What is a family foundation?
A family foundation is a legal entity that facilitates succession planning and implementation, as well as asset management. It is a vehicle for building family wealth and may help reduce the risk of family assets being fragmented. Importantly, the beneficiaries of a family foundation are neither its shareholders nor co-owners of its assets. They are only entitled to receive benefits specified in the foundation’s statutes. Only natural people and public benefit organizations may be beneficiaries of a family foundation.
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Who is a family foundation for?
A family foundation may be a suitable solution for business families that own private companies and other assets. It may also be used to establish an entity that will own assets and pursue social or charitable activities if there are no family members to continue managing them. In addition, a family foundation can be an attractive solution for unmarried couples.
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When should you consider establishing a family foundation?
A family foundation is worth considering when planning and implementing succession, as well as when seeking to accumulate and grow family wealth. It allows assets to be transferred smoothly across successive generations and selected individuals or causes to be supported without transferring individual assets directly to heirs.
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What can you gain from a family foundation?
A family foundation makes it possible to grow family wealth and retain it within a single entity, as assets contributed to the foundation do not become the property of its beneficiaries. A family foundation has no shareholders, and its beneficiaries do not acquire any ownership interest in it. Moreover, beneficiary status cannot be transferred. A family foundation may also help limit forced heirship claims, as assets contributed more than ten years before the opening of the succession are not included when calculating the basis for such claims.
Scope of support
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Establishing the governance framework and preparing the foundation’s statutes
An appropriate governance framework is essential for the proper operation of a family foundation and the effective implementation of succession objectives. As part of our work, we hold workshops to discuss potential governance solutions, including the designation of the foundation’s beneficiaries, its governing bodies and their composition, payments to beneficiaries, and mechanisms for overseeing the family foundation.
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Registration of the family foundation
Once the family foundation’s statutes have been adopted, a family foundation in organization is established. For the family foundation to become fully operational, it must be registered in the Register of Family Foundations maintained by the Regional Court in Piotrków Trybunalski.
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Contribution of assets to the family foundation
When establishing a family foundation, the founders are required to contribute at least PLN 100,000 to its founding fund. During the foundation’s subsequent operation, various types of assets may be contributed to it, including, in particular, cash, real estate and shares in commercial companies. Our work focuses on identifying potential assets and subsequently contributing them to the foundation.
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Transfer of shares in companies to the family foundation
Shares in commercial companies are among the key assets that may be contributed to a family foundation. Grant Thornton provides comprehensive support throughout the share transfer process, including the preparation of the relevant documents, corporate approvals and agreements transferring ownership of the shares, followed by the registration of these actions with the National Court Register.
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Tax analysis of the transfer of assets, including real estate, to the foundation
The contribution of assets to the foundation, including real estate, requires a legal and tax analysis. Its purpose is to present the relevant legal and tax criteria in the context of the adopted business assumptions and legal considerations, providing a basis for the decision on whether to transfer the assets, including real estate.
Why might a family foundation be the right solution for you?
- You own a company and other assets and want to organize and plan succession, while also establishing rules for managing your assets now and in the future so that they can be accumulated across successive generations of your family.
- You want to establish an entity that will own assets, such as shares in companies, real estate or securities, and pursue social or charitable activities if there are no family members to continue managing them.
- You are in an unmarried relationship and want to secure your partner’s inheritance rights.
- Remember: these are only some of the many possible applications of a family foundation.
Implementation process
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Workshops
Online or in-person meetings aimed at identifying the client’s needs and developing the key assumptions required to begin work on the foundation’s statutes.
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Preparation of the foundation’s statutes
Based on the arrangements made during the workshops, we will prepare the family foundation’s statutes, which will be supplemented during meetings with the client and in line with ongoing arrangements. The work will result in a final version of the statutes, which will then be adopted before a notary.
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Registration of the family foundation in the register
We prepare the application to register the family foundation in the Register of Family Foundations, together with the complete set of documents required for registration. We continuously monitor the progress of the registration proceedings before the registry court and submit requests to expedite the proceedings.
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Preparation of documents for transferring assets
Once the family foundation has been registered, we begin work on transferring assets. We prepare the necessary corporate approvals and agreements transferring ownership of shares in companies.
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Registration of share transfers with the National Court Register
Where shares in companies are being relocated, we prepare the relevant application to the National Court Register.
Online or in-person meetings aimed at identifying the client’s needs and developing the key assumptions required to begin work on the foundation’s statutes.
FAQ – Family Foundations
What is a family foundation and why is it established?
How does a family foundation facilitate succession and protect family assets?
In addition, subject to the applicable statutory conditions, it may be possible to limit forced heirship claims, strengthening the protection of family wealth and facilitating its transfer to future generations.
How are a family foundation and its beneficiaries taxed?
Taxation arises when benefits are paid to beneficiaries or when the foundation is dissolved. In such cases, a flat-rate corporate income tax of 15% applies. Taxation at the beneficiary level depends on the beneficiary’s relationship to the founder: immediate family members are exempt from personal income tax, more distant relatives are subject to a 10% rate, and unrelated individuals are subject to a 15% rate.
What are the costs of establishing a family foundation and what assets must be contributed initially?
The court fee for registering a family foundation is PLN 500, and additional administrative charges may also apply. The minimum value of the fund required by law is PLN 100,000.
How does a family foundation operate and what governing bodies does it have?
The foundation’s organizational structure consists of its governing bodies: the management board, which handles its day-to-day affairs; the beneficiaries’ meeting, which participates in key decisions; and, in certain circumstances, a supervisory board that oversees the management board’s activities.
