The Estate Planning Imperative: Why the Acquisition Structure Determines the Succession Outcome
For ultra-high-net-worth families whose wealth includes significant luxury villa holdings, the intersection of property law, inheritance law, tax law, and family governance creates a complexity that demands specialist professional attention — not as a post-acquisition consideration but as a design criterion that should shape the ownership structure of every significant property acquisition from the moment of first commitment. The families who manage this complexity well preserve both the financial value and the emotional significance of their villa assets across generations. The families who manage it poorly — or who defer it until it becomes urgent — consistently find that the asset they built with such care and investment becomes a source of family conflict, unnecessary tax liability, and diminished financial return.
The forced heirship rules that characterise the legal systems of France, Italy, Spain, and Germany create a specific challenge for non-European villa owners who hold property in these jurisdictions. Under the EU Succession Regulation of 2015 — applicable across most EU member states — non-EU nationals who own property in an EU country can elect to have their estate governed by the law of their nationality rather than the law of the country where the property is situated. For Gulf, UK, and US nationals whose domestic succession law provides greater flexibility than the forced heirship requirements of French or Italian law, this election — which must be documented in a properly drafted will that specifically references the EU Regulation — can dramatically increase the family’s control over the distribution of villa assets on the primary owner’s death, preserving the ability to direct the property to the intended beneficiary rather than dividing it according to a formula imposed by the lex situs jurisdiction.
The Swiss Lex Koller framework creates an additional layer of succession complexity for foreign nationals who own Swiss luxury chalet property. Under Lex Koller, the inheritance of Swiss real estate by a non-Swiss national heir who does not themselves qualify for a purchase permit may require a forced disposal of the property — potentially at a price and timing that the family would not otherwise choose. The most experienced Swiss property advisors — including the private client teams at Wüest Partner and the real estate specialists at Bär & Karrer — design ownership structures that anticipate and address this risk from the outset of the acquisition process, ensuring that the family’s succession plan for the Swiss property is compatible with Lex Koller’s requirements at every stage of the intended holding period.
Trust and Foundation Structures: The Architecture of Multigenerational Villa Ownership
For ultra-high-net-worth families who intend their luxury villa holdings to remain in the family across multiple generations — functioning as family retreat assets, sources of rental income, and stores of long-term value — the trust or private foundation structure provides the most robust and flexible legal architecture available. These structures, properly designed and administered, can hold villa assets outside the taxable estates of individual family members, protect the properties from the claims of creditors, divorcing spouses, or legally mandated heirs, and provide a governance framework that manages the inherent complexity of shared family asset ownership across generations.
The Jersey or Guernsey discretionary trust — administered by a licensed trustee company under the supervision of the relevant Channel Islands regulatory authority — has long been the preferred vehicle for ultra-high-net-worth families from the UK, the Gulf, and Asia who wish to hold significant international luxury real estate outside the taxable estate of the primary wealth creator. The discretionary structure gives the trustee — who in practice acts on the legally non-binding guidance of a letter of wishes provided by the settlor — full flexibility to distribute income and capital to the family beneficiaries in the most advantageous manner as circumstances evolve, without fixing the distribution outcome at the point of the trust’s establishment. For villa assets that generate significant rental income — and whose management and enjoyment are shared among multiple family members with different tax residencies and different financial needs — this flexibility is invaluable.
The Liechtenstein Foundation — a legal entity with no equivalent in common law jurisdictions — has gained significant traction among European, Gulf, and Asian ultra-high-net-worth families as a vehicle for holding significant private real estate assets across generations. Unlike a trust, which creates a division between the legal ownership of assets (held by the trustee) and their beneficial ownership (held by the beneficiaries), the Foundation owns its assets in its own right — with no distinction between legal and beneficial title — and is governed by a foundation council whose membership and decision-making framework are defined in the Foundation Statutes at the point of establishment. For families who prefer the institutional clarity of a foundation structure over the trustee-beneficiary relationship of a trust, and for families in civil law jurisdictions who find the common law trust concept unfamiliar, the Liechtenstein Foundation provides an alternative that combines legal robustness with the governance flexibility that multigenerational villa ownership demands.
Family Governance and the Succession Conversation: The Human Dimension of Villa Inheritance
The legal and tax architecture of luxury villa succession planning is, ultimately, the technical expression of a set of human decisions that determine how a family intends to relate to its shared assets across generations. The families who navigate villa succession most successfully are those who combine rigorous professional planning with an equally rigorous process of family governance — creating shared understanding, shared expectations, and shared agreements about how the asset will be managed, who will have access to it, how operating costs will be shared, and under what circumstances it might be sold.
The family constitution — a non-legally-binding document that articulates the family’s values, governance principles, and expectations for shared asset management — has become an increasingly standard element of ultra-high-net-worth estate planning for families with significant luxury real estate holdings. Facilitated by specialist family governance advisors — including the private wealth practice at Withers, the family office consulting teams at BDO, and the dedicated family governance specialists at several leading private banks — the family constitution process brings all relevant family members into a structured conversation about the villa’s role in the family’s collective life: how decisions will be made, how disagreements will be resolved, how the asset’s management costs will be funded, and how the family’s relationship with the asset will evolve as the ownership transitions across generations.
The practical management of a shared family villa asset across a multigenerational ownership group requires, at minimum, a clearly defined usage allocation process, a professional property manager who is accountable to the family governance structure rather than to any individual family member, a dedicated maintenance and capital expenditure reserve fund, and an annual review process that assesses both the financial performance of the asset and the family’s collective satisfaction with its management. These operational foundations — often overlooked in the excitement of acquisition and the complexity of legal structuring — are ultimately what determine whether a luxury villa becomes the source of family unity and shared identity that its acquirers intended, or the source of conflict and financial dissipation that inadequate planning consistently produces.