Trusts for entrepreneurial families

The unique challenges of entrepreneurial families

Families that have built their wealth around one or more businesses face unique challenges that conventional estate structures struggle to address. Value is often concentrated in illiquid assets, the boundary between personal and business wealth is blurred, and the generational transition can threaten both the family and the enterprise.

A trust offers a comprehensive solution to these challenges by creating a legal framework that separates ownership from management, protects participations against the personal risks of shareholders and organises the generational transition in an orderly manner.

Separating ownership from management: the key to longevity

One of the principal strengths of a trust for entrepreneurial families lies in its ability to separate asset ownership from operational management. This separation offers several advantages:

• Business continuity: the trust holds the participations in a stable manner, independently of personal events affecting family members (death, divorce, incapacity). The business can continue to operate without disruption.
• Meritocracy in management: the operational leadership of the business can be entrusted to the most capable family members or to professional managers, without calling ownership into question.
• Conflict prevention: governance rules defined in the trust deed and the family charter frame decisions relating to the business and reduce sources of conflict between family branches.
• Creditor protection: participations held by an irrevocable trust are protected against the personal creditors of family members.

Structures suited to entrepreneurial families

The optimal structure depends on the nature of the business, the composition of the family and long-term objectives. Several approaches are commonly used:

• Holding trust: the trust holds a holding company that in turn holds the operating participations. This two-tier structure provides flexibility and protection while simplifying governance.
• Trust with Private Trust Company (PTC): the PTC acts as trustee with a board of directors that includes family members. This structure is particularly suited to substantial estates where the family wishes to remain involved in strategic decisions.
• Multiple trusts: for families with several branches or several businesses, creating separate trusts allows governance and distribution rules to be tailored to each situation.

Preparing the generational transition

The transition from one generation to the next is the most critical moment for a family business. Without adequate preparation, it can lead to destructive conflicts, a loss of managerial competence or a forced sale of the business.

A trust enables this transition to be planned by defining in advance the rules for management succession, eligibility criteria for leadership positions and buyout mechanisms for members wishing to disengage. The trustee, as an independent administrator, ensures the impartial implementation of these provisions.

Swiss Trustee's expertise for entrepreneurial families

Our team has deep experience in structuring trusts for families with businesses across a variety of sectors: industry, real estate, trading, professional services and technology. We work in close collaboration with the family's legal and tax advisers to design structures that respect operational realities while ensuring the protection and longevity of the family estate.