Advantages of Family Succession in Brazil – A Comparison to Argentina

After the death of a person, a process must start to allow the transfer of that person’s property to those who are entitled to receive them, who are the heirs or beneficiaries of the inheritance.

This process, however, may be different depending on the country where the death took place because each place has its own laws and specificities.

In this article, we are going to establish a comparison between the proceeding of family succession in Brazil and in Argentina, as well as highlight the advantages which Brazil offers for the succession process started in its territory.

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Author: Lucas Gomes Furtado

How much is the inheritance tax rate in Brazil and in Argentina?

Generally, after the death of a relative, the heirs or beneficiaries who will inherit their estate are also responsible for the payment of inheritance tax. 

This usually happens in several countries around the world, and each of them has their own specific rules regarding the payment and charging of this tax.

In Brazil, the inheritance tax is named ITCMD (Imposto sobre transmissão causa mortis e doação) and must be paid whenever there is the transfer of goods or transfer of rights, in case of death or donation.

In our country, each federative state determines its inheritance tax rate and how it will charge it, but the percentage must not be higher than 8% of the market value of the property.

This means that, according to Brazilian law, there cannot be an inheritance tax rate higher than 8% in relation to the value of the property transmitted to the heirs after death.

In Argentina, as of now, there is no specific inheritance tax charge nationally, even though there is a lot of debate regarding this subject in the country.

However, in one of the country’s provinces, the inheritance tax has been charged since 2011 in certain situations. We are talking about the province of Buenos Aires, the most populous province in Argentina.

Thus, this tax is owed by the person who resides in this province and who has received property free of charge, which means through inheritance or donation, as it also happens in Brazil with ITCMD.

However, the rules in regard to charging inheritance tax in this Argentinian province are considerably different from the Brazilian rules, as we are going to see below.

Buenos Aires

In the province of Buenos Aires, the inheritance tax must be paid when the amount of the transmission is higher than $1,344,000 Argentinian pesos (currently around R$25,000,00), as long as the heirs are the deceased’s parents, children, or surviving spouse.

If the heirs have any other sort of relation to the deceased, the inheritance tax is owed when the amount of the transmission is higher than $322,800 Argentinian pesos (currently around R$ 6,000,00).

In both scenarios, the tax rate will vary from 1.6% to 6.4% on the value of the property, which means that the higher the amount of property and the more distant the degree of kinship to the deceased, the higher the tax rate will be.

How does the division of property work in Argentina?

Generally, the rules for the division of property in Argentina have lots of similarities if compared to the Brazilian rules, mainly when there is no will left by the deceased.

Around there, there is also an order of preference of legitimate heirs, which are the descendants, ascendants, surviving spouses, and collateral relatives up to the fourth degree of kinship.

Likewise, the existence of closer relatives to the deceased always excludes their distant relatives in the succession.

Hence, children have more priority to inherit and will receive equal shares of the deceased’s estate. Their grandchildren, however, will only inherit by right of representation, in case they replace their deceased father or mother.

If there are no descendants, the closest ascendants will receive the inheritance, which will also be divided equally among them. If there are no ascendants, the surviving spouse will inherit the whole estate.

Finally, if there is no surviving spouse, the closest collateral relatives will receive the property in the following order: siblings (second degree), uncles/aunts and nephews/nieces (third degree), or cousins, granduncles/grandaunts, and grandnephews/grandnieces (fourth degree).

Nevertheless, the situation of the surviving spouse is unique, as it also happens in Brazil, because they will participate in the succession together with the descendants and the ascendants.

This means that whenever the surviving spouse participates in the inheritance process with the descendants of the deceased, the spouse will receive a share of property that is equal to theirs.

If the spouse participates in the inheritance process with the ascendants, however, the spouse will necessarily receive 50% of the estate and the remaining 50% will be divided among the ascendants.

Are there any obstacles or prohibitions to inheriting in Argentina?

Just as it happens in Brazil, Argentinian law determines that heirs who are considered unworthy of inheriting or who have been disinherited will not be able to receive any shares of the inheritance.

In Brazil, heirs may lose their right to inherit in specific situations, such as such as unworthiness, disinheritance, and the existence of debts.

An heir will be considered unworthy if they commit any act against the life or the honor of the owner of the estate, or even against their freedom to make a will. For this to happen, an unworthiness lawsuit must be filed in court.

Besides that, an heir can also be disinherited for the same situations mentioned above, or if they physical offenses, or serious injury, have illegal relations with a stepparent, or fail to assist their ascendants in case of disease.

On the other hand, heirs may also be prevented from inheriting in case of debts made by the deceased, if the payment of these debts uses all the property left by them and there is nothing left to inherit.

Regarding this matter in Argentina, the legislation is basically identical to the Brazilian legislation, both in regard to unworthy heir and disinherited heir situations.

What are the advantages of starting a family succession in Brazil?

When we look closely at the Brazilian legislation, it is possible to notice that in Brazil there are several advantages to people who decide to start their family succession in Brazilian territory.

In the case of Argentina, although there is no specific inheritance tax charge throughout the whole country, the tax is owed precisely in the most populous province of the country, where more than fifteen million people live.

Therefore, many heirs who live there will have to take on the costs of this tax, which may reach up to 6.4% on the value of the property, which is basically the same as the Brazilian inheritance tax rate limit.

In Brazil, one of the benefits brought by the law is the possibility that the estate owner can get a private pension plan.

That is because the private pension plan holder can define how the division of this money will happen after their death by naming any person they want as a beneficiary to receive them.

According to Brazilian law, most federative states do not charge ITCMD on the amount of money left in private pension plans because it is not part of the inheritance and does not need to be included in the inventory proceeding.

Private pensions

In other words, this amount of money related to private pensions can be received by the beneficiaries irrespective of the course and the conclusion of the inventory proceeding.

Another interesting possibility to be considered is the creation of a holding company by the owner of the estate.

In this kind of company, it is possible to plan the management of property and/or other companies by the company partners.

There, particular goods belonging to natural people will be gathered and start belonging to the holding company, although still managed by the partners.

An advantage of holding companies is having more safety and better planning of the property that belongs to it, which will also be divided according to the owner of the estate’s wishes, after their death.

Another positive aspect of this kind of company is related to the taxation on the holding, which is usually considerably lower than what the law determines on natural people.

In both scenarios, a holding company allows for a less expensive, less bureaucratic, and more simplified way to conduct the succession family process, as everything has been planned in advance.

Thus, bringing property from other countries to Brazil with the intention of planning a family succession may be an attractive decision for whoever owns property abroad, given these benefits of the Brazilian legislation.