Information on inheritance law for resident foreigners and their families with assets in and outside of Brazil...
International inheritance and estate matters can be very complex, particularly if assets are located in different countries. Moreover, disposing of an estate may trigger tax consequences. It is, therefore, highly recommended to seek expert advice on estate planning at an early stage. The following will give a rough overview of the basic principles of inheritance law in Brazil.
Which Law Applies?
Brazilian courts apply the national law of the country where the deceased used to live and/or Brazilian law where it is more favorable to the Brazilian spouse or children of the deceased. Brazilian courts have exclusive jurisdiction over the relevant probate proceedings and to distribute the assets situated in Brazil.
Brazilian law applies to all owners of property in Brazil, including foreign nationals, and does not distinguish or specify a different form of treatment for foreign nationals owning property in Brazil, members of different religions, or non-Brazilian resident foreign nationals.
The Brazilian Civil Code (Law 10406/2002) contains the rules concerning succession, and the Code of Civil Procedure (Law 5869/1973) sets forth the procedural rules applicable to successions. In its turn, the Introduction to the Brazilian Civil Code Act (Decree-law 4657/1942) specifies which law will apply in the event of a succession with international elements.
In case the actual applicable law is disputed, the court with jurisdiction over the location of the estate will determine which law is to govern, and, in general, Brazilian law will normally be applied. Some States have courts with special jurisdiction for family law matters. All proceedings involving family law cases are confidential.
Inheritance cases tend to last not less than six months. However, proceedings may last a number of years where the beneficiaries (heirs and/or legatees) do not agree with their rights and obligations.
Brazilian law requires that a reserved portion equal to 50 percent of the estate be distributed to the so-called necessary heirs, namely the existing descendants, ascendants and surviving spouse. The remaining 50 percent may be freely distributed under a will. Where there is no will or a will is found to be invalid, the whole estate is distributed to the necessary heirs. These rules apply to foreign nationals precisely in the same manner as they apply to Brazilian citizens.
Hereditary succession operates as follows:
In principle, the assets are shared between the descendants and the surviving spouse. Except in relation to special cases, the spouse is entitled to a portion of the estate equal to that of the portion distributed to the descendants.
In case the deceased leaves no descendants, the estate is shared between the ascendants, and the spouse. Where there are first degree ascendants (for example father and mother), one third of the estate is distributed to the surviving spouse. However, the surviving spouse will receive 50 percent of the estate if:
- There are only ascendants within a further degree of kinship.
- There is only one first degree ascendant.
In the absence of descendants and ascendants, the estate is entirely distributed to the surviving spouse. Where there are no descendants, ascendants and a surviving spouse, the estate is inherited by the collateral relatives up to the fourth degree, and there being no relatives as well as in case inheritance is waived, the estate is distributed to
- The relevant Municipality or the Federal District, if located in their jurisdictions.
- The Federal Government, if located within a federal territory.
Inheritance by children
Minors have to be represented by their parents or guardians in case assets are distributed to them. Parents may appoint guardians in their wills or another official document. Where the appointment of a guardian is required, the courts will appoint one.
For cases in which there is not an appointed guardian, the guardian will be a blood relative of the minor, subject to the following order:
- Collateral relatives up to third degree.
Restrictions on inheritance by foreign nationals
In general, the same rules applicable to Brazilian individuals and companies with regards to acquisition of real estate apply to their foreign counterparts. There is, however, an exception in relation to the acquisition by foreign individuals and companies of real estate in coastal and frontier areas, as well as certain other areas deemed of national security.
Before purchasing real estate in Brazil, non-residents (both individuals and entities) have to enroll with the Brazilian taxpayers' registry.
Brazilian law does not provide a specific deadline for the sale of property acquired by way of inheritance which cannot be owned by foreign persons. Therefore, foreign persons should seek legal advice specific to their particular case.
It is important to consider the tax applicable (Inheritance tax - Imposto Transmissão Causa Mortis e Doação - ITCMD) to causa mortis property transfers and gifts of any type of property or rights, which is levied by Brazilian States and the Federal District. For example, Law 10.705 of 28 December 2000 provides that the applicable tax rate in the State of São Paulo is four percent.
During the Lifetime of the Property Owner
During their lifetime, a property owner may gift their assets to anyone, provided that:
- Applicable taxes are duly paid
- Conveyances of real estate are made before a notary public (Brazilian law provides that title to real estate is only transferred after registration of the deed with the appropriate land registry)
- Gifts between ascendants and descendants or spouses are construed as advances of inheritance entitlements
- A person making a gift must set aside sufficient assets or income for their own maintenance
Transfers of real estate may be made by way of inter vivos gifts and for any reason, on any or no payment.
Disclaimer: Every effort has been made to offer information that is current, correct and clearly expressed. The information in this summary is intended to be no more than a general overview of the position and certain details have been deliberately omitted. The contents of this page should not be taken as an authoritative statement of Brazilian law and practice. Neither the author nor the publisher are responsible for the results of actions taken on the basis of information contained in this summary, nor for any errors or omissions. This text is not intended to render legal advice. Readers are encouraged to seek professional advice concerning specific matters before making any decision.