‘These are the richest Germans’ manager magazin has published a ranking of the assets of the 500 richest Germans and their families. The current list of Germany's top wealth holders also provides an insight into the preferred methods of wealth management. Particularly noteworthy: 65 of the families listed use family foundations to secure their assets in the long term and preserve their values over generations.

Why do wealthy families rely on foundations?

Foundations offer high net worth individuals a unique opportunity to manage their assets in a secure and organised way. The focus is not only on the financial aspect, but also on preserving family values and traditions. A foundation makes it possible to keep assets in a fixed structure that makes it difficult for third parties - whether creditors or unwanted heirs - to access them.

The advantages of family foundations are obvious:

1. Long-term asset protection: Foundations are designed to preserve assets in the long term. They ensure that assets cannot be divided up or sold, but remain within the foundation. For family businesses in particular, this is a popular method of keeping the company in the family for generations to come. They have neither shareholders nor members and are therefore particularly good for asset protection.
2. Avoidance of inheritance disputes: A foundation can avoid the division of family wealth between different family strands and establish clear rules for the use of assets and the role of family members. This prevents lengthy and costly inheritance disputes and ensures family peace.
3. Tax advantages: In addition to asset protection, setting up a foundation also offers tax advantages. It is true that the establishment of a foundation triggers gift tax and a substitute inheritance tax is payable every 30 years. However, these circumstances can be planned and therefore optimised. Even charitable foundations (§§ 51 ff. German Tax Code) are permitted to use up to one third of the foundation's funds for the benefit of the family, so that public and private benefit aspects can be skilfully combined.
4. Less state supervision: in some federal states, family foundations are subject to less state supervision

Foundation or other structure? An individual analysis is crucial

Whether a foundation is the right solution or whether another structure, such as a family holding company, is more suitable depends on many factors - from the amount of assets to the type of assets and the family's long-term goals. International aspects also play a role in the decision, for example if assets are held abroad. Different countries also compete for the largest assets in foundation law, and the ‘Liechtenstein family foundation’ in particular has become a household name.

Structured wealth planning as the key to long-term success

The current ranking of the 500 richest Germans shows: Those who take care to structure their assets in a well thought-out way at an early stage have the best chance of preserving them in the long term and utilising them in line with their own values. A foundation can be an important instrument here, but it must be embedded in an overarching strategy. It is best to take a holistic approach to succession in your own company and to providing for your family.

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