Gift of shareholdings
Simple, and exempt if the conditions are met, but it remains open to action by the forced heirs for the period set by law.
Individuals · Family business
Business succession planning
The worst time to organise the handover of a business is when it has already become necessary. The tools exist and some are very effective, but they take time, agreement between the people involved and conditions that have to be kept up for years.
01 · Why it matters
What happens without planning
When the business owner dies, the business is divided among all the heirs according to the shares set by law, regardless of who works in it and who is capable of running it. This is the point at which many family businesses come to a halt.
- Joint ownership of the estate among several heirs (comunione ereditaria) means every decision needs agreement.
- The legittimari (forced heirs) are entitled to a share that cannot be ignored.
- Those who worked in the business and those who never did find themselves on an equal footing.
- Inheritance taxes have to be paid even if the business does not generate cash.
- Conflict between heirs immediately affects relations with banks and trading partners.
- The declaration of succession has deadlines that do not wait for agreements.
The quota di legittima (the reserved share for forced heirs) is the constraint no tool can ignore: the spouse, the children and, if there are none, the parents are entitled to part of the estate, and provisions that encroach on it can be challenged. Every serious plan starts from there.
02 · The dedicated tool
The patto di famiglia (family business pact)
This is the contract designed specifically for the purpose: it allows the business owner to transfer the business or shareholdings to one or more descendants, with the participation of all the forced heirs.
Who takes part
The business owner, the descendants receiving the business and everyone who would be a forced heir if the succession opened at that moment.
Paying out the others
The recipients pay the other forced heirs the value of their shares, in cash or in kind, unless they waive it.
Stability
What is received is not subject to collation (being brought into account) or to a reduction action: this is the decisive advantage over a gift.
Form
A public deed before a notary, or the pact is void.
Why it is more solid than a gift
This is the difference that really counts.
- A gift can be challenged by the forced heirs for twenty years
- A family business pact cannot, because the forced heirs took part
- The business transferred can therefore be sold and financed
- In return, everyone must consent: that is the real obstacle
03 · The tax advantage
Exemption from inheritance and gift tax
The transfer of businesses and shareholdings to descendants or to the spouse can be exempt from tax, when specific conditions are met.
- The transfer must be made to descendants or the spouse.
- For shareholdings in companies limited by shares, the recipient must acquire or add to control.
- The recipients must continue the business or hold control for a minimum period set by law.
- The commitment must be stated expressly in the deed or in the declaration of succession.
- Failing to comply means losing the exemption, with the tax recovered together with a penalty and interest.
- The exemption applies to succession, to a gift and to the family business pact.
The commitment to continue is a real constraint, not a formality: selling the shareholding before the minimum period ends means losing the exemption, with the tax recovered in full. It has to be weighed before the transaction is set up, not when an offer arrives.
04 · The alternatives
The other tools available
The family business pact is not the only route, and it is often combined with other tools.
Family holding company
It brings the shareholdings together and allows shares to be transferred gradually, separating ownership from governance. See holding company.
Trust
It ring-fences assets for named beneficiaries, with a settlor, a trustee and written rules. It has its own tax treatment and must be built with care.
Will
It directs who receives what, while respecting the reserved shares. It does not resolve conflicts, but it channels them.
Shareholders' agreements
They govern decision-making, exits and pre-emption rights between the future shareholders, before the handover takes place.
Insurance policies and financial instruments
They serve to create the cash needed to pay out the forced heirs who do not receive the business.
05 · The complex tool
When a trust makes sense
It is the most flexible tool and the most delicate: it allows ownership of assets to be separated from their enjoyment, according to rules written by the settlor.
- The settlor transfers assets to the trustee, who manages them for the beneficiaries.
- A trust deed is needed, setting out purpose, duration, powers and rules of distribution.
- The protector, where there is one, oversees the trustee's actions.
- The tax treatment depends on the type of trust and on when the beneficiaries acquire their entitlement.
- A sham trust, in which the settlor in fact keeps control, is disregarded.
- It cannot be used to put assets beyond the reach of creditors: the azione revocatoria (clawback action) remains available.
A trust works when the settlor genuinely gives up the assets: they must really lose control of them. Trusts in which the settlor remains the true owner in all but name are treated as shams and disregarded, with the income attributed to the settlor and every ring-fencing effect lost.
06 · The path
How to approach business succession
The technical part comes last. The decisions come first, and they take time.
- Understand who wants what: who intends to carry on in the business, who would rather be paid out, who does not know yet.
- Value the business on defensible criteria: without a shared value, no agreement is possible.
- Check the cash needed to pay out those who do not carry on.
- Choose the tool according to the agreements reached, not the other way round.
- Prepare governance for afterwards: who decides, with what majorities, how people can exit.
- Allow time: a well-planned handover is built over years, not months.
The most frequent mistake is to start from the tool ("let's set up a trust", "let's set up a holding company") before understanding what the people involved want. The right tool emerges from the agreements; imposed beforehand, it gets in their way.
Frequently asked
The questions that keep coming up
Can I leave the business only to the child who works in it?
With the family business pact, yes, and that is exactly its purpose: the business goes to the recipient, who pays the other forced heirs the value of their shares, unless they waive it.
With a simple will or a gift, on the other hand, the other forced heirs can take action to claim their share, making the allocation unstable for years.
Is tax payable on transferring the business?
It can be exempt, if the transfer is made to descendants or the spouse and the recipients undertake to continue the business or keep control for the minimum period required.
The commitment must be stated expressly in the deed or in the declaration of succession. Breaching it means losing the exemption, with the tax recovered in full together with a penalty and interest.
Does a trust protect me from creditors?
Not from existing ones. A trust set up when the debts already exist can be attacked with the clawback action and, in the most serious cases, can also have criminal implications.
It does, however, have a legitimate role in protecting and organising assets when it is set up while solvent, for genuine purposes and with the settlor actually giving up control.
When should I start thinking about it?
Long before you need to. A well-built handover to the next generation takes years: understanding what each person intends, valuing the business, creating the cash for the payouts, preparing those who stay.
Those who think about it only once the need has arrived nearly always find only fallback solutions, which cost more and are less stable.
Let's talk
A business that passes on without agreements gets divided, and often comes to a halt
The real work is not the deed: it is getting the people to agree beforehand. The deed comes afterwards, and it is the easy part.