Many different reasons to establish a foundation
Reasons for establishing a foundation are as varied as the people who wish to found them. Specialists in charitable-organizations law must, therefore, be prepared to offer custom-tailored advice. "Off the rack" solutions are rarely useful. A foundation can, for instance, serve to preserve the family's wealth as a unified whole, thus avoiding a fragmentation of the wealth among heirs. A foundation can also serve to provide for family members long-term, or to permanently preserve the founders' business enterprise even if suitable successors cannot be found within the family. The foundation can also serve the community's welfare by pursuing charitable goals. Finally, the name of a foundation can assure that the founder's name will last long after his or her death.

Business Succession: Double-foundation models
If a businessperson is motivated by the goal of solving succession problems, the establishment of a foundation can offer an appropriate solution. The advantages: The business is guaranteed to continue, since foundations are legal constructs that are generally presumed to last indefinitely. Hostile takeovers by competitors are impossible, since the foundation has no shareholders, therefore preventing a third party from acquiring a majority position. As the saying goes: A foundation belongs to itself.

Of course, a sound business-succession model requires more than the mere establishment of a foundation. A foundation is not a panacea for all succession problems. Without capable leadership, no succession model can be successful. However, the foundation option can provide the proper form for a succession solution. Double-foundation models often make sense. In double-foundation models, a charitable foundation holds the overwhelming majority of the working capital, and a second foundation, usually a family foundation, holds a majority of the voting rights and, in some cases, a majority of the profit-participation rights. This model both realizes the tax advantages and provides for close relatives. In cases in which no suitable successor is present among the founder's children, but one does appear among the grandchildren, much more complex foundation structures may be needed.

Private wealth succession
Private wealth succession - that is, the transfer of assets which do not represent a share of a business (stocks, funds, similar securities, cash, real-estate, etc.) - can be managed with foundation-based solutions. Establishment of a foundation is usually in order when no heirs are present. Other considerations are frequently to pursue good works after the founder's death and to remain "present". Even when heirs exist, many financially successful private persons still consider establishing a foundation. Generally, the foundation bears the name of the founder's family. Thus, they discreetly follow the old saying: "Do good and let it be known".

Inheritance-law questions always relevant
Whatever the founder's motivation, questions of inheritance law must always be considered when establishing a foundation. The most important issue is ensuring that when the founder dies, the foundation is not confronted with compulsory inheritance claims or other inheritance-related compensation claims that may arise under German law, and that the foundation may not be able to meet. Thus, early action is required in such cases. One solution may be to agree on waivers of compulsory-inheritance rights.