Right to a compulsory portion
There are various legal obstacles on the path to business succession. One of the biggest hurdles is the right to a compulsory share.
The challenge
A family-held firm may make up most of the family assets. You would like to pass on assets, treating heirs equally, and observing compulsory portion rights. This may prove difficult. The transfer to a successor leads to considerable compensation payments to the other heirs. The financial means are often lacking to settle such claims.
Under current law, compulsory portion claims are generally due immediately. When companies are taken over, this often leads to liquidity bottlenecks.
Assets attributable to the compulsory legal share must be unencumbered, unconditional and easy to sell. According to the “bien aisément négociable” doctrine, minority interests may not be allocated.
Planning options
In principle, a prenuptial agreement, an inheritance contract or a will are possible planning instruments.
Marriage contract
For example, a company (including its income) may be allocated to an entrepreneurial spouse as personal property. This increases the entrepreneur’s estate.
Last will and testament
An entrepreneur may assign the company to a descendant. A business owner may give his or her heirs instructions concerning the division, determine a favorable accepted value and appoint an executor. The company shall continue until the division of the estate.
Inheritance contract
The company is often the main asset. Who wants to be the successor? Will some heirs renounce their hereditary rights? What will they receive in return?
Or should a successor be allocated a majority share and the other heirs a minority share? The latter have rights. These can be set out in a shareholder pooling agreement. In addition, the “biens aisément négociables doctrine” must be observed.
Conclusion
Start planning in good time. Involve all heirs.