Why Is It Worth Establishing a Family Foundation?

A family foundation is becoming an increasingly attractive option for entrepreneurs, particularly in the context of business transactions such as the sale of shares in a limited liability company (sp. z o.o.). Our experience shows that more and more individuals are exploring the use of a family foundation as a tool to protect their interests during transactional processes.

One of the key advantages of establishing a family foundation in Poland is that it allows entrepreneurs to sell shares in a company without incurring high security costs or facing risks associated with potential legal or financial issues of the company. Incorporating a family foundation into the transaction process changes its dynamics, offering benefits for both the seller and the buyer.

For a seller, transferring shares to a family foundation results in tax savings, as they are not required to pay capital gains tax at the time of the sale. The tax is only due when funds are distributed from the foundation to a beneficiary. Additionally, by using a family foundation, the seller remains involved in the transaction process and does not simply disappear “after the deal.” This provides an important layer of security for the buyer, who avoids the risks associated with the former owner’s potential liabilities.

From the buyer’s perspective, a family foundation is a solid and stable transactional partner. As a legal entity, the foundation is more durable and easier to secure than a private individual. Furthermore, the buyer does not need to worry about the foundation disappearing or being dissolved, which enhances the overall safety of the transaction.

Family foundations are not used solely by entrepreneurs. A growing number of investment funds are recognizing their potential as business partners. Due to tax advantages, family foundations can grow rapidly, making them appealing to funds seeking new investment opportunities. We expect to see increasing collaboration between family foundations and private equity or venture capital funds in the near future.

It’s also worth noting that family foundations are not limited to securing business transactions. They can also serve as effective tools for succession planning, protecting family wealth, and achieving philanthropic goals. Thanks to their flexibility and adaptability to individual needs, family foundations are a versatile solution for entrepreneurs and families seeking stability, security, and efficient wealth management.

In Poland’s dynamic business landscape, establishing a family foundation is becoming an increasingly attractive option for entrepreneurs looking for effective tools to manage their assets and secure their interests in transactions. With their unique features and tax benefits, family foundations offer not only strong legal protection, but also a long-term strategy for wealth management and the achievement of both business and social goals.