JUVE Law Firm of the year

Company Succession and Trusts

Squabbling over inheritance tax keeps boom alive

All things come to an end – apart from the wrangling over inheritance tax. This was the impression given by the battle over the reform demanded by the Federal Constitutional Court (Bundesverfassungsgericht). That was until things went too far for the Karlsruhe judges and they ultimately intervened, taking the case back upon themselves. With the current tax exemptions for bequeathed companies having been largely declared unconstitutional, legislators were given until June 30, 2016 to come up with new rules. Although the Bundestag (the German Federal Parliament) passed the planned law at the last minute, the Bundesrat (the German Federal Assembly) put a spanner in the works and referred the draft to the Bundestag and Bundesrat mediation committee for renegotiation.

Even before this, law firms and their clients had been exploring the matter in depth to see whether in this case the old regulations would continue to apply, combined with severe restrictions to the disadvantage of company heirs, or whether the old regulations would no longer be valid. In the end, 2016 looked a lot like 2015 for advisors – only with more last minute panic in view of the expected law. Transfers under the old law continued to boom as they had the previous year, with many owners racing to pass on their companies to young family members or trusts in order to take full advantage of the old regulations while they still could.

It was a similar story with regard to the amendment to the Cultural Goods Protection Act – another source of many a heated debate. Art collectors feared a drop in their assets’ values with the plans to introduce a license for exporting art more than 75 years old and worth at least €300,000 to other European countries. But the law came into force as planned on August 1.

Complexity in advice calls for more structures from firms

These uncertainties surrounding the amended laws and the resulting boom in demand for advice should lead to more (large) firms systematically entering the field of company succession and trusts in the future, all the more so as the wealth of high-net-worth individuals (HNWI) and ultra-high-net-worth individuals (UHNWI) continues to grow, and with it the issues and possibilities for managing and increasing this wealth.

Behind the market leaders Flick Gocke Schaumburg and P+P Pöllath + Partners, above all CMS Hasche Sigle and Gleiss Lutz have become pioneers for a systematic approach in recent years, offering their clients tailor-made private client advice spanning numerous practice groups. Rödl & Partner followed suit by consolidating its competencies, and Oppenhoff & Partner is devoting more attention to this specialist field.

High demand for firms with international experience

At the same time, more advice will be sought in the years ahead from firms well versed internationally, one reason being the growing internationalization within the younger generation of HNWIs. Advice on cross-border relocation is increasingly turning into mobility advice, which offers solutions going beyond the previous tax-based approach. One firm that was able to put its global contacts to better use was DLA Piper; this has long been a major strength of Freshfields Bruckhaus Deringer.



Substantial private wealth often arises from succession planning in family businesses (incl. corporate sales) for owners who are high-net-worth individuals (HNWIs) or ultra-high-net-worth individuals (UHNWIs, with assets over €100m). These assets must be structured, reinvested, assured and passed on – often using trust solutions. Company succession teams at more and more firms are advising high-net-worth private clients (such as managers and athletes) concerning the professional environment; this is only mentioned in this chapter as an additional competence. ?Tax law (incl. tax litigation, operational and fiscal advice) remains essential, but so do ?corporate and transactions ( ?M&A, ?private equity), inheritance, family, art and trust law, as well as the execution of wills.

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