The use of a patrimonial holding company is a common legal tool for estate and succession planning, offering benefits like streamlined asset management, lower tax liabilities, and safeguarding of wealth.
A patrimonial holding company is established specifically to manage the assets and properties of individuals or legal entities, as opposed to engaging in productive activities like an operating company.
Understanding the operations and legal implications is crucial for lawyers specializing in business and family law. This article discusses the types and advantages of a patrimonial holding company, along with the role of lawyers in establishing and advising clients.
Planning and guiding customers in managing their digital heritage.
Main categories of Asset Management
There are various kinds of heritage assets, each serving distinct objectives.
Pure Heritage Holding
- Exclusively designed for the control and oversight of assets and privileges.
- It does not engage in operational or commercial activities.
Mixed Heritage Holding
- You can also engage in commercial or business activities in addition to managing assets.
- A company that oversees property management and leasing services.
Family Heritage Ownership
- Established to safeguard and oversee a family’s legacy.
- Simplifies inheritance and prevents disputes among heirs.
Managing inherited real estate assets
- Specializing exclusively in property management, whether for leasing or selling.
- Utilized for tax optimization and to mitigate consecutive risks.
Participations Holding Company
- Manages other businesses by owning shares in them.
- It can be utilized to consolidate control of a family business.
Different types of ownership serve distinct purposes and advantages, which vary based on the goals of partners or families. Selecting the right structure hinges on partners’ objectives as well as legal and tax considerations.
Practical instructions for lawyers on creating a will.
Creating a Heritage Holding involves a series of sequential actions.
A patrimonial holding company creation provides various advantages to its clients as a legal tactic.
It is crucial for lawyers to have a clear understanding of each step in the legal process and be able to explain it in a way that is both technically precise and easily understandable for their clients.
Identification and Examination of Heritage Objectives
Prior to initiating any official process, thoroughly analyze the client’s financial situation.
A patrimonial holding company can serve various objectives, so it’s crucial to clearly outline its specific priorities. Encourage your client to contemplate:
- Successful inquiries describe how the estate aids in the generational transfer without relying on the conventional inventory method.
- Explain how personal assets can be safeguarded from legal actions by being effectively incorporated into the business framework.
- Certain activities conducted through holdings can lead to valid tax savings due to tax efficiency.
- Centralized management illustrates how the holding enables a cohesive oversight of various assets and investments.
Choosing the appropriate social framework
It is crucial to advise your client about the legal consequences of each corporate structure at this point. Provide a thorough explanation.
- This option, the Limited Company (Ltda.), is emphasized for its minimal operating expenses, uncomplicated organization, and decreased advertising needs.
- The anonymous society (S.A.) provides more flexibility for partners to join or leave, issue various types of shares, and may be better suited for intricate or high-value assets.
- The Unipersonal Limited Society (SLU) can be seen as an alternative to the previous EIRELI for situations with only one partner, but it is crucial to clearly define its restrictions for future reference.
The decision should take into account the intricacy of the inheritance, the amount of heirs or beneficiaries, and the particular tax goals.
Constitutional Instrument Preparation
Guide your client on the significance of having a properly organized document at this point. Explain that:
- The social contract or statute serves as the holding company’s “constitution” and should cover all necessary scenarios to prevent potential conflicts.
- Administrative provisions need to be carefully written to specify who will hold decision-making authority and the circumstances under which it will be exercised.
- Rules regarding profit distribution require careful consideration, outlining the frequency, proportions, and conditions for holding back funds.
- Succession procedures and transfers of quotas/actions need to be clearly defined, including priority rights and acknowledgment of the ownership.
- Conflict resolution provisions like mediation and arbitration can help prevent potential legal conflicts in the future.
Integration of Assets into the Estate
Explain to your client that this stage involves careful strategic planning and consideration of financial aspects.
- Goods need to be evaluated by a skilled expert to establish their appropriate market worth.
- Goods transferred to the holding company trigger the application of ITBI (Tax on the Transmission of Real Estate) unless the transfer involves the allocation of property to partners for predominantly non-real estate purposes.
- The best timing for the transfer should take into account the client’s overall tax planning, as rushed actions may lead to avoidable tax obligations.
- The transfer paperwork needs to be flawless, with documentation kept in offices and relevant authorities for every category of asset (such as mobiles, vehicles, and corporate holdings).
Implementation of Governance and Compliance is being put into practice.
Advise your client that maintaining the holding properly is just as crucial as establishing it.
- The assets of the parent company should be managed separately from the personal assets of the partners to prevent confusion between personal and company assets.
- Corporate meetings should be scheduled and recorded regularly, even in family-owned businesses, to emphasize the consistency of decision-making.
- Financial and tax statements must be prepared meticulously to prevent scrutiny from tax authorities.
- Rental agreements, comodato arrangements, and other partnerships between landlords and tenants should adhere to prevailing market conditions and avoid being classified as simulations.
This structure is not an unbreakable “fortress”, but a valid heritage organization that, when correctly set up and upheld, offers reliable protection within the confines of existing laws.
Key Advantages of Asset Holdings
Forming a patrimonial holding company can offer numerous advantages to its shareholders and beneficiaries. Key benefits include:
Patrimonial Protection – Protecting heritage
The arrangement safeguards family assets from financial threats and legal actions by transferring ownership to a company, which hinders legal intervention.
Successive Planning
Owners can transfer assets to their heirs during their lifetime by using usufruct-reserved quotas, which helps avoid inventory paperwork and lowers inheritance tax expenses.
Tax Charge Reduction
Taxing real estate rental income can be notably decreased by utilizing a holding company, resulting in a reduced tax rate of 11.33% compared to the 27.5% rate imposed on individuals.
Heritage Management Facility
Having all assets managed by one company makes it easier to handle inheritance and prevents disputes among heirs or partners.
The lawyer’s role in organizing a Patrimonial Holding.
The patrimonial holding company serves as a strategic instrument for attorneys involved in estate and succession planning.
Understanding the structure and advantages can help customers protect their assets, reduce taxes, and manage their inheritance effectively.
Choosing the right model and carefully managing the legal aspects are crucial for ensuring the security and effectiveness of asset management.
Read the article on Bens Sharing to understand when it happens and how to do it.
