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Never before have more taxable businesses and individuals in Germany been faced with the question of succession than there will be in the coming years. In this context, the issue of businesses and real estate appraisals, which has been a topic of political discussions, is of vital concern. We provide expert assistance and experience in the development of succession concepts, conservation of assets, and optimizing of taxes.
Succession plans are required for transfer of personal property as well as general future plans for business assets. Regarding the latter, this comprises not only the fiscal aspects of estate and gift taxes but also the future shareholder and management structures of businesses.
The individual transfer of property in Germany is dominated by issues such as using tax exempt amounts within the family during the ten-year limit and the hot topic of reality appraisals. In conjunction with our legal counsel, we provide consulting regarding structured transfer of individual property to beneficiaries and assist you in both, proleptic estate (gifts) and drafting your last will. Additionally, we can serve as executors of your will.
Succession in businesses is often problematic in medium-sized enterprises managed by the owners. Less than half of all businesses in Germany have a structured plan for succession. However, it is imperative for businesses to structure succession- not only due to the tightening of the "Basel II" regulations, (the principles on which loans are granted). The number of cases in which succession is amicably realized within the family is rapidly decreasing; therefore new ways need to be found to allow these businesses to continue on.
Succession plans include:
- Succession within or outside the family, with or without shareholding of family members,
- Gratuitous (unpaid), partly or wholly non-gratuitous (paid) transfer processes,
- Transfer against pension or one-time payment,
- Succession consulting for permanent controlling purposes.
Succession consulting, therefore, is not a one time process. Rather it is the ongoing supervision, adjusting and fine-tuning of succession clauses in both the articles of association and testaments.
Objectives of Succession:
- Preservation of assets, especially securing the future management of the business;
- Tax
optimization, i.e. Prevention of revenue taxes due to succession and
optimizing of the accrual of estate and
gift tax; - Prevention of probate disputes;
- Prevention of claims to statutory forced shares or supplementation claims to such shares.
- Surveying and consultation regarding the drafting of business owners' testaments and estate regulations under fiscal aspects, including consultation regarding succession clauses in the articles of association;
- Development of structured and tax optimized concepts of preliminary succession;
- Tax optimizing of all transferable assets, including optimizing the legal structure of the organization under succession aspects, for example by creation of tax reduced capital (such as commercial family pools, trusts);
- Preliminary structuring of all assets in order to avoid taxable settlement payments in the course of probate disputes;
- Appraisal of business assets according to approved valuation methods;
- Configuration of succession outside the family through selling the business by way of management buy-out or buy-in, going public/IPO or transfer of assets to domestic or foreign foundations;
- Tax related questions in connection with the execution of a will and probate disputes.
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