Family foundation
Familienstiftung
Other languages: Deutsch · Français · Español
A foundation whose purpose lies predominantly in the interest of one or more families.
In Germany, the assets of domestic family foundations are subject to inheritance substitute tax every 30 years. In Switzerland, family foundations are only permitted for certain purposes; in Liechtenstein, they are a common instrument of succession planning.
In practice
A family foundation separates the assets from the family members and binds them to the purpose set by the founder. In practice, its governance – the composition of the board, the rules for distributions and the rights of the founder – determines how flexible the foundation remains across generations. The family office keeps the deeds, by-laws, board resolutions and the list of beneficiaries current, because they are needed for banks, registers and tax returns.
Distinctions and common mistakes
In Switzerland, family foundations may only support family members in specific situations such as education, setting up in life or hardship; pure maintenance foundations are not permitted. A common mistake is to treat a foreign family foundation like a domestic one for tax purposes, although founders and beneficiaries may be taxed very differently.
Relevant in: Switzerland · Germany · Liechtenstein
Related terms
- Private foundation (Austria)
- Austrian legal form under the Private Foundations Act for permanently dedicating assets to a purpose set by the founder.
- Inheritance substitute tax (Germany)
- German tax that charges the assets of domestic family foundations every 30 years as if they passed to two children.
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