Finocchio & Ustra Sociedade de Advogados | View firm profile
The incorporation of offshore companies by Brazilian individuals – particularly in jurisdictions such as the Bahamas and the British Virgin Islands – is a structure widely used for the purpose of making investments abroad, international portfolio diversification, and wealth planning in general.
However, a point that is often overlooked in the planning and implementation of this structure is succession. Upon the decease of the individual holding the offshore company, the time and costs required for heirs to effectively complete the succession process frequently become real obstacles: the unexpected need to initiate probate proceedings abroad – including hiring a local counsel, payment of substantial local court fees, and other typical practical challenges – in addition to the probate process and other obligations related to inheritance in Brazil.
With this in mind, the following question arises: Why cannot the probate of an international shareholding be conducted directly in probate proceedings in Brazil?
Brazil follows the principle of Plurality of Succession Jurisdictions, which provides that assets located in different countries must be dealt with in separate probate proceedings in each respective jurisdiction. Likewise, Brazilian laws provide that the Brazilian judicial system has exclusive jurisdiction to confirm, validate, and give effect to the provisions of a private will, as well as the probate and partition proceedings regarding assets located in Brazil. Consequently, Brazilian judges do not have jurisdiction over assets located abroad.
Among the many instruments of succession planning, special attention should be given to the relevance and simplicity of structuring a will in the offshore company’s local jurisdiction. Through this legal instrument, the testator may set out, in a straightforward, flexible, and practical manner, the intended disposition and administration of the testator’s assets upon their decease.
From a practical standpoint, a will structured abroad may provide for the appointment of an executor and alternates, as applicable, the designation of an individual responsible for the administration of the assets until the heirs are effectively vested with ownership, and the intended manner of distribution of the shareholding. These features significantly reduce the likelihood that the succession process will generate strife among heirs or erode the investment’s value – in time and assets – and the overall value of the offshore structure.
It is important to note that the existence of an international will does not eliminate the need for its validation by the competent foreign judicial authority in the context of probate proceedings abroad. Nonetheless, such probate proceedings tend to become more expedited, predictable, and less costly, since the local judicial authority should observe the testator’s express intent regarding the transfer of the shareholding.
Once validated and rendered final by the foreign judicial authority, the will must be submitted in the context of probate proceedings in Brazil — whether judicial or extrajudicial, as allowed under Brazilian law — and that the provisions and succession rules established by the testator abroad may be duly taken into account in the Brazilian probate proceedings, and the respective shares of the heirs and, where applicable, the surviving spouse, are properly equalized, ensuring equitable treatment amongst them.
With respect to documents issued by a foreign public authority and submitted to be used before Brazilian authorities or entities, certain formalities must be observed to ensure their validity in Brasil. In general, either be duly certified and apostilled in accordance with the Hague Convention and subsequently translated into Portuguese, or, alternatively, be translated and certified directly by the competent Brazilian consulate in the country of origin, in which case apostille and additional translation in Brazil are not required.
Accordingly, a foreign will constitutes an integral instrument in planning an offshore structure, contributing to predictability, conflict prevention, and the efficient allocation of resources in the event of a transition.
HOOK:
An international will is a relevant instrument in offshore structuring, as it allows the succession of assets located abroad to be organized in accordance with the testator’s wishes, reducing costs and mitigating conflicts. Learn why this document is essential and how it is implemented and applied after the testator’s death.
Authors:
Felipe Cervone, partner in the corporate area of FIUS
Pedro Goulart Cheng, senior lawyer in the corporate area of FIUS
Luana Silveira Magnani, junior lawyer in the corporate area of FIUS
Isabella Beneti Carrilho, intern in the corporate area of FIUS
Daniela Justino Dantas Martelli, coordinating lawyer in the family and succession area of FIUS