Source: STEP Journal
Milan Sivý TEP and Jiří Pokorný discuss the increasing prevalence of family foundations in Czechia and their key advantages over trusts as succession planning structures.
The Czech Republic pioneered asset management structures within the European Union. The Civil Code, effective from 2014, adopted the Quebec fiducie model, in Czech svěřenský fond (the Czech trust), as a continental equivalent to the Anglo-Saxon trust. This instrument has since become widely used for private asset management and succession planning.
However, other estate planning vehicles enabled by the Civil Code, notably family foundations and establishments, have remained less prominent. Czech legal subjects may choose from multiple institutional succession planning options. Family foundations have recently experienced significant growth due to their advantages for founders and families, warranting closer examination.
Under Czech law, a foundation is a legal entity constituted by assets allocated for a specific purpose. Czech law distinguishes between foundations and endowment funds. For simplicity, this article refers to the common characteristics of both, and both are referred to as foundations. Unlike corporations, the property element prevails over the personal, ensuring autonomous and continuous management.
Foundations have a centuries-long history in the Czech Republic (at least since 1811, in the case of charitable foundations) and are not, in essence, a new legal tool unknown to the general public. However, the general public usually associates foundations with public benefit activities rather than with the management of private or family assets.
In a family foundation, the founder establishes the foundation by allocating assets and setting its purpose and rules (generally, to support the founder and their family and to manage family assets). The board of directors serves as the governing body. A supervisory board or protector provides oversight.
Family foundations initially remained overshadowed by Czech trusts, which gained popularity through the public trust register, [1] favourable tax treatment and media attention.[2] From 2014 to 2025, Czech private trusts reached 5,259.[3] During the same period, 374 family foundations were established.[4] Notably, family foundation registrations have increased annually since 2020.
Despite initially receiving less media attention, family foundations have been analysed in Czech professional literature since 2014, when the new regulation on family foundations came into effect. Through advisor education and growing client awareness, family foundations are establishing their role in asset protection and succession planning. Key advantages over Czech trusts include:
Czech family foundations are not yet widely known to the general public, but they are increasingly finding their place in the Czech market. For clients with assets located in continental law jurisdictions, family foundations offer a more recognised, efficient and secure structure of asset management. A similar trend of growth can be observed in German-speaking countries and, in recent years, also in Poland.
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[1] Czech foundations are also subject to a public register.
[2] Similar rules apply to family foundations, as well.
[3] The total number of trusts (not only private ones) for the same period is 5,279. The data is based on publicly available sources.
[4] The total number of foundations (not only private or family ones) for the same period is 1,683 (in the foundation register, including foundations established before 2014, the total is 3,185).
