M
mcd
New Member
recently i was doing some research on what happens upon death of the owner of brazilian property and stumbled upon these forums. i was suprised to see the quantity and quality of posts on investing in brazil and was likewise also suprised to see nothing discussing this topic. so, i'm starting this thread to hopefully bring some light to the issue, and open up some discussion.
originally, i was approaching the topic from a dual-national standpoint (us/brazil),and was wondering how it would affect both nationalities. however, in my research i came to learn something very important: the brazilian government treats foreign and national property ownership THE SAME wrt to inheritance tax and property distribution (aka estate tax and probate in the US).
to summarize what i've found is, upon the death of the property owner, the property goes into receivership in the brazilian courts and uses a will that it deems to be valid and proceeds with disbursement, which supposedly takes a minimum of 6 months. if there is no will, or the foreign will is considered invalid, the court will use brazilian law to issue disbursements. regardless if there is a will or not, brazilian law recognizes that at least 50% of the estate must go to "necessary heirs". there is also an estate tax that is issued on the property called the ITCMD which is imposed by the state the property is in, and looks to be at a maximum of 4.5% (sao paulo). there are many more details, but that's the basic gist of it.
obviously, if you have heirs in foreign countries, and are interested in passing your estate on, it would be wise to try and avoid some of the complications that this process will most definitely bring up if not properly prepared. the most simple of solutions that will at least take care of 50% of your estate, would be to have a local (brazilian) will drawn up that will be officially recognized by the courts.
i belive there might be other solutions that can get around this process entirely, but i'm still researching those. basically, though, the idea would be to own property through a brazilian company which is then own by a a foreign trust (us or other nation that recognizes them). the reason for the nested structure is due to brazilian non-recognition of trust entities. however, there is some literature saying that foreign trusts may be regarded in the courts as non-resident entities. how that would play into a death/probate scenario is anyone's guess though, and so, for the time being feel the trust/corp structure might be the best play.
looking forward to hearing your thoughts.
references:
(was not allowed to post these links due to small post count)
originally, i was approaching the topic from a dual-national standpoint (us/brazil),and was wondering how it would affect both nationalities. however, in my research i came to learn something very important: the brazilian government treats foreign and national property ownership THE SAME wrt to inheritance tax and property distribution (aka estate tax and probate in the US).
to summarize what i've found is, upon the death of the property owner, the property goes into receivership in the brazilian courts and uses a will that it deems to be valid and proceeds with disbursement, which supposedly takes a minimum of 6 months. if there is no will, or the foreign will is considered invalid, the court will use brazilian law to issue disbursements. regardless if there is a will or not, brazilian law recognizes that at least 50% of the estate must go to "necessary heirs". there is also an estate tax that is issued on the property called the ITCMD which is imposed by the state the property is in, and looks to be at a maximum of 4.5% (sao paulo). there are many more details, but that's the basic gist of it.
obviously, if you have heirs in foreign countries, and are interested in passing your estate on, it would be wise to try and avoid some of the complications that this process will most definitely bring up if not properly prepared. the most simple of solutions that will at least take care of 50% of your estate, would be to have a local (brazilian) will drawn up that will be officially recognized by the courts.
i belive there might be other solutions that can get around this process entirely, but i'm still researching those. basically, though, the idea would be to own property through a brazilian company which is then own by a a foreign trust (us or other nation that recognizes them). the reason for the nested structure is due to brazilian non-recognition of trust entities. however, there is some literature saying that foreign trusts may be regarded in the courts as non-resident entities. how that would play into a death/probate scenario is anyone's guess though, and so, for the time being feel the trust/corp structure might be the best play.
looking forward to hearing your thoughts.
references:
(was not allowed to post these links due to small post count)
