The Polish Family Foundation as a Potential Instrument of Creditor Fraud
The family foundation (fundacja rodzinna), introduced into Polish law in 2023, serves primarily to protect family wealth and facilitate intergenerational succession. Yet the legal architecture of this institution contains features that may render it attractive to debtors seeking mechanisms for asset protection against enforcement proceedings. This Article examines the multilayered system of creditor protection that Polish law provides in response to potential abuse of the family foundation structure, with particular attention to the interplay between statutory liability under the Family Foundation Act and the traditional actio pauliana remedy.
I. The Family Foundation’s Structural Vulnerability to Abuse
The fundamental characteristic distinguishing the family foundation from capital companies lies in the nature of the founder’s contribution. When a founder transfers assets to a family foundation, no equivalent consideration passes in return. By contrast, a shareholder contributing capital to a limited liability company (spółka z ograniczoną odpowiedzialnością) acquires shares that remain within the shareholder’s estate and may be subject to enforcement proceedings. The founder acquires nothing—the assets definitively depart the founder’s legal sphere—yet the founder may retain de facto control over the foundation by serving on its management board and may derive benefits as one of its beneficiaries.
This asymmetry creates an inherent temptation to exploit the family foundation as a vehicle for removing assets from the reach of creditors. A debtor might theoretically transfer valuable assets to a foundation, formally divesting ownership while retaining practical control and the capacity to benefit from the assets’ value. The legislature recognized this risk and introduced protective mechanisms designed to safeguard creditor interests.
II. The Legislative Rationale of Articles 8-9: Creditor Protection as a Legislative Priority
In enacting Articles 8 and 9 of the Family Foundation Act, the legislature proceeded from an unambiguous premise: the establishment of a family foundation must not serve as an instrument for defrauding the founder’s creditors. The explanatory memorandum accompanying the draft legislation expressly states that the transfer of assets to a family foundation should not worsen the position of creditors relative to their situation prior to such transfer.
The protective mechanism adopted in the statute rests upon a construction of joint and several liability. The family foundation bears liability jointly and severally with the founder for the founder’s obligations arising prior to the foundation’s establishment. This liability is subject to a monetary limitation corresponding to the value of assets contributed by the founder—a solution analogous to the liability of an enterprise acquirer under Article 554 of the Civil Code.
Critically, however, the legislature declined to exclude the application of general Civil Code provisions concerning creditor protection. The actio pauliana under Articles 527-534 of the Civil Code remains fully available to the founder’s creditors. This legislative decision was deliberate: both mechanisms serve complementary functions, and only their combined application ensures comprehensive creditor protection.
III. A Taxonomy of Creditor Protection Instruments
A creditor of a founder whose assets have been transferred to a family foundation possesses an arsenal of legal remedies. The proper deployment of these instruments requires an understanding of the legal character of each and their mutual interrelationships.
A. Foundation Liability Under Article 8: Character and Scope
The family foundation’s liability for the founder’s obligations, as regulated in Article 8, arises by operation of law (ex lege) at the moment assets are contributed to the foundation. No additional juridical act or constitutive court judgment is required. From the instant of asset transfer, the foundation becomes a joint and several debtor alongside the founder.
A creditor pursuing claims on this basis brings an action for payment, invoking the pre-existing joint and several liability. The subject of the proceedings is the determination of whether the founder’s obligation existed prior to the foundation’s establishment and the value of assets contributed by the founder. The court does not create a new legal relationship; it merely confirms the existence of liability flowing directly from statute.
The substantive scope of Article 8 liability encompasses all civil-law obligations of the founder: contractual, delictual, arising from credits and loans, and including maintenance obligations. These obligations need not be due and payable at the time of the foundation’s establishment—it suffices that they arose prior to that date.
The limitations on this liability are both temporal and quantitative. The temporal limitation means that the foundation bears liability only for obligations arising before its establishment (with an exception for maintenance obligations under Article 8(2)). The quantitative limitation, derived from Article 9, caps liability at the value of assets contributed by the founder, determined according to their condition at the time of contribution and prices at the time of creditor satisfaction.
B. The Actio Pauliana: Character and Prerequisites
The actio pauliana constitutes an instrument of fundamentally different legal character. It is an action for the modification of legal relations—the creditor seeks a declaration that the debtor’s juridical act is ineffective as against the creditor. Only a final judgment granting the claim creates a new legal situation, enabling the creditor to conduct enforcement against the subject matter of the impugned transaction as though it remained within the debtor’s estate.
The prerequisites for the actio pauliana comprise: the existence of a claim entitled to protection; the debtor’s performance of a juridical act to the prejudice of creditors; the debtor’s awareness of creditor prejudice; and—as a general rule—the third party’s knowledge of this awareness or the possibility of acquiring such knowledge through the exercise of due diligence.
