Information about the three entities to consider.

Holding

Estate management and asset protection.

A family holding company is an LLC (SARL) or a limited partnership that’s established to hold assets for the benefit of family members.

A family holding company is a powerful financial structure that allows families to manage their wealth and business interests collectively.

This type of organization owns controlling stakes in various subsidiaries, providing a centralized approach to asset management and investment strategies.

What is the purpose of a Family Holding Company?

Family holding companies offer numerous benefits, including enhanced control over family assets, streamlined wealth transfer, and potential tax advantages.

One goal of this structure is to ensure that assets can be shifted out of your estate and into the hands of future generations or trusts for their benefit. Instead of transferring an asset directly into the hands of the next generation, you can combine family-owned assets into the family holding company and use it as a centralized way of managing the family’s wealth. Then you can transfer shares or a percentage interest in the family holding company that owns the assets to the next generation or trusts for their benefit.

Benefits

Improved Cooperation. A family holding company brings about family cooperation through managing your assets together in the most efficient way possible.

Another significant benefit of owning the assets in a properly structured family holding company is that in many states, your creditors will not be able to force the holding company to liquidate its assets or make distributions to you if they have obtained a court judgment against you or other members of the holding company.

SOURCE: https://www.offshore-protection.com/family-holding-company

Purpose:

Holding Company: A holding company is a business entity created primarily to own and manage investments in other companies, assets, or securities. Its main purpose is to hold, control, and manage these investments, and it usually does not engage in the production, distribution, or sale of products or services directly.

Business Activities:

Holding Company: The primary activities of a holding company include acquiring, managing, and divesting ownership stakes in other companies, and collecting dividends or capital gains from these investments. A holding company may provide support services like management, financial, or legal guidance to its subsidiaries, but it generally does not engage in direct business operations.

Structure:

Holding Company: A holding company may own shares in multiple subsidiary companies, each operating independently or as part of a larger corporate structure. The holding company may also have an ownership stake in other holding companies.

Liability:

Holding Company: By separating the holding company from its operational subsidiaries, the holding company can often limit its liability exposure. If a subsidiary faces legal or financial issues, the holding company's assets may be protected from these liabilities, depending on the jurisdiction and corporate structure.

Financial Performance:

Holding Company: The financial performance of a holding company is primarily derived from the performance of its subsidiary companies and investments. The holding company's revenues usually come from dividends, interest, and capital gains from its holdings.

Operational

The “real” business

An operating company is responsible for the day-to-day management of the business.

It is often the subsidiary of the holding company.

A holding company owns a company’s assets (such as intellectual property, stock and equipment used by the operating company, real estate).

Purpose:

Operational Company: An operational company, also known as an operating company, is a business entity that actively participates in the production, distribution, or sale of goods and services. It is involved in the day-to-day operations and management of its business.

Business Activities:

Operational Company: An operational company's activities encompass a wide range of functions related to the production and delivery of goods and services. This includes marketing, sales, research and development, manufacturing, and customer service, among others.

Structure:

Operational Company: An operational company typically has its own organizational structure and management team, focused on executing the company's business strategy and operations.

Liability:

Operational Company: An operational company is directly responsible for its actions and the consequences thereof. This means that it may be held liable for any legal or financial issues that arise from its operations.

Financial Performance:

Operational Company: The financial performance of an operational company is determined by its success in generating revenues from its core business activities, such as selling products or services

Family Trust

Legacy and Future Generations

Trusts are used to manage estate taxes, shelter assets from creditors and pass on wealth to future generations. A family trust is a specific type of trust that families can use to create a financial legacy for years to come.

A family trust ensures that your assets are managed according to your wishes on behalf of your beneficiaries.

At the core of a family trust, there are three parties: a grantor, a trustee and the beneficiaries. The grantor is the person who makes the trust and transfers their assets into it. The trustee is the person who manages the assets in the trust on behalf of the beneficiaries. The beneficiaries are the individuals who receive some type of financial benefit from the trust, similar to a beneficiary for a life insurance policy.

As you might expect, a family trust lists your family members as the beneficiaries. That means your children, grandchildren, siblings, aunts and uncles, cousins or any other family members can be a beneficiary. Family trusts can also include spouses.