ITALY Law and Practice Contributed by: Paolo Ludovici and Andrea Mirabella, Gatti, Pavesi, Bianchi, Ludovici
expected to be involved in the short to medium term and their interest in being involved in the management of the family’s key assets. Generally, the decision-making process concerning which strategy to adopt requires a series of steps which can be summarised as follows: • mapping family wealth; • identifying and focusing on goals; • preserving generational continuity (or selling the family business to enter into new industries); and • evaluation of potentially applicable solution(s). From a mere asset protection perspective, the Italian Civil Code provides some instruments to achieve the interests of the family and the achievement of worthy purposes, such as: • Patrimonial fund ( fondo patrimoniale ) – a special estate and property fund can be created by the spouses (or civil union partners) to cover the needs of their family (or of the civil union). Spouses (or civil union partners) cannot dispose of the assets in the fund in a way that conflicts with the family purposes to which they are bound, and creditors cannot seize the assets in the fund for debts they knew were incurred for purposes unrelated to fam - ily interests. • Destination bond ( vincolo di destinazione ) – certain registered movable and immovable assets may be allocated, for a span of time not exceeding 90 years or the life of the beneficiary individual, for the accomplishment of a goal that is considered worthy by the law. Through the establishment of the destination bond, the assets placed therein can be seized only for satisfying the debts incurred for the accomplishment of said goal. The creditors of the settlor have no access to such assets and they are not included in the community property of the married couples. Corporate vehicles may also be used to achieve asset protection objectives. Setting up a simple partnership ( società semplice ) is a common way to hold financial and immovable assets. Assets held by the partner - ship are not seizable by the partners’ creditors. The creditor may: (i) enforce his/her rights to the profits
payable to the shareholders; or (ii) demand liquida - tion of the shareholders’ shares if the debtor’s other assets are insufficient. There is no obligation to keep accounting or administrative records, nor records of any shareholder agreements. It is possible to provide administrative rights that are not proportional to eco - nomic rights. 4.2 Succession Planning The key to successful estate planning lies in combin - ing the opportunities offered by civil and tax law with a long-term perspective. Instruments used for succession purposes under civil law include: • The family pact (see 2.6 Transfer of Assets: Vehi- cle and Planning Mechanisms ). • Corporate vehicles – setting up a holding company may be a way to remove any conflicts between heirs from the operating companies, shifting them to another layer. The structure of the holding com - pany enables the determination of rules of govern - ance of the family estate, through which it is possi - ble to distinguish between powers of management and enjoyment of economic rights. Moreover, through the gift of bare ownership (see 2.6 Transfer of Assets: Vehicle and Planning Mechanisms ), it is possible for the usufruct holder to retain control of administrative and economic rights by anticipating the transfer of share ownership. From a tax perspective, the legislation offers support for generational transitions from both an income tax and an inheritance and gift tax perspective. For exam - ple: • Income tax – neutrality regime for contributions of shareholdings for setting up family holding compa - nies (see 1.3 Income Tax Planning ); and • Inheritance and gift tax – exemption for transfers of businesses and shareholdings – also through a family pact – to spouse and descendants (see 1.2 Exemptions ). 4.3 Transfer of Partial Interest The transfer of shareholdings is subject to registra - tion tax in a fixed amount (EUR200) and stamp duty
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