You’ve built the business. Now you want your children to benefit from it without handing them control before they’re ready.
That is the central challenge in business succession. Transferring wealth is relatively straightforward. Transferring it at the right time, with clear rules and appropriate tax planning, takes more thought.
It helps to treat succession as a new venture. It needs seed capital, a sensible ownership structure, governance and vesting-style controls. The next generation should have the opportunity to build wealth, but responsibility and decision-making power should develop in stages.
For many business owners comparing an Irish family partnership vs trust, the best answer may not be one or the other. A carefully planned combination of bare trusts, a family partnership and growth shares can separate three things that are often confused:
- Who benefits economically
- Who holds legal title
- Who controls important decisions
That separation can allow you to start transferring future value without giving up control of the business today.
Bare trust age 18 Ireland: what actually happens?
A bare trust is one of the simplest ways to hold an asset for a child.
The trustee holds legal title, but the child has a fixed and absolute beneficial entitlement. In plain terms, the asset belongs to the child. The trustee looks after it because the child is not yet legally able to do so.
There is an important distinction here. The child’s beneficial ownership does not normally begin at 18. It arises when the bare trust is established and the asset is placed in it. Revenue’s treatment reflects this: for Capital Gains Tax purposes, property held by a bare trustee is generally treated as if it were vested directly in the beneficiary, including where the beneficiary is a minor. Revenue’s guidance on interests in trusts explains this approach.
What changes at 18 is control.
Ireland’s age of majority is 18. Once the beneficiary becomes an adult, they can generally require the trustee to transfer legal title to them. The trustee cannot simply decide that the beneficiary is too young, financially inexperienced or not yet ready for the responsibility. The legal age is set by the Age of Majority Act 1985.
That can create an “age 18 cliff”.
A bare trust may work well for a defined sum intended for education, a house deposit or another clear purpose. It can be less comfortable where the trust holds valuable company shares, investment assets or an interest in the family business.
At 18, the beneficiary may be able to:
- Take legal ownership of the asset
- Exercise the voting rights attached to shares
- Sell or transfer the asset, subject to any valid restrictions
- Receive income and sale proceeds directly
- Make decisions that do not align with the family’s succession plan
The child may be highly capable. The difficulty is that the structure leaves little room to recognise that different people become ready at different times.
What a family partnership changes
A family partnership adds a governance layer.
It is not a special tax exemption or a way to continue treating an adult child’s property as if it still belonged to the parents. It is a partnership governed by a detailed agreement setting out how assets, profits and decisions are managed.
The partnership agreement can address matters such as:
- Who manages the partnership
- Which decisions require unanimous or enhanced approval
- How profits and capital are distributed
- When a family member can become involved in management
- Restrictions on transferring or charging a partnership interest
- What happens following death, incapacity, divorce or bankruptcy
- How disagreements are resolved
- Whether family members must meet experience or training requirements before taking a management role
The default rights and duties under partnership law can be varied by agreement between the partners. Section 19 of the Partnership Act 1890 expressly recognises that flexibility.
The partnership agreement must do the real work. Without carefully drafted provisions, default partnership rules may produce results that the family never intended.
A family partnership also has to be respected as a genuine legal and commercial arrangement. Managing partners must follow the agreement and comply with their duties. Parents cannot treat assets that belong economically to their children as a personal reserve fund.
Irish family partnership vs trust: the practical difference
| Question | Bare trust | Family partnership |
|---|---|---|
| Who owns the economic benefit? | The named beneficiary | The partners according to their partnership interests |
| Who manages the asset? | The trustee while the beneficiary is a minor | The person or group appointed under the partnership agreement |
| What happens at 18? | The beneficiary can generally require legal title and control | A child may receive or take title to a partnership interest, but the partnership agreement can continue to govern management, transfers and access to underlying assets |
| Can control be staged? | Very limited scope once the beneficiary is an adult | Yes, if the agreement contains clear governance provisions |
| Is the structure tax-transparent? | Generally, the beneficiary is treated as the beneficial owner | Broadly, partners are taxed by reference to their shares of partnership income, gains and assets |
| Best suited to | Simple, fixed gifts where outright control at 18 is acceptable | Family wealth or business interests requiring long-term governance |
Revenue generally treats partners as beneficially entitled to fractional shares of partnership assets for Capital Gains Tax purposes. A partnership is therefore not a tax-free holding box. Transfers into, within or out of the structure must be reviewed carefully. Revenue’s guidance on the taxation of partnerships sets out this transparent treatment.
Growth shares for children in Ireland
Growth shares can provide the economic bridge between a bare trust and a family partnership.
Growth shares are a separate class of company shares that usually participate only in value created above a specified threshold, known as the hurdle.
For example, assume a family company is independently valued at €10 million. A new class of growth shares might participate only in value above that €10 million hurdle. If the company later sells for €16 million, the growth shares participate in an agreed portion of the additional €6 million.
The parents’ existing shares retain the value already built. They may also retain voting and management rights. The next generation receives an interest in future growth at a much lower entry value.
This is the succession equivalent of giving the next generation founder equity in a new venture:
- The current company value is the founders’ existing capital.
- The growth shares are the next generation’s seed equity.
- The company’s constitution and shareholders’ agreement are the cap table rules.
- The family partnership agreement supplies the governance.
- Management responsibility develops in stages rather than arriving on one birthday.
