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Succession planning is still often postponed by business families, despite its practical effects being widely known.

In many cases, succession is still treated as a taboo, as if postponing the conversation were less risky than facing it.

The problem arises later: judicial inventories that drag on for years, paralyzed companies, high ITCMD (Inheritance and Gift Tax) rates, attorney fees, and family conflicts. It is in this scenario that succession planning becomes an instrument of governance, predictability, and value preservation.

The family holding company organizes assets in Brazil, centralizes real estate and equity interests, and allows succession to occur through the transfer of shares.

It is common to donate shares with a lifetime usufruct reservation, so that the founder, while still alive, transfers bare ownership to the heirs but retains decision-making control and the usufruct of the income until his or her death, which reduces risks and diminishes tax impacts.

The structures also usually have clauses of incommunicability and unseizability that aim to protect the founder’s assets, in order to keep them with his heirs and successors, preventing third parties, spouses, and/or partners of his heirs from benefiting from the assets.

The articles of association play a central role. The possibility of establishing decision-making powers, creating different classes of shares with different political and economic rights, allows for the separation of management, avoids conflicts, and helps to ensure business continuity.

Offshore companies, when well structured, play an important role in the organization of international assets. It centralizes investments abroad, mitigates the challenges of transnational succession, and avoids asset fragmentation among heirs.

For offshore structures to work, it is essential to demonstrate economic substance: local administration, proper accounting, and business purpose. Merely formal structures tend to be disregarded, including with the application of Article 116 of the CTN.

Integration allows the offshore entity to be a partner in the Brazilian holding company. In succession, the transfer of offshore shares occurs in accordance with its bylaws and applicable foreign law, without the need for inventory in Brazil. Profits from foreign subsidiaries are taxed here under CFC rules.

However, treating holding companies and offshore entities as absolute protection is a mistake. The structure creates governance mechanisms, but none of this replaces prior family alignment.

Effective succession planning requires anticipating uncomfortable scenarios: divorces, premature deaths, disputes between heirs. These issues need to be addressed in partnership agreements and clear rules before the estate becomes the subject of litigation.

Planning succession means deciding while you are still alive how your estate will be managed when succession is no longer a choice but an imposition.

Por Isadora Schwartzmann, partner at CQTD.