How can private wealth be protected in good time? An overview of corporate structures, private foundations, advance planning and liability risks.
Read articleIn Austria, there are only a limited number of ways to protect private wealth against third-party claims in good time:
Real estate can be protected against third-party claims by restrictions on encumbrance and disposal, at least during the beneficiaries’ lifetimes. Such restrictions may, however, only be granted in favour of close relatives who are natural persons. Other options include granting a right of residence or a building right.
As a general rule, company shares cannot be protected against enforcement against private assets. The company agreement should nevertheless be carefully structured, transfers of shares made subject to consent, and appropriate rights to acquire shares agreed.
A holding structure should be standard practice, particularly to allocate operating risks to subsidiaries.
A private foundation is currently the only means of protecting private wealth across generations. If the foundation documents are properly structured, access to the founder’s assets and rights is effectively excluded.
Establishing a Liechtenstein private foundation is also a very effective means of protection, particularly in light of the planned legislative changes concerning Austrian private foundations. We offer this service in cooperation with lawyers in Liechtenstein.
It should be expressly noted that transactions intended to prejudice creditors may be challenged for up to 10 years, and that transferring assets may have criminal-law implications, particularly where enforcement is already foreseeable or pending. It is therefore essential to establish appropriate business and private structures in good time and obtain professional advice.
It generally also makes sense to diversify assets across business interests, real estate, precious metals and investment portfolios, whether actively managed or held with private banks.
Before assuming an office such as managing director, management board member, supervisory board member or member of a foundation’s management board, it is strongly advisable to arrange D&O insurance.
Finally, arrangements should be made in good time for any future loss of legal capacity. Appropriate powers of attorney, including advance powers of attorney, and a will should be prepared, together with an advance healthcare directive where appropriate.
We provide comprehensive advice in cooperation with tax and business advisers. Further information is available in our section on Wealth, Real Estate & Succession. We would be pleased to assist you with an initial legal assessment.
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