Revenue describes growth shares as a special class of ordinary shares that generally has a low or nil value until a business hurdle is reached. It also stresses that unquoted shares must be properly valued by reference to the business, its assets, profitability and prospects. The label “growth share” does not make a share valueless. Revenue’s growth share guidance is clear that valuation records must support the figure used.
Growth shares can therefore ring-fence the value built by the parents while directing an agreed share of future growth to the children. They do not eliminate tax, guarantee a nominal valuation or automatically preserve control. The rights attached to each share class must support the intended outcome.
How the structures can work together
An illustrative structure might operate as follows.
1. Establish the current value
The business is independently valued. This valuation supports the hurdle above which the growth shares will participate.
The valuation must reflect more than the balance sheet. Revenue’s rules for private company shares can take account of family holdings, voting rights, dividend rights, nominee arrangements and trust interests. Minority discounts cannot be assumed simply because shares have been divided among relatives. Revenue’s CAT valuation guidance explains how control and class rights can affect value.
2. Create the growth share class
The company’s constitution is amended to define the growth shares’ economic, voting and transfer rights.
The parents might retain voting shares and the value attributable to the business at the date of the restructuring. The growth shares participate in an agreed proportion of later value.
Existing shareholders’ agreements, bank facilities, investor rights and regulatory requirements must also be checked.
3. Introduce the next generation
Growth shares, or interests connected to them, can be introduced for the children while their entry value remains comparatively low.
Where a child is under 18, a bare trustee may hold the relevant interest. The child receives the economic benefit, but the trustee deals with the legal administration during the child’s minority.
The transfer or issue must still be valued correctly. Any difference between the consideration paid and market value may have tax consequences.
4. Use the family partnership for governance
The growth shares may be held as partnership assets, with the parents and trustees participating through defined partnership interests.
While a child is a minor, a bare trust can hold their partnership interest. At 18, the child may generally require legal title to that interest. They do not necessarily gain a unilateral right to extract the company shares or sell the partnership’s underlying assets.
The partnership agreement can continue to govern:
- Management appointments
- Reserved decisions
- Distribution policy
- Transfers outside the family
- Admission to management
- Withdrawal and dissolution
- Information and reporting rights
This does not remove the child’s ownership. It defines the rights attached to what they own.
5. Build a pathway into responsibility
Control can develop through experience rather than age alone.
A child might first receive financial information and attend family governance meetings. Later, they might act as an observer, lead a defined project or participate in selected decisions. Full management responsibility can follow when they have the skills and commitment the business needs.
That is far more useful than treating an eighteenth birthday as evidence of commercial readiness.
Tax must be designed alongside control
The strongest succession structure is not simply the one producing the lowest immediate tax charge. It is the one that balances tax, control, family fairness and commercial flexibility.
The tax review should consider:
Capital Acquisitions Tax. A child’s receipt of shares or a partnership interest may be a gift. As of July 2026, the Group A parent-to-child threshold is €400,000, subject to aggregation of earlier benefits. CAT is generally charged at 33% above the available threshold. Revenue’s current CAT thresholds should be checked when implementing the transfer.
Capital Gains Tax. A gift is generally a disposal for CGT purposes. Parents may therefore face CGT even where they receive no sale proceeds. Revenue confirms that gifts and exchanges can trigger CGT and that market value is normally used for gifts to someone other than a spouse or civil partner. Revenue’s CGT guidance explains the general rule.
Business Relief. Qualifying business property may receive a 90% reduction in taxable value for CAT. The conditions must be tested against the company, the assets transferred and the planned holding period. Relief should never be assumed merely because the asset is connected with a family company. Revenue’s Business Relief guidance confirms both the reduction and its conditional nature.
Stamp Duty. Transfers of existing Irish shares can attract Stamp Duty. The current general rate on instruments transferring shares is 1%, although the exact treatment depends on how the transaction is implemented. Revenue’s share transfer guidance should be reviewed.
The plan may also affect income tax, dividend withholding tax, retirement relief, company law filings and the tax position of family members living outside Ireland.
Is this the right structure for your family?
A combined structure may be worth considering where:
- A valuable business is expected to grow significantly
- The parents want to begin transferring future value now
- Children are too young to participate in management
- Different children have different levels of interest in the business
- The family wants clear rules around voting, distributions and transfers
- The parents want to distinguish economic benefit from operational control
- There is a genuine plan to prepare the next generation for responsibility
It may be unnecessarily complex where the intended gift is modest, control at 18 is acceptable or the family does not want the administration that comes with formal governance.
The structure must also fit the family. A technically efficient plan can still fail if it creates resentment, gives inactive children rights the active successor considers unfair, or leaves the founder unable to fund retirement.
Review the structure before value moves
Succession planning works best before the next growth phase, investment round or sale process begins. Once value has increased, transferring it can become considerably more expensive.
If you already hold assets for children through bare trusts, or your current succession plan depends on transferring ordinary shares at a later date, it is worth asking whether the structure still reflects your real objectives.
A Succession Structure Review can map the existing ownership, identify the age 18 control points, test potential growth share and partnership options, and bring the legal, tax and family governance work into one plan.
The aim is not to create complexity. It is to give the next generation a meaningful stake while protecting the business, the family and the value you’ve built.
About the author: Claire Tuohy is a Partner at HOMS Assist, specialising in wills, trusts, probate, and cross-border estates. With dual qualifications in Ireland and England & Wales, and as an active member of the Society of Trusts and Estate Practitioners (STEP), Claire brings deep expertise in tax-efficient succession planning. Her commitment to clear, practical advice ensures high-net-worth clients navigate complex estate matters with confidence.