In the context of family foundations, the final prerequisite is significantly relaxed. Article 528 of the Civil Code provides that where a third party has obtained a pecuniary benefit gratuitously, the creditor may seek a declaration of ineffectiveness even where that party neither knew nor could have known of the debtor’s awareness of creditor prejudice. Since the contribution of assets to a family foundation is gratuitous in character (the founder receives no consideration), this provision applies. Additionally, Article 527 § 3 of the Civil Code introduces a presumption of knowledge on the part of persons in a close relationship with the debtor—and the relationship between a founder and the foundation established by that founder indisputably satisfies this criterion.
C. Delictual Liability Under Article 415 of the Civil Code
A third layer of protection consists in delictual liability. Where the conduct of the family foundation (more precisely, the persons comprising its organs) aimed at frustrating creditor satisfaction meets the prerequisites of a tortious act, the creditor may pursue compensation under general principles.
This liability requires proof of unlawfulness, fault, damage, and adequate causal connection. It is the most difficult to establish but potentially the most advantageous—it is not subject to the monetary limitation of Article 9 of the Family Foundation Act and extends to the foundation’s entire assets.
D. Enterprise Acquirer Liability Under Article 554 of the Civil Code
Where the subject matter of a contribution to a family foundation is an enterprise, additional liability under Article 554 of the Civil Code becomes operative. The foundation, as acquirer of the enterprise, bears joint and several liability with the transferor (founder) for obligations connected with the conduct of that enterprise. This liability is limited to the value of the acquired enterprise and may be excluded where the acquirer neither knew nor could have known of the obligations despite exercising due diligence.
IV. Overlapping Protection and the Principle of Free Selection
A founder’s creditor may freely choose among available protective remedies. No rule mandates the “exhaustion” of one instrument before resort to another. Parallel proceedings on different legal bases are equally permissible—a creditor may simultaneously pursue payment from the foundation under Article 8 and bring an actio pauliana seeking a declaration that the asset contribution is ineffective.
This freedom of selection finds justification in the distinct legal character and function of each instrument. Article 8 liability exists ex lege and requires only judicial enforcement. The actio pauliana requires a constitutive judgment creating a new legal situation. Each mechanism has its own prerequisites, scope of application, and limitations.
In domains where both instruments might theoretically apply (obligations existing prior to foundation establishment), the creditor makes a selection guided by practical considerations. An action for payment under Article 8 is procedurally simpler but subject to monetary limitation. The actio pauliana requires proof of additional prerequisites but enables satisfaction from the specific subject matter of the impugned transaction, which may prove more advantageous where that asset has appreciated in value.
V. Gaps in Statutory Protection and Their Remediation Through the Actio Pauliana
Analysis of Article 8 reveals significant limitations that the actio pauliana effectively addresses.
A. The Temporal Gap: Obligations Arising After Foundation Establishment
Article 8(1) protects only creditors whose claims existed prior to the family foundation’s establishment. Obligations arising after that date (except maintenance obligations) are not covered by the foundation’s joint and several liability.
The actio pauliana recognizes no such limitation. Article 530 of the Civil Code extends protection to future creditors—the provisions governing the actio pauliana apply also where the debtor acted with intent to prejudice creditors whose claims will arise only subsequently. A founder establishing a family foundation “preemptively,” before incurring obligations, remains exposed to successful challenge of the transfer by future creditors.
B. The “Dead Zone” Gap: Between Founding Act and Asset Contribution
A distinctive gap exists in the period between execution of the founding instrument and actual contribution of assets to the foundation. Obligations of the founder arising within this interval occupy a peculiar “dead zone”—they formally arose after the foundation’s establishment, so Article 8 does not apply, yet they precede the actual diminution of the founder’s estate.
The actio pauliana addresses this gap. The creditor may challenge the act of contributing assets to the foundation by demonstrating that at the moment of contribution the founder acted with awareness of creditor prejudice.
C. Donations Following Initial Capitalization
A founder may contribute additional assets to a family foundation after the initial capitalization of the founding fund. Such subsequent transfers, typically effected by way of donation, are not covered by Article 8 liability with respect to obligations arising after the foundation’s establishment.
The actio pauliana then constitutes the primary protective instrument. Donations are particularly susceptible to challenge given their gratuitous character and the associated evidentiary relaxations benefiting the creditor.
D. Limitation of Article 8 Claims
Claims against the foundation under Article 8 are subject to limitation under general rules. The actio pauliana claim is subject to independent limitation—five years from the date of the impugned transaction. These periods run independently, meaning that a creditor who has lost the ability to pursue Article 8 claims due to limitation may still have available recourse through the actio pauliana.
VI. Criminal Dimensions: Liability for Conduct Prejudicing Creditors
The transfer of assets to a family foundation with intent to frustrate creditor satisfaction may constitute a criminal offense. Article 300 § 1 of the Penal Code criminalizes fraudulent asset flight from creditors—the frustration or diminution of creditor satisfaction through the removal, concealment, alienation, donation, destruction, encumbrance, or damaging of estate assets.
