Manage your family wealth easily with a family holding company: We show you how

Are you considering whether it makes sense to incorporate your family's assets into a family holding company? If so, there are a number of things to consider. The following points will help you make your decision:

• What is a family holding company?
• What about the operational business and the limitation of liability in a family holding company?
• The family holding company in case of inheritance
• Tax advantages of the family holding company

If your family owns assets such as securities, real estate or shares in companies, it may make sense to set up a family holding company. All assets can be centralised in one company and the asset relationships between family members can be clearly defined.
There are a number of options when it comes to legal form: you can set up your family holding company as a GmbH, GbR or limited partnership.

Are you not sure which legal form suits your individual needs and requirements? Or are you already sure that you want to set up a GmbH? Our team will be happy to advise and assist you with your start-up project.

Within the holding structure, the subsidiary is generally responsible for the operational business. The holding company (parent company) manages the shares in the subsidiary. Probably the biggest advantage of the holding company is that in the event of the subsidiary's insolvency, the holding company is not liable for the subsidiary's existing liabilities.
You can use this to your advantage: The liability is spread and the risks are reduced. For your family wealth, this means that it remains concentrated and protected in the holding company.

The family holding company has other advantages: In the event of inheritance, the family holding company cannot be dissolved like a community of heirs. This means that the family's assets do not disintegrate. In addition, the clear ownership structure avoids disagreements between family members. The continuation of the business for future generations can thus be regulated in a peaceful manner.

The holding structure has tax advantages. The family holding company is particularly attractive in terms of inheritance tax: inheritances are generally subject to inheritance tax. However, the tax burden can be significantly reduced through the transfer of tax-favoured assets in accordance with § 13b of the Inheritance Tax Act (ErbstG) within the framework of the family holding company.

Although family holding companies offer many advantages, the potential disadvantages should not be overlooked. They often involve high costs and complex structures and can lead to tensions within the family. Here is an overview of the main disadvantages.

• Complexity and cost
  Setting up and managing a family holding company is expensive and complex, often involving high consultancy and administration costs.
• Potential for conflict
  Differing views on management and succession are a source of conflict that can strain the business and family relationships.
• Restricted freedom of decision
  Shared decisions limit individual freedom - this can be particularly frustrating for minority shareholders.
• Tax risks
  Despite the potential benefits, high taxes can be incurred, for example on asset transfers and double taxation.
• Lack of flexibility
  Family holding companies are designed for the long term and are often slow to respond to short-term changes.

A family holding company is an organisational structure that centrally manages assets such as securities, real estate and shareholdings and clearly defines the asset relationships between family members.

Legal forms of family holding companies:

You can set up a family holding company as a GmbH, GbR or limited partnership, depending on your individual requirements.

Limitation of liability:

In a family holding company, the parent company (holding company) is not liable for the liabilities of the subsidiaries, which protects your family's assets.

Operational business:

The subsidiaries are responsible for the operational business, while the holding company manages the investments.

Inheritance advantages:

A family holding company cannot be dissolved in the event of inheritance like a community of heirs, which ensures continuity of assets and minimises disputes.

Tax advantages:

The family holding company offers tax advantages, in particular with regard to inheritance tax through the transfer of preferential assets in accordance with § 13b ErbStG.

Risks and opportunities:

Consider both the benefits and potential limitations of the holding structure to make informed decisions.

Seek advice:

Consider seeking professional advice to determine the best structure for your family's wealth.

The establishment of a family holding company offers numerous advantages for the management and protection of family wealth. The centralised holding of securities, real estate and shareholdings not only limits liability but also greatly simplifies succession planning. Continuity of wealth is ensured, particularly in the event of inheritance, and potential conflicts within the family can be minimised. Families also benefit from tax advantages, particularly with regard to inheritance tax.

A family holding company is therefore a strategic solution that allows you to protect your wealth in the long term while preserving it for the next generation. It is worth considering the options and structures carefully to make the best decision for your family's wealth.