AUSTRIA Law and Practice Contributed by: Clemens Philipp Schindler and Katharina Schindler, Schindler Attorneys
However, legal entities may act as settlors of an Austrian private foundation, in which case the right to amend the foundation documents may maintain as long as the legal entity exists (some uncertainties remain in cases where the shares in such entities are transferred). The use of a legal entity to act as a co- settlor of a private foundation has become a common legal instrument in estate planning.
effect, unlike wills) often used in relation to family- owned companies, such contracts are only available between spouses in Austria. 4.3 Transfer of Partial Interest Generally, no adjustment or discount of the fair market value applies in the transfer of parts of assets. In the case of a donation inter vivos, no gift tax applies and the donee may carry forward the acquisition costs of the donor. The most common reasons for wealth disputes and family disputes are divorce, inheritance, disagree - ments regarding the strategic direction of family busi - nesses, and insufficient corporate and estate planning structures. Such disputes lead to corporate or succession liti - gation proceedings that may trigger disproportion - al damages for family businesses. Mediation has become more and more important in such situations. Family constitutions, shareholder agreements and clear assignment of power in family companies may also help to avoid long and costly litigation proceed - ings. 5.2 Mechanism for Compensation The task in solving compensation claims is to find a way to compensate without jeopardising the contin - ued existence of a family business. The establishment of a foundation may be a suitable solution. 5. Wealth Disputes 5.1 Trends Driving Disputes 6. Roles and Responsibilities of Fiduciaries 6.1 Prevalence of Corporate Fiduciaries Corporate fiduciaries are not common in Austria. 6.2 Fiduciary Liabilities Board members of corporations or private foundations managing third-party assets are subject to a higher standard of conduct. A violation of professional care and duty obligations may lead to the board members
4. Family Business Planning 4.1 Asset Protection
The most popular legal options for asset protection include corporate structures in combination with shareholder agreements, private foundations and, to some extent, prenuptial and postnuptial agreements. In particular, private foundations can be a useful option to protect wealth from inheritance disputes (eg, forced heirship claims) and also from creditors of the next generation. According to Austrian private foundation law, the private foundation becomes the owner of the endowed assets. Claims of beneficiaries against the private foundation may be barred in the foundation’s documents. In addition, qualified board members of a private foundation appointed by the settlor may ensure that family assets are preserved. 4.2 Succession Planning A common way to retain influence over assets is to transfer them inter vivos but to agree the right to usu - fruct. This can be applied to companies as well as real estate. The prohibition of sale and encumbrance is commonly used in the course of transferring real estate between family members. The transfer of shares in a company can also be restricted. Structured wills including the establishment of an executor of the last will in combination with resolving conditions to prevent the violation of the testator’s will are common tools for prolonging influence and preserving wealth after death. Generally, the executor of the last will does not have such a strong position as in other jurisdictions, such as Germany. Similarly, while German inheritance law has a broader scope of inheritance contracts (which have a binding
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