Family Wealth Planning: Ensuring the preservation and proper transfer of family wealth is a central concern for every responsible asset manager and family head. In Hungary, several options are available for family wealth planning, including a will, a foundation, and trust administration, each serving as effective tools. But which is the best choice for you and your family?
Will: The Classic Solution
A will is one of the most well-known and widely used instruments in estate planning. It allows the asset owner to specify who should inherit which assets after their death.
Advantages:
– A simple and cost-effective solution.
– Can be flexibly changed during the owner’s lifetime.
– Allows precise determination of inheritance shares.
Disadvantages:
– The probate process can be lengthy and costly, involving estate proceedings and associated fees.
– Disputes among heirs are common.
– Does not offer protection against the fragmentation of assets.
Foundation: Serving Long-Term Goals
If a form of asset management aims to support not only inheritance but also specific long-term objectives, establishing a foundation may be the right choice. A family foundation can preserve wealth for a specific purpose across generations.
Advantages:
– Protects assets from individual interests.
– Can provide a favorable tax environment.
– Can support family members or charitable causes.
Disadvantages:
– Higher establishment costs and administrative effort.
– Less flexibility compared to trust administration.
– Subject to external controls and regulations.
Trust Administration: A Flexible and Effective Solution
Trust administration is a relatively new legal institution in Hungary, offering the possibility to separate and professionally manage assets. With this instrument, the asset owner (settlor) transfers management to a trustee, who manages it for the benefit of the beneficiaries.
Advantages:
– A flexible and customizable solution.
– Assets can be protected from creditors.
– Provides a long-term and secure solution for inheritance and asset management issues.
Disadvantages:
– Requires expert assistance during setup.
– Can be more expensive than a will.
– Not all asset types are easily managed in this form.
Which Solution to Choose?
The choice of the appropriate instrument for family wealth planning always depends on the individual’s life situation, asset structure, and family dynamics. If you seek a simple and cost-effective solution, a will might be the right choice. If you aim for long-term objectives, a foundation could be suitable. If you prefer flexibility and asset protection, consider trust administration.
If uncertain about the best solution for your family, it is advisable to seek professional advice. Consulting experts in wealth planning can help secure your family’s future and ensure effective asset management.
Dr. Katona Géza, LL.M. ügyvéd (Rechtsanwalt / attorney at law)
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Katona és Társai Ügyvédi Társulás
(Katona & Partner Rechtsanwaltssozietät / Attorneys’ Association)
H-106 Budapest, Tündérfürt utca 4.
Tel.: +36 1 225 25 30
Mobil: + 36 70 344 0388
Fax: +36 1 700 27 57
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Meta Description: Explore effective strategies for family wealth planning in Hungary, including the use of wills, foundations, and trust administration, to ensure the secure transfer and management of your family’s assets.