Family holding company: separating family wealth from business risk

The concrete problem

This is the most frequent enquiry in the practice and it almost always arrives phrased the same way: the family wants a bad year in the business not to take the house with it. The answer does not start by picking a vehicle. It starts by establishing where each asset sits today, who answers for which obligation, and what it would take to move whatever is worth moving. Only then does talking about structures make sense.

The limit we put in writing

A reorganisation carried out when a debt, a claim or an insolvency is already under way protects nothing, and can turn into an additional problem for the family and for whoever signs. This work is done before, not after. When a case arrives late we say so plainly and set out what can still be done, which is usually a different conversation.

The vehicles and what each one does

No structure is better than another in the abstract. We explain what each figure does, what obligations it creates, what it costs to maintain and what consequences it carries in the specific case, so the decision is taken with that information in view rather than on a generic recommendation.

• Holding or family company. Choice of corporate form, definition of the corporate purpose, management rules and dividend policy.
• Commercial trust, or fiducia mercantil. As a vehicle for managing assets or dedicating them to a defined purpose under the Commercial Code, with its costs and its reporting obligations.
• Usufruct and bare ownership. To separate the income from an asset from title to it, typically where ownership is to be transferred without losing the income.
• Contributions in kind. Of real estate or shareholdings, with their tax, registry and notarial effects.
• Bylaw provisions. Transfer rules, pre-emption rights and conditions for admitting third parties, so that a single sale does not undo the structure.

How we decide the structure

• We start from the inventory. If there is none, we build it first: nothing can be designed without knowing whose name each asset is in.
• We measure the cost of moving. Transferring an asset has tax, registry and timing consequences. Sometimes the cost of the transfer exceeds the benefit of the protection, and that has to be said.
• We compare alternatives. We present the viable options with their legal, tax and governance effects, including the administrative burden of maintaining each one.
• Tax reading in parallel. The analysis is run together with our tax practice, with the fiscal consequences on the table rather than afterwards. We do not propose structures whose only purpose is to reduce a tax, and we warn in writing when an option creates exposure before the tax administration.
• Implementation. We draft bylaws and contracts and coordinate the procedures with notaries, chambers of commerce, land registries and trust companies until the structure is up and running.

What the client receives

• A written document with the viable alternatives, the recommended one, its grounds and its caveats.
• The estimated cost of implementing each alternative and the cost of maintaining it year on year.
• The instruments drafted and signed: bylaws, minutes, contribution agreements, the trust agreement or the relevant transfer deeds.
• Support with the registry procedures until the structure is filed and operating.
• A later review, because structures age: families, assets and rules all change.

Who this is for

• Business families who want to separate family wealth from the operating risk of the business.
• Partners about to bring the next generation, or a third party, into the ownership and who need a vehicle that allows it.
• Groups with a structure built years ago that needs an outside review.
• Individuals whose assets, built across several businesses, are now mixed inside a single company.