Have you ever wondered what would happen to your company if tomorrow you were no longer there to run it? This is a question that entrepreneurs I work with frequently ask me. After more than 15 years advising on corporate succession planning in Uruguay, I can tell you that a well-structured corporate will can be the difference between successful business continuity or its disintegration.
What is a corporate will?
Although the term “corporate will” doesn’t formally exist in Uruguayan legislation, lawyers and notaries use it to refer to a set of legal instruments that allow planning the succession of business assets.
Look, it’s like creating a detailed map so that those who succeed you can navigate the complex terrain of your company without getting lost. It includes traditional testamentary provisions, but specifically adapted to the business context, along with shareholders’ agreements, family protocols, and fiduciary structures.
Important fact: According to a recent study by the Chamber of Industries of Uruguay, only 27% of family businesses in the country survive the transfer to the second generation, and barely 12% reach the third. The main cause is not lack of economic viability, but the absence of adequate succession planning.
Key Instruments for Corporate Succession in Uruguay
In my experience working with all types of Uruguayan companies, from small family businesses to medium-sized corporations, I’ve identified these instruments as fundamental:
Notarial Will
It’s the foundation of the entire process. In Uruguay, the Civil Code contemplates three main open testamentary forms: the solemn will (granted before notary and witnesses), the closed will (delivered sealed to the notary), and the special will (in extraordinary circumstances). For entrepreneurs, I generally recommend the open solemn will due to its greater legal security.
Family Protocol
This document, although not specifically regulated in Uruguayan legislation, has full contractual validity and perfectly complements the will. It establishes the rules of the game for the family in relation to the company: conditions for incorporating family members, dividend policy, conflict resolution mechanisms, etc.
Testamentary Trust
A tool that has gained popularity in recent years. It allows separating ownership from management, appointing a professional trustee who manages the business assets according to detailed instructions by the testator.
Corporate Succession Pacts
Unlike other countries, in Uruguay these pacts are restricted, but there are indirect mechanisms allowed by Law 17.703 (Trust Law) and Law 16.060 (Commercial Companies Law) that allow achieving similar effects.
Watch out for this! “In my years of practice, I’ve seen too many cases of entrepreneurs who relied only on a traditional will, without considering the particularities of business assets. The result was disastrous: companies fractioned among heirs with opposing interests, endless power struggles, and in many cases, the sale or liquidation of businesses that had been profitable for decades.”
The Process for Creating an Effective Corporate Will
I’ll share the methodology I’ve perfected over the years:
Asset and Family Diagnosis
The first step is always to understand the exact composition of the business assets and family dynamics. It’s like taking a complete X-ray before any intervention.
Identification of Succession Objectives
Continuity under family management? Professionalization? Partial or total sale? The objectives will determine the instruments to use.
Succession Strategy Design
Creating the legal architecture combining the different available instruments.
Documentary Formalization
Drafting and implementing the necessary legal documents, with special attention to their coherence among themselves.
Family Communication and Education
A crucial aspect that many professionals neglect. It’s not enough to have perfect documents if successors don’t understand their purpose and operation.
A real-life example: “I worked with a medium-sized company in the agroindustrial sector. The founder had three children: one worked in the company with passion and knowledge, another had a completely different profession, and the third was only interested in receiving dividends. We designed a corporate will that included a trust for the shares, with clear instructions about management, a family protocol with rules for third-generation incorporation, and liquidity mechanisms for heirs not involved in management. Five years later, when the founder died unexpectedly, the transition was surprisingly smooth, and today the company continues to prosper under the leadership of the prepared son, while the others receive fair benefits without interfering in management.”
Crucial Aspects to Consider
Legitimate Portion in Uruguay
Uruguayan legislation establishes mandatory percentages for forced heirs (legitimate portion). For children, it amounts to 2/3 of the estate if there’s no spouse, and 1/2 if there is. This limits testamentary freedom, but there are legal mechanisms to reconcile with business unity.
Valuation of Business Assets
A significant technical challenge. The correct valuation of shares, participations, and intangible assets is fundamental for an equitable distribution that doesn’t compromise business viability.
Harmonization with Matrimonial Regime
The interaction between marital community property and business assets must be carefully considered, especially in cases of second marriages or blended families.
Tax Implications
Property Transfer Tax (ITP) and other tax considerations must be incorporated into planning.
