The Family Foundation Act came into force a year ago. During this time, over a thousand family foundations have been established, and several hundred more are awaiting registration. This is significantly more than expected, confirming the urgent need for this law. Family foundations have quickly gained popularity, becoming a key element in wealth management and succession for many Polish entrepreneurs. Thanks to the new regulations, family business owners can now better plan the future of their businesses, securing them for the long term and ensuring their continued existence in family hands.
Is it worth creating family foundations?
Family business owners in Poland have been eagerly awaiting regulations facilitating the accumulation of assets and business development for years. As of April 30, 2024, 980 foundations had been registered in Poland, and the latest data shows that there are now over 1,000. Currently, interest in family foundations is truly significant, with the number of applications for registration exceeding forecasts. This is a huge success for a legal institution that has been eagerly awaited for years.
Who is the family foundation for?
A family foundation is designed for individuals who wish to secure their assets for the future. Its goal is to ensure that the company will endure for generations, with the assets remaining in the hands of the family or those close to the founder. These assets are subject to further management in accordance with the founder's wishes, as expressed in the foundation's statute and other documents. The founder can ensure the continuation of the values they espouse, the way the company is run, and the paths of development, in line with their beliefs, which they would like to see continued for generations to come.
A family foundation allows for succession under clearly defined rules set by the founder. However, this solution is primarily aimed at owners of family businesses with the status of large and medium-sized enterprises or owners of significant private assets, although the minimum value of assets contributed to the foundation is PLN 100,000.
Advantages of a family foundation
For such businesses, a family foundation offers many benefits in terms of succession, including:
- securing the succession process for generations;
- maintaining the family character of the company;
- protection against the division of shares or stocks among all heirs;
- the possibility of adopting clearly defined rules for the payment of benefits.
An important element is that the founder can condition payments to beneficiaries on meeting precisely defined conditions, and the legislature has not provided any restrictions in this regard. This protects the estate from the risks associated with traditional property succession.
Asset protection in a family foundation
A family foundation protects assets from creditor claims, provided the founder's liabilities arise after the assets are contributed to the foundation. A family foundation separates assets from personal and business assets. In the event of financial difficulties for the company or the founder, assets contributed to the foundation are safe. The founder is not liable for the obligations of the family foundation, although the foundation will be jointly and severally liable for the founder's civil liabilities and tax arrears arising before the foundation's establishment, but only up to the amount of the assets contributed. A family foundation is not liable for the founder's liabilities arising after its establishment.
Summary
Family foundations are a modern and effective tool for asset management and succession in family businesses. Their growing popularity in Poland, evidenced by the fact that over a thousand such foundations were established within a year, is evidence of how much this law was long-awaited and necessary. For many entrepreneurs, a family foundation guarantees that their companies will endure for generations and that the values they espouse will be continued. Through clear management principles and asset protection, family foundations can become the foundation for the stability and development of Polish family businesses for years to come. This is a success not only for individual companies but also for the entire economy, which benefits from the stability and continuity of family businesses.
If you are interested in establishing a family foundation, please contact us. Our team of experts will be happy to answer all your questions, advise on the formalities, and guide you through the entire process of establishing a family foundation.
This article is for informational purposes only and does not constitute legal advice.
Legal status as of May 28, 2024
authors:
