Asset protection through real estate transfer to a foundation – Transferring real estate to a foundation also provides an effective asset protection mechanism. By transferring your real estate to a trust, it is legally separated from your personal assets. This protects them from potential creditors or other financial risks. A family trust can thus be a valuable security measure to protect your real estate assets from unforeseen events and ensure your family’s long-term financial stability.
Transfer real estate: example including foundation
Transferring a property to a family foundation in Germany can be a complex process involving legal and tax aspects. It is advisable to seek advice from an experienced lawyer or tax advisor to ensure that all legal requirements are met.
Please note that this is only a general overview and the exact steps and requirements may vary depending on the individual situation and the applicable laws in Germany. Therefore, it is important to seek advice from foundation experts to ensure a smooth and legally sound transfer.
How do I transfer a property to a foundation?
Basically, there are several steps that should be followed when transferring a property to a family foundation:
The right setup of your foundation: preparation
If you don’t already own a family foundation, you need the right setup first.
Establishment of the family foundation
First, a family foundation must be established. This requires the creation of a foundation deed, which defines the purposes of the foundation, the beneficiaries and other relevant details.
Selection of the property
The property to be transferred to the family foundation must be selected. Make sure the transfer is compatible with the goals and purposes of the foundation. A family foundation often aims to preserve assets for generations. Therefore, the property selected should provide long-term stability. Factors such as location, sustainability of the real estate market, and potential performance are important to ensure the long-term preservation of the asset’s value.
Valuation of the property
The property should be appraised by an independent appraiser to determine the current market value. This is important for tax purposes and to ensure that the transfer is made on reasonable terms.
Transfer agreement – step 1
A transfer agreement must be drawn up between the previous owner and the family foundation. This contract regulates the transfer of the real estate and all associated conditions. In terms of its structure, it will certainly remind you of a typical contract of sale of a property.
Structure of the transfer agreement: example
The contract should begin with an introduction identifying the parties to the contract. Here, the previous owner (seller) and the family foundation (acquirer) are named.
- Description of the property
- Purchase price or transfer conditions
- Delivery and transfer of ownership
- Warranties and liability, other conditions
- Consents and approvals
- Place of jurisdiction and arbitration agreement
Description of the property
Describe the property accurately to avoid misunderstandings. This includes details such as address, land register number and a precise description of the premises.
Purchase price or transfer conditions
The contract should specify the purchase price or the conditions for the transfer of the property. This can be, for example, a fixed purchase price, a symbolic amount or other agreed consideration.
Delivery and transfer of ownership
The time and method of transfer of the property should be specified in the contract. This includes the transfer of title, handover of keys and all relevant documents.
Warranties and liability
The contract may contain provisions on warranties and liability. For example, the seller may provide warranties about the condition of the property or exclude certain defects. Limitations or exclusions of liability can also be agreed.
The contract may contain further conditions and provisions governing the rights and obligations of both parties. This may include, for example, provisions on ancillary costs, maintenance, rights of use or similar.
Consents and approvals
If certain consents or approvals are required for the transfer (e.g. consent of co-owners, consent of banks), these should be recorded in the contract. The contract may contain provisions for termination, e.g., in the event of non-fulfillment of the terms of the contract or other agreed circumstances.
Place of jurisdiction and arbitration agreement
The contract may contain a choice of court or arbitration agreement to determine which court or arbitration tribunal has jurisdiction in the event of a dispute.
The contract should be signed by both parties to ensure its validity. It may also be necessary for witnesses or notaries to certify the signatures.
Registration in the land register – step 2
Check tax and legal aspects – Step 3
Transferring a property to a family foundation can have tax implications. A tax expert / foundation expert can help you develop the best tax strategies and file the necessary tax returns.
An attorney should oversee the entire transfer process to ensure that all legal requirements are met and that there are no legal risks.
With my experts you will establish your company safely and with all tax advantages.