Family Office: Protect and Transfer Business Wealth Across Generations

A family office is a private advisory structure that coordinates the management, protection, and inter-generational transfer of the wealth held by a business-owning family, integrating tax planning, legal structuring, investment management, succession planning, and governance advisory into a single framework. In Spain, family wealth management intersects multiple tax regimes: Corporate Income Tax (LIS) and Wealth Tax (IP/ITSGF) on the holding structure, Personal Income Tax (LIRPF) on distributions, and Inheritance and Gift Tax (ISD) on transfers — where Article 20.2.c LISD provides a reduction of up to 95% on the taxable base for transfers of qualifying family business interests, subject to maintaining the conditions for five years post-transfer. Family holding companies (sociedades holding familiares) are the most common structural vehicle, providing participation exemption on dividends under Article 21 LIS, asset protection, and a cleaner architecture for succession planning.

Business-owning families face singular challenges that private banking alone is not equipped to resolve: the separation of personal and business wealth, managing inter-generational interests and conflicts, tax optimisation of holding structures, and succession planning in its legal, fiscal, and emotional dimensions.

Why Business Families Need a Professional Structure to Protect and Transmit Their Wealth

Business-owning families accumulate wealth through decades of entrepreneurial effort, yet rarely have the professional structures needed to protect and transmit it. Wealth concentrated in operating companies carries concentration risk and generates annual wealth tax exposure. Holding structures that were never properly designed produce unnecessary tax leakage on dividend flows. Succession has not been planned, meaning that a founder’s death or incapacity triggers family conflict, inheritance tax bills that force asset sales, and uncertainty about business continuity — all simultaneously. No single adviser has ever looked at the complete picture. Our family office service is built precisely to fill that gap — a single point of coordination across tax, legal, finance, real estate, and private banking, with continuity of knowledge about the family’s full situation.

Our Family Wealth Diagnostic and Family Office Structuring Process

The engagement begins with a comprehensive wealth diagnostic: mapping the full family balance sheet, identifying structural inefficiencies, and quantifying the tax cost of the current arrangement against optimised alternatives. This diagnostic frequently reveals that the family business exemption for Inheritance and Gift Tax is not being fully maintained — either because the qualifying conditions were never formally verified, or because they have been inadvertently eroded as the founder’s active involvement changed. We then design and implement the recommended structure — holding companies, family investment vehicles, succession plans — and develop the family protocol that articulates governance rules across generations. The protocol covers admission of family members to the business, remuneration of active and passive shareholders, dividend policy, and exit mechanisms for those who do not wish to continue. The succession planning and tax planning teams work in close coordination to ensure legal structure and tax optimisation are designed as a coherent whole.

Real Results in Family Office: Tax Efficiency and Generational Continuity

• Comprehensive wealth diagnostic with full family balance sheet mapping and tax cost quantification of current vs optimised structure.
• Holding company design and implementation: participation exemption on dividends, asset protection, and family business exemption maintenance for ISD purposes.
• Family protocol drafted and formalised: admission rules, remuneration, dividend policy, and exit mechanisms agreed in writing before conflict arises.
• Succession plan integrating legal structure, tax efficiency, and family consensus — the generational transfer becomes a managed transition, not an existential risk.
• Next-generation onboarding programme: financial education, governance training, and structured involvement pathways that prepare heirs to take on responsibilities.

Family wealth management in Spain sits at the intersection of Corporate Income Tax (LIS), Personal Income Tax (LIRPF), Wealth Tax (IP/ITSGF), and Inheritance and Gift Tax (ISD). The family business exemption under Article 20.2.c ISD can reduce ISD by up to 95% on qualifying family business transfers — but requires active maintenance of qualifying conditions for five years post-transfer. Anti-avoidance rules in the LGT and LIS restrict the use of purely interposing holding structures without genuine economic substance. For families with international connections, EU and OECD rules on cross-border estate planning and exchange of information create additional complexity requiring specialised advisory. Our wealth tax specialists ensure that the IP and ITSGF dimensions of the family structure are managed alongside the ISD and corporate tax dimensions.

The family office model: structures and services

A family office is a professional structure dedicated to managing the financial affairs, investments, legal obligations, and administrative requirements of a wealthy family or individual. The model originated among the ultra-high-net-worth families of 19th-century America but has become the dominant wealth management approach for families with significant assets — typically above EUR 5 million in investable assets — across Europe and Spain.

The distinction between a single family office (SFO) and a multi-family office (MFO) is significant. An SFO is dedicated exclusively to one family and requires sufficient assets (typically EUR 30-50 million or above) to justify the fixed cost of dedicated professional staff. An MFO, by contrast, provides family office services to multiple client families through a shared cost structure — which is the model BMC employs for most of our family office clients in Spain, the Canary Islands, and internationally.

Investment advisory and portfolio management

At the core of family office services is investment management: constructing and maintaining a portfolio of financial assets (listed equities, bonds, funds), alternative investments (private equity, real estate, infrastructure), and direct business holdings that meets the family’s return objectives and risk tolerance over a long-term horizon.

Our investment advisory does not compete with private banks or asset managers — we work alongside them, acting as an independent investment controller and adviser. Our role is to provide independent oversight of investment performance, manage the relationship with multiple investment providers, and ensure that the overall portfolio is coherently structured rather than being the accidental accumulation of individual products sold by various institutions.

For families with direct business holdings, we integrate corporate finance and valuations advisory to ensure that private company assets are assessed on a comparable basis to market-priced financial assets.

Tax and fiscal planning for wealthy families

Wealthy families face a specific tax planning challenge: the intersection of personal income tax (IRPF), Wealth Tax (IP), Inheritance and Gift Tax (ISD), and corporate taxation of holding structures creates a multi-dimensional optimisation problem that requires coordinated advice from specialists across all dimensions.

In Spain, the specific fiscal geography — the Comunidad de Madrid offers a 100% IP exemption; the País Vasco and Navarra apply their own foral regimes; the Canary Islands’ ZEC offers IS advantages — means that residency and asset location decisions have material and permanent fiscal consequences. Our wealth tax and inheritance tax teams work closely with our family office advisers to ensure that structure decisions are always made with a full understanding of the long-term fiscal consequences.

For international families, non-resident tax advisory and treaty planning are central to the family office engagement — particularly for clients who split time between Spain and other countries and must manage the risk of inadvertent Spanish tax residency or double taxation.

Succession and governance

One of the most important and underserved aspects of family wealth management is the transition of control and ownership from one generation to the next. Without a formal succession structure — a succession plan, a family protocol, and the institutional governance mechanisms to implement it — even well-constructed wealth structures can be damaged by the conflicts and inefficiencies that arise when family members have incompatible expectations about ownership, management roles, and distributions.

Our succession planning and corporate governance teams provide the institutional design work that underpins effective multi-generational wealth transfer. This includes family constitution design, family assembly and family council structures, and the legal documentation (wills, shareholder agreements, usufruct arrangements) needed to implement the agreed succession plan.

Contact our family office team for a confidential discussion of your family’s wealth management and succession planning needs.