Building up a property portfolio is one thing. Managing it effectively and transferring it to the next generation in a tax-efficient manner is another. Particularly where individual properties are highly valuable or a family owns a larger property portfolio, an unplanned transfer can create significant legal and financial risks. Establishing a family asset pool or family company can help to avoid these risks.
Contents
What is a family asset pool or family company?
Tax-efficient wealth transfers
The older generation can retain control
Profits from the family asset pool: can income tax be optimised?
How is a family asset pool or family company for property established?
Common legal forms for family asset pools: GbR, KG and GmbH
Advantages of a family asset pool
Recent case law: the BFH on the tax exemption for family homes held through a family asset pool
Making active use of the structuring options offered by a family company
What is a family asset pool or family company?
The terms family asset pool and family company are not defined by law. They generally refer to asset-holding companies through which a family pools and manages substantial assets, such as property or securities, often across several generations.
When structured correctly, such a company can facilitate the pooling, management and transfer of family wealth, including transfers made during a person’s lifetime as part of succession planning.
Tax-efficient wealth transfers
One of the main reasons for establishing a family asset pool or family company is to transfer assets to the next generation efficiently as part of lifetime succession planning.
However, establishing a family company does not automatically reduce tax. The company merely provides the legal framework through which available tax advantages can be used more easily and effectively.
A family asset pool makes it possible to transfer property assets gradually and subject to clearly defined rules, for example to children or grandchildren. Instead of transferring individual properties directly to children or grandchildren as joint owners by way of a gift or inheritance:
- the properties are first transferred to the family asset pool and
- specific shares in the company are then gifted or bequeathed to the children or grandchildren.
This makes it possible to use the children’s or grandchildren’s statutory inheritance and gift tax allowances in a controlled, individually tailored and potentially comprehensive manner.
Please note: For inheritance and gift tax purposes, the same tax allowances apply when shares in a family asset pool are transferred to spouses, children or grandchildren as would apply to the direct transfer of an ownership interest in a property.
The older generation can retain control
Unlike a direct transfer of property ownership, a family asset pool can allow the older generation to retain substantial or even controlling influence over the assets.
This may be achieved through voting rights, management powers and other provisions in the company’s articles of association or partnership agreement. Such arrangements are often legally advisable or necessary where minors or adult children with limited business experience are involved.
Where assets are to be transferred to minors or young adults for tax-planning purposes, a family asset pool can therefore provide a useful balance: tax allowances can be utilised while responsibility and control remain with the older generation.
Profits from the family asset pool: can income tax be optimised?
In addition to potential inheritance and gift tax advantages, a family asset pool may also help to optimise the income tax position of individual shareholders or partners.
Individually tailored profit-distribution arrangements can make it possible to take account of relevant income thresholds and progressive tax rates, thereby avoiding an unnecessarily high income tax burden.
How is a family asset pool or family company for property established?
A family asset pool is generally established in three stages.
1. Establishing the company
The first step is to establish a company. Asset-holding family companies are usually structured as partnerships, particularly a German civil-law partnership (Gesellschaft bürgerlichen Rechts, or GbR) or a limited partnership (Kommanditgesellschaft, or KG). However, a limited liability company (Gesellschaft mit beschränkter Haftung, or GmbH) may also be considered. The partnership agreement or articles of association clearly define the rights and obligations of the participating family members. Their respective roles will depend primarily on
- the chosen legal form,
- the age of the participating family members and
- the level of influence that each individual should retain.
The company is commonly established initially by only some of the family members, such as the parents. Shares are subsequently transferred to additional family members as part of the third stage.
2. Transferring the properties to the company
Once the company has been established, ownership of the properties is transferred to the company. In other words, the property assets are contributed to the company.
The family members hold shares or partnership interests in the company and therefore participate indirectly in the company’s assets. They do not, however, become direct co-owners of the individual properties.
3. Gifting shares in the company
Once the company has been established and the properties have been contributed, shares or partnership interests may be transferred to children or grandchildren.
They then become shareholders or partners and participate indirectly in the company’s assets in proportion to their respective interests.
Whether inheritance or gift tax arises depends on whether the value of the transferred interests exceeds the recipient’s individual inheritance or gift tax allowance.
Common legal forms for family asset pools: GbR, KG and GmbH
Three legal forms are particularly suitable for family asset pools:
- the civil-law partnership (GbR)
- the limited partnership (KG) and
- the limited liability company (GmbH).
Civil-law Partnership (“GbR”)
Of the available company forms, the GbR generally involves the lowest formation and administrative costs. It is also highly flexible and can be tailored closely to the family’s individual circumstances. A disadvantage is that all partners generally have unlimited personal liability. This can make the participation of minors legally complicated and, in many cases, impracticable.
Limited Partnership (Kommanditgesellschaft, “KG”)
The formation and administrative costs of a KG are also relatively low, particularly when compared with a GmbH. A key advantage over the GbR is that limited partners do not generally have unlimited liability for the company’s obligations. Unlike general partners, their liability is restricted to a specified amount.
Because the liability of individual partners can be limited, minors may be able to participate in a KG. In the special form of a GmbH & Co. KG, liability can even be limited for all partners. However, this structure requires a separate GmbH to be incorporated and included in the arrangement.
Limited Liability Company (“GmbH”)
As a corporation, a GmbH involves greater formation and administrative costs. Its principal advantage is that the liability of all shareholders is limited.
A GmbH may be suitable where the objective is to reduce the ongoing tax burden on income or profits. It can offer particular advantages where profits are retained within the company rather than distributed and the properties are intended to remain in the company on a long-term basis.
Potential disadvantages include taxation of latent gains when properties are sold or the company is dissolved, as well as potential German real estate transfer tax liabilities.
