Intra-Family Succession

Intra-family succession is the handover of a company to members of the owner's own family, such as children or grandchildren. It is one of three typical succession routes, alongside a transfer to employees and a sale to external buyers. Demographics are the main driver of succession demand, as many owners step down for age-related reasons while the pool of people in start-up age brackets shrinks. That a handover within the family cannot be taken for granted is due to changed life plans among the next generation, which often pursues its own careers, and to the plain question of suitability, since entrepreneurial leadership cannot be inherited.

The handover is usually structured as a gift or anticipated inheritance, which makes inheritance and gift tax and the relief rules for business assets an early item on the agenda. Provision for the retiring owner, compensation for siblings not taking over, the senior's role after the handover and whether leadership and ownership pass together or separately all need to be settled as well. Equal treatment of several children is often the hardest point, because the business is often the largest asset and compensation payments to siblings who step aside can burden the company. Where the family route fails, the path opens to external buyers, which makes this the first fork in any succession process.

Note: This explanation is for general information only and does not constitute tax advice. Tax treatment depends on the individual case and may change with new legislation. For a binding assessment, please consult a qualified tax adviser.