Family Deed | It is common in these times to hear about “family shareholder agreements” or “family deed”.
And the natural question that many of us ask ourselves is what exactly is this?
I would summarize it in the following:
They are the rules that regulate the behavior and decision-making of the members of a family regarding the assets and estate of the family business.
The main purpose is that this legacy is managed in an orderly and efficient manner so it can grow and last for generations.
“Ultra-high net worth grandfather, millionaire father, poor grandson” – Unknown
When is the best time to start a family deed?
There is no bad or wrong time to start.
But without a doubt, the determining factor in how easy or difficult the process can be is the family’s willingness to accept the development process and its implementation.
How to start and with whom?
As I have already mentioned in previous articles.
Each family is a different universe, with particular characteristics and needs, which is why the key.
Once the decision is made to start the process, is to have the support of an expert from start to finish.
This person should have the necessary experience, skill, and capacity to select and combine the perfect team of specialists in different fields.
From lawyers, and financial counselors, to family counselors if necessary.
So that they can help identify the exact and real needs that your family has.
And thus be able to design a family deed, tailored-made that works and is possible to execute over time.
What role does executability play?
This verb comes from the Latin word “execution” and it plays a stellar role.
In fact, it should always be the cardinal point that guides the process of designing the family deed, always applying the principle of “the power of simplicity”.
As often trying to be very sophisticated, we tend to design guidelines that on paper look very good, but that over time are not executable.
This results in a waste of time, and money and generates problems instead of solutions.
To conclude, we are living through times of change that bring great opportunities for those family businesses that are well organized.
This is why the question that I would recommend asking ourselves is:
Are we prepared?
How is the family deed constituted?
The family patrimony is constituted by means of a public deed, which generally, voluntarily, due to the decision made by fathers and mothers to protect their home from third parties who may request an embargo.
Who can constitute a family estate?
The family patrimony is constituted by any person who is the sole owner of a property, that is, it is not possible to build a family patrimony on a property owned by two or more people.
Among the people who can constitute a family estate, we have the spouses or any person who has minor relatives within the second degree of consanguinity (siblings and grandchildren).
In favor of whom can a family estate be constituted?
The family estate is constituted to protect the family, therefore, the beneficiaries of this figure cannot be more than the members of the family of the person who constitutes the family estate.
Can I sell a property with family heritage?
The figure of the family patrimony prevents the seizure, but not the sale, however, before making the sale, the family patrimony must first be canceled, and if there are minors involved, it is necessary to have judicial authorization for said cancellation, as already was exposed.
In summary, a property with family assets cannot be sold until the family assets are canceled or extinguished.
According to economipedia
Estate planning is the development of a comprehensive plan in which all of an individual’s financial goals are determined. In it, the best-coordinated strategies are selected and executed to achieve these objectives.
The main objective of estate planning is to achieve a balance between future resources and future needs. To carry out good asset management, it is first necessary to have carried out good asset planning.
Areas of estate planning
It is a service that includes:
– Estate planning.
– Tax planning.
– Real estate planning.
– Succession planning.
Aspects to consider in estate planning
Typically estate planning begins with an account of the current financial situation and continues with a forecast of future income, expenses, and risks. That is why we try to estimate:
– Current income level.
– Forecast of future current income.
– Forecast of future current expenses.
– Forecast of extraordinary expenses.
– Saving capacity.
– Retirement contributions.
– Contributions to health insurance (social security, private insurance, etc.).
Based on all these data, savings guidelines are established to cover retirement and other various risks, such as possible discontinuity at work.
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