The most appropriate legal form, and the optimal corporate and tax structure, depend heavily on the family’s individual circumstances. Relevant factors include the ages of the parents, children and grandchildren and the level of control that individual family members should retain.
Advantages of a family asset pool
The principal advantage of a family asset pool does not lie in an immediate tax saving. Rather, it makes it possible to separate the transfer of ownership from the control and management of the property assets.
Its key advantages include the following:
Gradual and precise wealth transfers
Property assets can be transferred gradually and in amounts designed to make optimal use of the available tax allowances.
Clearly defined management and decision-making powers
The partnership agreement or articles of association can specify who manages the company, which decisions require the approval of particular family members, and how voting rights and profits are distributed.
Prevention of fragmentation of the property portfolio
The properties remain the property of the company. Only shares or partnership interests are transferred, while the company remains the legal owner of the properties.
Greater certainty when a family member leaves the company
Withdrawal, termination and compensation arrangements can be regulated in advance in the partnership agreement or articles of association.
Protection against transfers to third parties
Shares or partnership interests can be prevented from passing freely to outsiders if the governing agreement contains suitable restrictions.
Centralised property management
Particularly where a family owns several properties, tenancy agreements, renovation work, financing arrangements and distributions can be managed centrally through the company.
Protection in the event of inheritance or divorce
Succession clauses, restrictions on compensation payments, prohibitions on disposal and rights to reclaim transferred interests can help protect the properties in the event of inheritance disputes or divorce.
Recent case law: the BFH on the tax exemption for family homes held through a family asset pool
In 2025, the German Federal Fiscal Court (Bundesfinanzhof, or BFH) ruled on a case involving a married couple who had established a family company. Each spouse held a 50% interest in a GbR.
Before the company was established, the husband was the sole owner of the family home. He subsequently transferred the property to the GbR.
The issue before the court was whether the transfer qualified for an inheritance and gift tax exemption.
As a general rule, a lifetime transfer of a co-ownership interest in the family home between spouses can qualify for an exemption under section 13(1) no. 4a of the German Inheritance and Gift Tax Act (Erbschaftsteuer- und Schenkungsteuergesetz, or ErbStG). No gift tax is payable where the interest is transferred during the spouses’ lifetime without consideration.
But does the exemption also apply where the property is transferred to a jointly owned GbR? In this situation, the other spouse does not become a direct co-owner of the property but instead participates in it indirectly through the family asset pool.
The BFH held that the tax exemption may also apply where one spouse transfers the family home to a GbR without consideration and both spouses hold equal interests in that partnership.
BFH judgment of 4 June 2025, case no. II R 18/23 – originating proceedings before the Munich Fiscal Court.
Making active use of the structuring options offered by a family company
Families whose assets include several properties or a particularly valuable property, such as an apartment building, should consider whether establishing a family company or family asset pool would be appropriate.
Even where the company does not produce an immediate tax advantage, it can
- make the assets considerably easier to manage,
- facilitate the precise and controlled use of tax allowances during succession planning,
- simplify the transfer of assets to the next generation and
- help prevent a forced sale if disagreements arise between individual family members.
To obtain the greatest possible benefit from this type of structure, comprehensive legal and tax advice is essential when establishing the family asset pool.
The partnership agreement or articles of association, the agreement transferring the properties to the company and the agreements gifting the shares must all be tailored to the family’s individual assets, circumstances and succession objectives.
From a tax perspective, particular attention must be paid to
- the tax valuation of the properties contributed to the company and
- the precise calculation of the shares or partnership interests to be gifted.
Only careful planning and implementation can ensure that tax allowances are used effectively, unintended tax consequences are avoided and the legal and commercial advantages of the family asset pool are fully realised.
Do you have any questions about family asset pools or family companies?
Please feel free to get in touch. I would be pleased to answer your questions. Simply arrange an appointment using the booking options shown alongside.
Yours sincerely,
Nicolai Utz
Your ACCONSIS contact
Nicolai Utz
Lawyer
Specialist lawyer for inheritance law
Managing Director of ACCONSIS
Service phone
+49 89 547143
or via email
n.utz@acconsis.de
Frequently asked questions
What is a family asset pool for property?
A family asset pool is an asset-holding company through which a family pools its property assets.
The company is the legal owner of the properties, while individual family members hold individually defined shares or partnership interests in the company. This structure can make the property portfolio easier to manage and simplify its transfer to children or grandchildren.
How can a family asset pool reduce inheritance and gift tax?
Establishing a family asset pool does not in itself save tax. When shares or partnership interests in the family company are transferred to children, the same inheritance and gift tax allowances are generally available as would apply to the direct transfer of an ownership interest in a property.
The advantage of the family asset pool is that these allowances can be used strategically on an ongoing basis, generally at ten-year intervals, while subsequent transfers of shares or partnership interests are considerably easier to implement.
Can a family asset pool also reduce the income tax burden?
In the case of a partnership, profits generated by the GbR or KG, for example rental income, are attributed to the individual partners.
Where profits are distributed among several family members whose personal tax rates differ, carefully drafted profit-allocation provisions in the partnership agreement may make it possible to use the progressive income tax system more efficiently.
In the case of a GmbH, tax advantages may arise in particular where profits are retained within the company and the company does not intend to sell the properties.
Which legal form is best for a family company holding property?
Family asset pools are commonly established as a GbR or KG.
A GbR is flexible and comparatively inexpensive to establish. However, the partners generally have personal liability, which can be problematic where minor children or grandchildren are to participate.
A KG allows management powers and capital participation to be separated more clearly. This can be a significant advantage, particularly where minors are involved.
