Family Foundation for Real Estate: Interview with Stephan Czaja on the new “One” project

Family foundation for real estate – Foundations are usually associated with non-profit organizations. However, there are also private foundations, so-called “family foundations”. The main aim is to protect assets, transfer assets to the next generation and, above all, save taxes. It is worth considering this option if you have around 1 million assets or more. But what should you look out for when setting up a family foundation? Stephan Czaja provides foundation experts throughout Germany, with real estate experience asset protection and completely new with tax savings One (specializing in setting up foundations) and today gives us a little 1×1 on the subject of family foundations in Germany.

Interview: Family foundation in Germany

FIV: So that we can all get an idea, what are the big family foundations that everyone knows about?

Stephan: There are some well-known examples that most people will be familiar with. The “Krupp Foundation” and the “Siemens Foundation” are two of the best-known family foundations in Germany. Both foundations have set themselves the task of preserving the family fortune and passing it on to the next generation. However, they also support social and cultural projects. The purpose of a family foundation is primarily to secure and increase the family’s assets in the long term.

FIV: What is their purpose, why do these well-known families set up foundations?

Stephan: Large family foundations such as Krupp or Siemens are often about keeping the company and its assets in the family and protecting them across generations. The foundation separates the assets from the private assets and they cannot be sold or inherited so easily. Family foundations also enable long-term tax optimization and provide a legal framework to protect the inheritance from external influences.

FIV: We also stand for names and who has what! Can you give us a small top 3 of the larger foundations?

Stephan: Let me think for a moment.

• There is the Körber Foundation, which I believe has a volume of around 600 million euros and was founded by Kurt A. Körber,
• There is the Robert Bosch Stiftung, founded by Robert Bosch and worth a few billion euros,
• Or the Quandt Foundation, which everyone knows BMW with a volume of around 1 billion euros, founded by Johanna and Susanne Klatten.

Family foundation explained: What is it?

FIV: What exactly is a family foundation and how does it differ from other foundations?

Stephan: A family foundation is a private foundation whose main purpose is to preserve the assets of a family over generations. In contrast to charitable foundations, which focus on the common good, family foundations focus on the protection and preservation of family assets such as real estate, companies or other investments. The highlight here is that the assets are transferred to the foundation and therefore legally belong to the foundation and no longer to the founder or descendants. This offers a number of advantages, such as protection against inheritance disputes or third-party access.

What are the benefits of a family foundation?

FIV: What are the specific benefits of a family foundation? What advantages can you expect from it?

Stephan: The biggest advantage is certainly the protection of family assets. Through the foundation, the assets remain bundled and cannot be split up or sold so easily, for example in the event of a divorce or inheritance disputes. There are also tax advantages. Income generated within the foundation is usually subject to a lower tax burden than private income. Gift and inheritance tax can also be legally minimized by setting up a family foundation.

Here again very briefly:

1. Protection of family assets from sale or inheritance disputes
2. Tax advantages due to lower tax burden
3. Minimization of gift and inheritance tax

Who establishes a family foundation?

FIV: Who does this? Is there a certain type of person or family for whom a family foundation is particularly worthwhile?

Stephan: Family foundations are particularly attractive for entrepreneurial families who want to keep their company in the family for generations, or for families with large real estate holdings. But wealthy private individuals who want to secure their capital and optimize it for tax purposes also use this option. The establishment of a family foundation often comes into play when assets exceed the limit of around 1 million euros – at this point it really is worth considering.

How can you set up a family foundation yourself?

FIV: If you want to set up a family foundation yourself, what are the first steps?

Stephan: The first step is to get comprehensive advice. There are many legal and tax aspects that need to be considered, and mistakes can be expensive. Basically, everything starts with drawing up a foundation charter that regulates the purpose of the foundation, the organization and the management of the assets. The foundation must then be registered with the relevant tax office and the foundation supervisory authority. It is also important to think about the composition of the foundation board, as this is responsible for the administration of the foundation.

FIV: Can real estate and assets also be transferred to a newly established foundation?

Stephan: Yes, that is possible, I have a great guide online, maybe you can link to it: Transferring real estate to foundations.

FIV: Thank you very much for the interview, Stephan! Is there anything else you would like to tell our readers about the family foundation?

Stephan: Yes, I would say: inform yourself well and get professional advice. A family foundation is a great instrument for protecting assets and saving taxes, but it needs to be well planned and carefully implemented. If you do it right, you can protect your family and your assets in the long term. May I give you two more link tips?

FIV: Yes, of course!

Stephan: If you want to know more about

1. Foundations in general, you can also visit the Federal Association of Foundations
2. Establish family foundations for real estate, please have a look at my website under foundation establishment
3. And now generally on Saving One about family foundations in Germany