What is a Family Inheritance Agreement and What is its Purpose:

Family Inheritance Agreement is a key legal tool designed to ensure continuity in business
management by:

• Identifying one or more of the entrepreneur’s descendants who are deemed suitable to
  manage the business;
• Transferring the company to them, or if the business is structured as a corporation,
  transferring ownership shares;
• Settling the financial claims of any legal heirs who are not assigned the business or its
  shares.

Family Inheritance Agreement: the Parties Involved

The rules governing the Family Inheritance Agreement explicitly state that the parties must
include the entrepreneur, the descendants to whom they intend to transfer the family business,
as well as the spouse and all other individuals who would be considered legal heirs if the
entrepreneur’s succession were to open at that time

Key Characteristics

The Family Inheritance Agreement must be executed as a public deed in the presence of a
notary, and all legal heirs must participate.

The agreement requires that the beneficiaries who are assigned the company or its corporate
shares compensate the other participants with a sum equivalent to the value of the shares
reserved for the legal heirs. This compensation is mandatory unless the legal heirs voluntarily
choose to waive it in part or in full.

It is also possible for the other participants to be compensated with assets rather than money.

What are the advantages? The main benefits are: Economic benefits, peace of mind for the entrepreneur and continuity in the governance of the business

What role does a wealth advisor play? What is the Role of the Financial Advisor? In this context, financial advisors act as a pivot.
Their role is to explore all the explicit and unstated needs of the project and, if necessary,
connect the entrepreneur and their family with an accountant and a notary who can help finalize
the agreement.

Family Inheritance Agreement, an Example:

Let’s consider the case of an entrepreneur with three descendants, only one of whom is suitable
to manage the business. Since this individual is the only one with the vision to ensure the
business’s continuity, the business can be protected through a Family Inheritance Agreement.
This prevents the family from being forced to close the business, allowing it to continue
operating and providing returns.

To achieve this, the financial advisor can assist with transferring a portion of the investment
portfolio as compensation to the other heirs. The advisor can also connect all parties with the
necessary legal professionals to formalize the agreement