Generational transfer of wealth and succession planning

The conversation that gets postponed

Generational transfer is put off because it touches two uncomfortable subjects at once: death and money. The cost of postponing it is paid by the next generation, who inherit a company with no rules, shareholdings allocated by statute and a probate process that can drag on while the business needs decisions. This work is about arriving before that.

What the law allows and what it does not

Freedom to dispose of an estate is not absolute. The Civil Code reserves a portion of the inheritance for forced heirs, and that limit conditions any planning. We explain it at the outset, because many of the ideas that arrive at the first meeting, especially those aimed at leaving an heir out, do not hold up and only create future litigation. Our job is to state clearly how much room actually exists and what can be built inside it.

How the transfer is made

• Gradual entry into ownership. Planning how and when the next generation comes in, and in what proportion, instead of a single handover.
• Gifts, transfers and contributions. Documenting transfers between family members, with their supporting papers and their traceability.
• Usufruct and bare ownership. To transfer title while the older generation keeps the income for as long as it needs it.
• Wills. Reviewing the existing one or drafting the missing one, and checking it against the corporate structure and against what has already been transferred in life.
• Agreements among heirs. Rules set in advance on what happens to a stake when the moment comes.

Separating ownership, governance and management

Inheriting shares should not automatically mean running the company. Distinguishing between owning, taking part in strategic decisions and holding an executive role resolves much of the conflict seen in second and third generations. We document that separation in the bylaws and the agreements, so that those who will not manage the business still hold clear economic and information rights.

When to start

There is no perfect moment, but there are clear signals: when the older generation begins to delegate, when a child joins the company, when a health problem appears, when a significant asset is sold or when a shareholder moves abroad. Any of those changes the picture and calls for the plan to be revisited, or built if it does not yet exist.

The tax reading

Every transfer of wealth has tax consequences, starting with the occasional gains tax that applies to inheritances, legacies and gifts, and continuing through income tax, wealth tax and local taxes on real estate. That analysis is run together with our tax practice, before execution rather than after. We warn in writing when an option creates exposure before the tax administration.

When probate is already under way

Not every case arrives in time. Once there has been a death the work changes: it becomes a matter of sorting out the shareholding inside the probate process, whether before a notary or a court, and of coordinating the division of assets with what the company needs in order to keep operating. It also means anticipating where disagreement among heirs will surface and resolving it before it reaches a courtroom. If the dispute is already before a judge or an arbitral tribunal, it continues with our litigation and arbitration practices.

What the client receives

• A document with the transfer plan: what passes, to whom, when and through which instrument.
• Warnings about the legal limits of the plan and about the points an heir could challenge.
• The instruments drafted and signed: deeds, minutes, transfer agreements, bylaw amendments or a will.
• Coordination of the procedures before notaries, chambers of commerce and land registries.
• An analysis of the tax consequences of each alternative, produced before the decision rather than after it.