ITALY: Of ownership, stewardship and purpose in family businesses—the role of foundations (and trusts)

Abstract This article explores the challenges of succession into family businesses, particularly in Italy, where over 70% fail to survive the second generation. It highlights the effects of two alternative approaches: a tactical one, focusing on immediate transfer and tax optimization, and a strategic one, prioritizing the purpose of long-term continuity. The importance of “stewardship” and “purpose” in family businesses is emphasized. Foundations and trusts are the legal tools to dedicate assets to a purpose so that they can engrave upon ownership the features of stewardship. They can functionalize property rights to ensure the continuity and growth of the business as well as the prosperity of the family, reduce family conflicts and promote the coordination of family and business toward a common purpose, but they should not serve as a means to impose the will of the deceased one ‘beyond the grave’.