Russia Introduces Posthumous Wealth Management Laws for Business Continuity
Russia has introduced new laws to manage wealth posthumously, with inheritance and mutual funds allowing business continuity and protecting assets. These funds, introduced in 2018 and 2021 respectively, aim to prevent family disputes from collapsing businesses, as seen in cases like Natura Siberica and Sibantracit.
To establish an inheritance fund, an individual must record their decision in a will, submit relevant documents to a notary, and indicate beneficiaries and management conditions. After the owner's death, the notary creates the fund, and assets are transferred to it. Beneficiaries receive payments but cannot divide the company or sell assets. To protect beneficiaries, a differentiated structure of the inheritance fund's organs can be used, with oversight bodies having the power to remove executives if necessary.
Creating a personal fund requires transferring property worth at least 100 million rubles, targeting wealthy and very wealthy Russians. These funds can exist after the founder's death, addressing the posthumous tool limitation. However, the lack of direct economic benefits, such as tax incentives, may hinder their adoption. Controversial aspects include the absolute immunity of the fund's property from creditors' claims and the complex procedure for establishing a posthumous inheritance fund.
While these funds offer posthumous wealth management and business continuity, they also present challenges. Experts like Igor Rents have identified critical areas, including protecting beneficiaries from management abuse, sale or pledge restrictions, creditor immunity, and establishing fund procedures. Authorities hope these funds will prevent family feuds from collapsing businesses, but their success depends on addressing these issues and encouraging adoption through incentives.