The contribution of assets to a family foundation, undertaken with awareness of existing or threatened obligations and with intent to prevent creditor satisfaction, may satisfy the elements of this offense. Classification as “alienation” or “donation” of estate assets is warranted by the gratuitous and definitive character of the transfer.
Criminal liability may attach to both the founder and persons acting on the founder’s behalf or assisting in the realization
VII. Lessons from International Case Law: The Limits of Foundation-Based Asset Concealment
The temptation to exploit foundation and trust structures for creditor evasion is hardly unique to Poland. International jurisprudence offers instructive examples of both spectacular failures and successful asset preservation, illuminating the boundaries within which such structures may legitimately operate.
The Anderson case established what practitioners now call the “Anderson Risk.” Michael and Denyse Anderson operated a telemarketing scheme that the Federal Trade Commission accused of being a Ponzi scheme. In 1995, they established a Cook Islands trust with sophisticated “duress clauses” designed to prevent court-ordered repatriation—provisions that automatically removed the settlors as trustees upon any request made under legal compulsion. When ordered to repatriate funds, the Andersons complied by faxing their trustee, who promptly invoked the duress clause and refused. The U.S. court found the Andersons in civil contempt and imprisoned them for six months. Remarkably, the trust held: the assets were never returned. The case demonstrates that while offshore structures can successfully resist U.S. court orders, founders face serious personal consequences for creating such arrangements.
The Lawrence case presents a more cautionary tale. Stephan Lawrence, a Bear Stearns derivatives trader facing a massive arbitration judgment, transferred seven million dollars to a Mauritius trust just two months before the award was rendered. This timing proved fatal. The court found that Lawrence had retained the power to appoint and remove trustees, giving him de facto control despite the trust’s formal structure. He spent six years in federal prison for civil contempt—the longest such incarceration in U.S. history for this type of offense. The Mauritius trustee never released the funds, but Lawrence paid an extraordinary personal price for a structure created too late and with too much retained control.
By contrast, the Grupo Torras litigation against Sheikh Fahad Al-Sabah of Kuwait demonstrates when offshore trusts successfully resist even massive judgments. Grupo Torras obtained an eight hundred million dollar fraud judgment against the Sheikh, who had established a Jersey trust with substantial assets. The Jersey court’s determination proved decisive: these were “clean assets”—funds validly contributed to the trust well before any creditor claims arose. Despite five separate legal theories advanced by the creditor—including arguments that the trust was a sham, that the trustee had abdicated fiduciary duties, and that public policy should invalidate the structure—all failed. The distinction was not structural sophistication but timing and legitimacy of funding.
The Yukos arbitration illustrates these principles at the highest stakes. Mikhail Khodorkovsky built Yukos into Russia’s largest private oil producer, constructing an elaborate multi-jurisdictional structure spanning Gibraltar, the Isle of Man, Cyprus, and Channel Islands trusts. Crucially, the Pulmus Trust contained a clause providing for automatic transfer of control “in the event of Mikhail Khodorkovsky’s inability to act as beneficiary, resulting from, among other things, imprisonment.” When Khodorkovsky was arrested in 2003 and Russian authorities systematically dismantled Yukos through manufactured tax claims, the offshore structure enabled shareholders to pursue arbitration under the Energy Charter Treaty. In 2014, the tribunal awarded over fifty billion dollars—the largest arbitration award in history—ultimately upheld by the Dutch Supreme Court in 2025. The structure, established during profitable operations with legitimate assets and genuinely independent fiduciaries, outlasted a decade of state persecution.
- More on this topic in my article: Yukos vs. the Kremlin. How Offshore Structures Saved Billions from State Plunder
These cases underscore principles equally applicable to Polish family foundations: timing is paramount—assets must be transferred before creditor claims arise; independence of fiduciaries must be genuine rather than nominal; and no structure, however sophisticated, can legitimize assets tainted by fraud. The family foundation serves valuable purposes in succession planning and wealth preservation, but it cannot transform fraudulent intent into lawful protection.
Founder and Managing Partner of Skarbiec Law Firm, recognized by Dziennik Gazeta Prawna as one of the best tax advisory firms in Poland (2023, 2024). Legal advisor with 19 years of experience, serving Forbes-listed entrepreneurs and innovative start-ups. One of the most frequently quoted experts on commercial and tax law in the Polish media, regularly publishing in Rzeczpospolita, Gazeta Wyborcza, and Dziennik Gazeta Prawna. Author of the publication “AI Decoding Satoshi Nakamoto. Artificial Intelligence on the Trail of Bitcoin’s Creator” and co-author of the award-winning book “Bezpieczeństwo współczesnej firmy” (Security of a Modern Company). LinkedIn profile: 18 500 followers, 4 million views per year. Awards: 4-time winner of the European Medal, Golden Statuette of the Polish Business Leader, title of “International Tax Planning Law Firm of the Year in Poland.” He specializes in strategic legal consulting, tax planning, and crisis management for business.
