March 9, 2021 / Law /

The government is to present a bill on a family foundation in the coming weeks. It is a completely new legal vehicle under Polish law, but in many countries it is the basic element of planning family succession of assets. A family foundation may become the owner of an enterprise, shares in companies, securities, as well as real estate and movable property. The profit generated by the property belonging to the family foundation is allocated to the needs of the family. Thanks to this, two important spheres can be reconciled: business and private life.

Currently, business owners often decide to donate or inherit their enterprise to a selected person or persons. However, this ensures succession only in the second generation. However, this does not affect the future of the company and the property accumulated thanks to it. Sometimes the owners decide to sell the enterprise to a buyer outside the family, although it provides money for some time, but at the cost of losing the family character of the enterprise. In the case of shares in partnerships, there is another important aspect of restrictions on the freedom to use the share in the company. A change of the partner is allowed only if the articles of association so provide and the partners agree to the new partner. Therefore, the succession may be blocked by other partners.

The Ministry of Entrepreneurship and Technology presented the most important assumptions of the future draft law on the family foundation, from which it follows that:

  • a Polish family foundation, following the example of other solutions known in Europe, would be a legal entity. Its seat would have to be in the territory of the Republic of Poland;
  • the purpose of the family foundation’s activity could be the management and protection of property, in accordance with the will specified by the founder in the statute, including providing funds for the group of beneficiaries indicated by the founder;
  • a family foundation could be created for a specified period or for an indefinite period. The decision in this regard could be left to the founder and his succession plans;
  • in order to establish a family foundation, it would be necessary for a notary to draw up a founding deed or a will, including a declaration on the establishment of a family foundation. In the event that the family foundation was created on the basis of a will, the founder would specify the members of the family council in it;
  • the circle of beneficiaries of a family foundation and the scope of their rights should be determined by the founder.

In addition, one of the two taxation models operating in other countries is considered: on the activity constituting a contribution to the family foundation while exempting the beneficiaries from tax, or on the activity constituting a contribution to the beneficiary of the family foundation while exempting the foundation’s income from tax.