Ever heard of estate planning? In general terms, it is the set of measures taken by someone to transfer their assets to their children and/or other family members, in the most effective way possible.
Thinking regarding what will be done following your death may seem strange, however, it means that everything you built throughout your life will be like legacy for the people you love.
In this content, you will discover the answer to the most frequently asked questions related to the topic and you will have inputs to start your succession planning.
Just continue reading!
What is succession planning?
estate planning It is a set of strategies that organize the transfer of assets from a person to his heirs. to occur still alivethe process becomes simpler and avoids possible conflicts between successors.
By opting for this alternative, the need to go through a long and costly inventory process, very common in asset transfer processes. The wait to receive the inherited assets can last for years, while planning is faster and with reduced expenses.
succession planning is suitable for anyonebut mainly for the elderly (60 years or older), those who already have a lot of accumulated assets or work in a profession exposed to risk, for example, police officers, security guards and security guards.
Succession planning brings several benefits to beneficiaries. Below you can see what they are.
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Benefits of doing succession planning
The main advantage of planning is avoid complications throughout the process of transferring assets following death. In addition, it can bring other benefits, such as:
- Decreases paperwork costs: refers to probate fees, tax costs, attorney fees and others;
- Avoid family conflicts: well-defined planning tends to eliminate the wear and tear that such a difficult moment, such as the loss of a loved one, can cause;
- Reduces tax costs: there is a state tax, the ITCMD – Causa Mortis and Donation Transfer Tax –, which is levied on inherited assets. By carrying out succession planning and according to the strategy for dividing assets chosen in life, you can get a reduction in this tax or even a complete exemption;
- Does not depend on legal agility: Judicial solutions are not usually very quick, so the transfer of goods can be long. Having a plan reduces the waiting time and the bureaucracy involved;
- Prevents the inaccessibility of goods: it is common that, during the inventory, some goods can only be accessed with judicial authorization. Planning avoids this outage scenario.
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Types of Succession Planning
There are a few ways to do the estate planning and organize the sharing of its assets. Discover the main ones:
1. Testament
It is the most common form of estate planning and allows you to share the goods however you want, but with some rules established by the Brazilian Civil Code.
50% of the equity is part of the heritage legitimate and must be obligatorily intended for the necessary heirs, such as descendants (children), ascendants (mother, father, grandparents) or spouses/partners.
The other half is free to distribute to anyone, including the unborn. However, in this case, heirs must be born within 2 years from the opening of the succession.
The will can be:
Public
In this case, the will is made by Public deed and in the presence of two witnesses (who cannot be the beneficiaries) at a notary’s office. Only he and the witnesses know the contents of the document.
It is the safest and most confidential format, as the content will only be revealed to the heirs following the testator’s death certificate is presented.
Cerrado
Just like the public, this will must also be made in a notary office and in the presence of two witnesses. However, no one but the tester knows what was written.
The will is sealed and remains in the possession of the owner of the assets and, if it is opened before your death, it is invalidated. This is to ensure that no one has access to the content.
The closed will can be written in a national or foreign language, by the testator himself or by another person at his request, according to article 1871 of the Civil Code.
Particular
The document can be drawn up by the testator or a person he or she trusts, and must be signed by three witnesses. It is a simple and safe type, but following the testator’s death, the will must be confirmed by a judge, as well as the signatures must be verified by witnesses.
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2. Donations in life
The owner of the estate can choose who his heirs are and, still in life, donate what you want. In this way, beneficiaries are immediately in possession of the donated goods and, following death, do not have to worry regarding probate or another sharing process.
Although the donation in life is also subject to the ICTDM tax, the State may charge lower rates or even exempt the payment of the tax.
In addition, there are some peculiarities of this type of succession planning. The donor may include some clauses that restrict the recipient’s use of the goods. Between them:
- Inalienability: inability to transfer/donate/sell assets to another person;
- unseizability: the asset cannot be pledged on account of the holder’s debts;
- incommunicability: the person continues to be the owner of the property, even if they are married under a universal property regime (when the property before and following the marriage is owned by both);
- reservation of usufruct: the holder has the right to use the property while he is alive, but he can only transfer it following his death.
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3. Holding familiar
The strategy consists of create a company and place their heirs as partners. In this way, goods are distributed without the need to pay state tax or wait for the probate process.
Assets are transferred to the company’s equity and the best way to do this is by paying them into the organization’s share capital. Thus, there will be exemption from ITBI (municipal tax levied on transfer of goods for consideration while they are still alive).
With this, the equity becomes the company’s property and the owner of the assets is in possession of social quotas. After his death, these shares will be transferred to the other partners, that is, his heirs.
4. Life insurance
Many people do not know, but the life insurance is a form of estate planning. It works like this: you pay a monthly amount to the insurer and, following death, compensation is paid to the beneficiaries you choose when signing the contract.
In this case, there are no rules. Compensation can be paid to anyone who wants to, whether heir or not. And there are no taxes, values are available quickly and little bureaucratic.
However, life insurance involves only cash inheritance and not material goods. Up to 40 minimum wages cannot be seized and the amount transferred to the beneficiary cannot be used to settle the deceased’s debts.
5. Private Pension
Unlike Social Security, in which the deceased’s retirement goes right to the heirs, Private Security allows you to choose who will be entitled to the death pension at the time of hiring.
That is, there is no rule that 50% of the assets must go to descendants.
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6. Real estate funds
Although not as common, it is also a way of estate planning and that better serves families that have a large amount of real estate assets.
A fund is created with all the investor’s real estate assets, and then the heirs receive shares that they can negotiate to gain access to financial resources. That is, they can enjoy the properties through leasing or sale.
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7. Joint account
It is a simple and practical planning alternative, especially for those looking for liquidity and easy access to assets. In addition, it is a modality that does not require payment of the ITCMD tax.
However, this type of estate planning it can only be used by those who want to allocate their assets to just one person. This is because it is not possible to create an account with multiple holders.
How to do succession planning?
After knowing the variety of types of planning that we present here, the first step is to choose the mode you want to use. It is then important to analyze, talk to an expert company and, of course, with the heirs and their family on the subject.
There are several questions surrounding the succession, financial and family relationshipstherefore, it is advisable to align future expectations and let everyone know what will happen following death.
Hiring a specialized service is essential for the estate planning be carried out according to your requirements and interests. Without this, the process can be more bureaucratic and with more costs in taxes, for example.
Investing with Warren, you have the help of a financial planner so that the succession of your assets occurs as smoothly and safely as possible.
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