Scenarios
The family foundation in practice – four typical situations
The scenarios below are models: I put them together from situations that recur in conversations with founders, and they do not describe the matters of specific clients. For each one I list the questions that need to be settled and the risks to watch out for. The answers depend on the family – I look for them together with the founder. In one scenario the answer is: do not set up a foundation.
Scenario 1
A manufacturing business, three children, one on the management board
- Situation
- The founder is 64 and holds 100% of the shares in a limited liability company. His daughter has been vice-president for ten years; his sons work outside the business. The founder wants the business to stay in the family and the children to be treated fairly, though not necessarily equally.
- To be settled
- Should all the children have the same rights to distributions, given that only the daughter works in the business?
- Who runs the foundation and who runs the company – and can they be the same people?
- What part of the profit stays in the company for development and what part goes to the family?
- Who takes over the founder's powers when he is gone?
- Watch out for
- The conflict of interest of the daughter who runs a company owned by a foundation from which her siblings also benefit. Without dividend rules every year becomes a dispute: the sons want payouts, the daughter wants investment.
Scenario 2
A married couple with a dozen or so rental flats
- Situation
- The spouses, in their sixties, own a dozen or so flats, some let long-term and some short-term through an operator. They want to pass them on to their children without splitting the portfolio.
- To be settled
- Which flats should go into the foundation and which should stay outside it?
- Can the current rental model be kept after 2027, or does it have to change?
- On what terms may the children use flats owned by the foundation?
- Watch out for
- From 2027 – if the act enters into force – rental through an operator and short-stay rental lose the exemption, while direct letting for residential purposes keeps it. A flat occupied by a child rent-free is a hidden profit. If the flats are already in the foundation, residential units can be returned to their previous owner tax-free until the end of 2027 – but that is a decision based on numbers, not on reflex.
Scenario 3
A family with a daughter living in Germany
- Situation
- A founder from the Wielkopolska region holds shares in two companies and a commercial property. His elder daughter has been living and working in Germany for years, the younger one in Poland.
- To be settled
- Should the daughters receive distributions in the same form, given that they live in different countries?
- How will the German tax authorities treat a distribution from a Polish foundation – and who will check this before the first payout?
- Should the foundation's documents also be available in German? I can prepare them in both languages.
- Watch out for
- The Polish PIT exemption does not determine taxation in another country. From 2027 the controlled foreign company rules and exit tax are added – important if the foundation is to hold assets abroad.
Scenario 4
An entrepreneur who wants to sell his company in two years
- Situation
- A 45-year-old owner of a technology company is in talks with an investor about a sale within two years. He has heard that "through a foundation he can sell tax-free".
- To be settled
- Does a foundation make sense only after the sale – for the proceeds, as a long-term family portfolio?
- What should happen to the company if the transaction falls through?
- Watch out for
- A foundation is not set up for a single transaction. From 2027 – if the act enters into force – assets contributed to a foundation will be subject to a two-year holding period counted from the end of the year of contribution, and the anti-avoidance rules already apply today. "Buy a foundation, sell tax-free" structures are exactly what the legislator has been trying to close for two years. An honest answer is sometimes the cheapest service I can offer.
Law as of: 8 November 2026. The text is for information only and is not legal advice in an individual matter.