VAT records of sales and purchases;

  • check documents for accounting accuracy, post transactions to appropriate accounts;

  • provide support in financial statements reviews;

  • provide support in statutory audits of family foundation accounts, pursuant to Art 77 of the Family Foundations Act.

 

Feel free to contact us

Justyna Bauta-Szostak

Partner | Tax adviser | Attorney at Law
E: justyna.bauta-szostak@mddp.pl
T: (+48) 502 241 631

Bartosz Głowacki

Partner | Tax adviser
E: bartosz.glowacki@mddp.pl
T: (+48) 603 980 382

Related content