Trusts and Succession Planning Definition
National and international regulation provides a broad difference in the taxation of inheritance and/or gift tax matters. Generally speaking, the transfer of assets from one individual to another individual, being the latter one in natural person or corporate entity, may trigger a zero inheritance or gift tax burden, or totally opposite to this, a 50 % tax burden. Thus, there is a broad area to optimize the tax result of the transfer of assets from one person/entity to another person/entity.
Due to this, especially so-called ultra-high network individuals (abbreviation: UHNWIs) are, in order to keep their assets together and not to lose half of it to the fiscal authorities, forced to optimize their asset transfer. Against this background, the use of foundations and/or trusts plays a major rule within tax structuring. Using such entities, trusts, and/or foundations, the transferring person is able to achieve the requirements to be met by tax planning: Establishing one entity bundling the assets in just one entity instead of transferring the assets to a group of persons. Furthermore, by establishing such an entity, the transferring person is still able to determine the disposition of the assets to be transferred, e.g. by being the managing director of the foundation or trust, even though not being any longer the civil owner of those assets. Established in the right way, such an entity grants the opportunity to perpetuate one´s last will during the following 100s of years. And it also provides a certain form of asset protection: In case a creditor wants to file a claim against the transferring person, under German law such a creditor won’t succeed in case that the transfer of assets has taken place earlier than four years ago.
Asset protection is an important factor for clients and attorneys who work toward that goal counter liabilities which arise from taxation, business risk, and divorce. Attorneys have to offer a full range of skills relating to the organisation and structuring of the affairs of companies and individuals, assuring risk management and tax efficiency. Additionally a global perspective on a client's business and personal issues can ensure client focused legal service.
In practice, tax attorneys are specialised in the establishment of those foundations and in succession planning by using those trusts and/or foundations. Lawyers in this practice area provide advice on all aspects of private taxation, including income tax and the undertaking of returns, capital gains tax, and inheritance and gift tax. They are specialised in the field of succession planning and the mitigation of inheritance and gift tax, including Wills as well as trust taxation matters and the establishment and administration of trusts or foundations for both businesses and individuals.