Comparison: Corporate Succession Planning Methods
| Mechanism | Advantages | Disadvantages | Implementation Complexity |
| Traditional will | Simplicity, reduced cost | Limitations for complex structures | Low |
| Family protocol + will | Flexibility, addresses non-asset aspects | Requires family consensus | Medium |
| Testamentary trust | Maximum protection, professionalized management | Higher cost, technical complexity | High |
| Holding company | Asset separation, tax advantages | High formalization, less personal | High |
Current Trends in Uruguay
Corporate succession planning in Uruguay has evolved significantly in the last decade:
Process Professionalization
More and more entrepreneurs resort to multidisciplinary teams (lawyers, accountants, financial advisors) for designing their succession.
Fiduciary Structures
Trusts have positioned themselves as a cutting-edge tool after the consolidation of Law 17.703 and favorable jurisprudence.
Succession Anticipation
The trend is to plan during one’s lifetime, gradually implementing the transition while the founder can supervise it.
Uruguayan particularity: “A characteristic I’ve observed in the Uruguayan context is the increasing use of ‘management tests’ before definitive succession. It consists of giving progressive responsibilities to potential successors during a controlled period. This practical approach has proven very effective for identifying real capabilities and adjusting the succession plan accordingly.”
Frequently Asked Questions about Corporate Wills
Can the corporate will contradict the rules about hereditary legitimate portion in Uruguay?
They cannot directly contradict them, but there are legal mechanisms that allow harmonizing business continuity with respect for the legitimate portion. The most effective strategies I’ve implemented include: 1) Preferential allocation of business assets to heirs involved in management, compensating others with other goods; 2) Establishment of usufructs over shares, separating economic rights from political ones; 3) Creation of fiduciary structures that guarantee income to all heirs without fragmenting management unity; and 4) Contracting life insurance that will provide liquidity to compensate heirs who don’t receive participation in the company. Each solution must be custom-designed according to the specific family and business structure.
When is the ideal moment to create a corporate will?
The ideal moment is NOW, regardless of the entrepreneur’s age or health situation. I’ve seen too many cases of chaotic successions due to postponement. However, there are critical moments that usually trigger the need for planning: 1) The incorporation of the second generation into the company; 2) Significant changes in business structure such as mergers, acquisitions, or expansions; 3) Modifications in family situation (marriages, divorces, births); and 4) Upon reaching a certain business volume (generally, companies with revenues exceeding $1 million annually should have formal succession planning). Succession planning is a continuous process, not a single event, so we recommend periodic reviews every 3-5 years or upon significant changes.
How is the situation of heirs who are not involved in the company handled?
This is probably the most common question I receive in my practice. The key is to distinguish between ownership and management. The most successful strategies I’ve implemented include: 1) Creating different classes of shares, with different economic and political rights; 2) Establishing clear dividend policies that guarantee income to passive owners; 3) Designing liquidity mechanisms (“exit clauses”) that allow uninterested heirs to sell their participation under predetermined conditions; and 4) Using trusts that professionalize management while distributing benefits equitably. The solution must be personalized and consensual, ideally before the founder’s death, to avoid subsequent conflicts that are usually destructive to business value.
What complementary documents are necessary in addition to the formal will?
A will, by itself, is insufficient for comprehensive corporate succession planning. Essential complementary documents include: 1) Family protocol, which regulates aspects not strictly patrimonial such as conditions for entering the company, successor training, and conflict resolution; 2) Shareholders’ agreements, legally binding under Law 16.060, which establish rules for share transfers, special majorities, and preference rights; 3) Preventive powers, which guarantee operational continuity in case of temporary incapacity; 4) Trust constitutive documents, if this structure is chosen; and 5) Non-binding but morally important wish letters that express the founder’s vision and values. Coordination between these documents is crucial, and I recommend keeping them in a “business family book” accessible to those involved but with proper confidentiality protections.
Conclusion: The Legacy Your Effort Deserves
After years advising Uruguayan entrepreneurs, I can affirm with certainty that succession planning is not just a legal exercise, but an act of responsibility toward your family and the business legacy you’ve built.
A well-structured corporate will can be the difference between seeing your work continue and prosper or becoming a source of conflicts and eventual disappearance.
The unique combination of personal, family, commercial, and legal factors makes each case different, requiring a personalized and multidisciplinary approach.
