A family asset pool is defined as a family asset management company in which assets -frequently property, securities accounts and shareholdings in companies - are pooled specifically in order to manage estate planning. The advantages set out in the last edition of our magazine when taken together with the flexibility for structuring the company agreement mean that the family asset pool ranks among the attractive tax and civil law structuring instruments in terms of succession planning issues. Following on from this, we now discuss in detail the choice of the right legal form for the family asset pool. This constitutes a decision-making problem that needs to be solved by comparing the burdens that would be entailed.
Introduction to the choice of legal form for a family asset pool
Prior to selecting an appropriate legal form for a family asset pool company, it is imperative to compare the burdens that would be entailed. The following aspects will have a particularly important part to play here:
- the types of assets that the family’s wealth consists of or is intended to consist of (property, investments, equity interests, etc.),
- whether there is a large need for transactions or whether long-term investment is planned,
- the expectations as regards the rights of shareholders in respect of governance, control, and transparency,
- the degree of willingness to disclose, and
- whether under-age children should participate.
In practice, family asset pools are mostly established in the legal form of an (e)GbR ((registered) civil law partnership) or a KG (limited partnership). To begin with, however, a thorough review of the individual situation is required.
A short overview of the available choices of legal form
In the context of choosing a legal form, the following different types of companies can generally be considered.
1. (e)GbR
It is the simplest, swiftest, and most cost-effective type of family asset pool. It can be established through a simple company agreement, transfers of shares do not require a certain form, and it is not subject to any accounting or disclosure obligations under commercial or tax law. Taxation generally occurs via the cash basis method of accounting.
From a tax perspective, the GbR likewise provides advantages, since it can generate all types of income - in particular, even income from asset management, which is usually not subject to trade tax. Private assets can generally be contributed in a tax-neutral way. After ten years, tax-exempt property sales are possible - here, the periods of prior ownership are taken into account. Profits or losses are transparently allocated to the shareholders. In the case of purely family-owned companies, the transfer of property is frequently exempted from real estate transfer tax (transitional provision applies until 2026; new regulations remain to be seen).
Since 2024, a GbR has had to be entered into the Company Register when it acquires certain rights (eGbR) and this can lead to a slight increase in the administrative burden (more on the eGbR in a separate report planned for the May issue). Currently, the issue of whether an eGbR is still able to claim personal use [in order to terminate a tenancy] is the subject of dispute.
2. KG
The main difference compared to a GbR is the limitation of liability for limited partners. Consequently, a KG - especially if minors are supposed to participate - is frequently the better choice. Minors are able to participate as limited partners without far-reaching risks and with family court approval, which is generally easier to obtain.
A KG has to be entered into the Commercial Register, otherwise the same advantages and disadvantages apply as in the case of a GbR. From a tax perspective, a KG may likewise engage in asset management and is treated as fiscally transparent.
3. Asset management GmbH & Co. KG
If personal liability is to be completely excluded for all shareholders, then the company could be structured as a GmbH & Co. KG (limited partnership with a limited liability company as a general partner). In order for the company to continue to engage in asset management, another shareholder (not the GmbH) assumes management responsibilities. From a tax perspective, it - like a GbR and KG - would then be treated as fiscally transparent and generate income from asset management. Another advantage is that a GmbH & Co. KG can also be established by just one person.
4. A GmbH & Co. KG that is deemed to be of a commercial nature
If solely the GmbH or a non-participating person is appointed to the management, then the GmbH & Co. KG will be deemed to be of a commercial nature. Admittedly, the treatment under company and civil laws will remain unchanged, however, for tax purposes all income would be re-characterised as commercial income. This would only be a sensible course of action if the classification as a trade or business was deliberately intended or if business assets were exclusively contributed.
5. GmbH
A GmbH (limited liability company) is used less frequently as a family asset pool. It provides limitation of liability to the full extent, but always operates commercially for tax purposes and is subject to stricter requirements with respect to accounting, disclosure and auditing. The setting-up and operation give rise to significantly higher costs. From a tax perspective, this would only be a sensible course of action if the aim is to reinvest the profits back into the business over the long term (profit retention), e.g., in the case of expansive securities or equity strategies.
Opting for a legal form
Setting up a family asset pool usually involves the transfer of private assets. In an overall analysis, in most cases, the (e)GbR will be the appropriate structure here. However, when under-age children are to participate, then an asset-management KG would be suitable. Furthermore, if the aim is to achieve full limitation of liability, then it would be advisable to set up an asset-management GmbH & Co. KG. The GmbH & Co. KG that is deemed to be of a commercial nature as well as the GmbH should only be used in exceptional cases having particular characteristics.
In any case, in the run-up to opting for a legal form, it is essential to engage intensively with the question of which legal form would best meet the specific requirements.
Brief example B: Aged 80, married, two children, five grandchildren
In Example B, which is outlined here, (for Example A see the report in the March issue) it is assumed that the statutory property regime swing was applied (on the topic of tax optimisation by applying the statutory property regime swing see the report in the January 2025 issue) and that the accrued gains were equalised between the spouses - subsequently, a family eGbR was set up and the spouses contributed their let properties and liquid funds. Both spouses made gifts of shares in the company to the children and also to the grandchildren (generation leap) so that, in each case, it will be possible to utilise the tax allowances of both spouses for all the children and grandchildren.
The transfers were made subject to a right of usufruct in favour of the grandparents so that a regular income for living expenses remains ensured. Within the framework of estate governance (pooling agreement + will/execution of the will) it is ensured that, even after a death, no conflict-laden community of heirs can emerge and that the assets remain protected.
