International asset succession: risks, costs and how to avoid them

When starting an international allocation, the main pain point investors face is the inheritance tax. Many even consider giving up on this step, given the complexity involved and a cost far above what they already know in Brazil.

With proper planning, however, it is possible to protect your family from these high costs and make the succession process fluid, keeping international investing as simple and inexpensive as some investments in Brazil.

The risks involved in a succession

Put simply, there are two risks in any succession process, whether in Brazil or internationally: taxes and the succession procedure itself.

Taxes draw the most attention because they are an immediate demand on the family: the tax must be paid before the assets can be accessed. One of the best-known regimes is the US one, where rates can reach 40%. It is also important to note that the same inheritance can be taxed in more than one country (in Brazil, the investor’s country of residence, and in the country where the assets are located). In other words, inheritance tax paid abroad does not generate a credit against the Brazilian inheritance tax.

In addition to the tax, the procedural side of succession must be considered. Each jurisdiction has its own probate procedure and, until it is concluded, the estate is frozen. Bank accounts cannot be moved, real estate cannot be sold, structures are not properly managed. It is common for a family to discover that the assets exist, that they are theirs by right, and still be unable to touch them for months.

In this article, we walk through the main succession issues to watch when investing internationally: rates, costs, procedure and the instruments that protect and simplify the family legacy.

Estate Tax: the US inheritance tax

The Estate Tax applies to the transfer of assets upon death, with rates starting at 18% and reaching 40%, in brackets, the 40% bracket applying to the portion above US$ 1 million. For the purposes of this tax, regardless of the investor’s country of residence, assets located in the US are exposed to the same taxation. In other words, even an investor who has never lived in the United States, never held a Green Card and never set foot in the country may still be subject to the Estate Tax, as long as they hold US-situs assets.

What can meaningfully change the taxation of the inheritance, however, is the residence of the deceased. For US citizens and tax residents, the first US$ 15 million of worldwide assets are exempt from the Estate Tax. For non-residents, the situation of the overwhelming majority of Brazilian investors, that exemption drops to US$ 60 thousand of US-located assets.

What counts as a US-situs asset

For non-US residents, the Estate Tax reaches only the so-called US situs assets, and the classification comes directly from the Internal Revenue Code, not from the intuition of the bank where you invest. The table below shows the main assets held in the US and whether they are exposed to or exempt from the Estate Tax:

How to eliminate the Estate Tax on your investments

The mechanism to eliminate the Estate Tax is relatively simple: use a company located outside the US as the holder of the investments in the country. This eliminates the taxation entirely because, for US purposes, there is no “causa mortis” event in the country. The holder of the assets is a company, and a company does not die.

In other words, the US assets are no longer held directly in the individual’s name and become held by a company incorporated outside the United States, which is in turn owned by the individual. These are usually companies based in favorable tax jurisdictions (the well-known offshores), where non-residents typically pay no tax on income or inheritances, such as the British Virgin Islands (BVI), the Bahamas and Cayman, among others.

It is important to stress, however, that setting up the offshore company alone, while it does eliminate the Estate Tax, does not automatically eliminate the succession procedure if no facilitation tool is in place. Below we cover the succession process and how to make the transfer of wealth fluid across generations.

The succession process without a facilitation tool

Opening a company to hold the assets, whether based in Brazil, the US or offshore, does not automatically simplify succession. Structures without a succession tool in place depend on the full procedure in both the deceased investor’s country of residence and the company’s jurisdiction, which delays delivery to the heirs and turns an already-built estate into an unavailable resource, adding a cost that is rarely discussed: the time it takes to transfer the wealth.

When no instrument is in place, the transfer of assets abroad goes through five stages:

The detail that usually goes unnoticed is the dependency between the stages. The procedure abroad only begins after the Brazilian probate ends, because it is the Brazilian court that defines the destination of the assets.

Tools to simplify succession

When investing through companies, it is possible to implement instruments that simplify the succession process, eliminating the dependencies described above, especially those related to the Brazilian probate, and making the process as quick as a simple documentary adjustment.

The table below shows the most widely used tools, followed by a summary of each one:

Joint Tenancy With Rights of Survivorship (JTWROS)

A clause registered on the share certificate itself. With it, all shareholders are considered owners of 100% of the shares, with no percentage split. When one of them passes away, the remaining shareholders continue to own the entirety, without anything needing to be transferred: the deceased is simply removed.

As an analogy, we often compare it to a game of peg solitaire. As long as at least one shareholder remains in the structure, succession resolves itself, with no probate needed anywhere. The mechanism only stops working when a single shareholder remains, at which point the structure returns to the long path described above. That is why the shareholding composition needs to be designed with the next generations in mind, not just the couple.

Vista Trust

The Vista Trust is an instrument exclusive to the British Virgin Islands, formalized through a Trust Instrument. It is a document separate from the corporate paperwork, in which the client (Settlor) determines the distribution of the shares to the beneficiaries as they wish, with the Trustee responsible for executing that wish.

With this tool, beneficiaries do not need to be shareholders of the company and the division can be unequal, even including people who are not forced heirs.

It is worth noting that this is the only physical document the investor receives in the process of setting up and maintaining the international structure, sealed by the BVI government, with one physical copy held by the investor and another by the Trustee.

Share classes

A structure with distinct share classes in the international company: beneficiaries receive shares with no value and no voting power (Class B), while the value and voting power remain with the owners of the wealth (Class A). The documents provide that, upon the succession of the Class A holders, the value and voting power transfer to Class B, thereby avoiding the need for succession proceedings in Brazil and abroad.

Will

A familiar instrument in Brazil, it is a document that sets out how the estate should be distributed upon succession. Unlike in Brazil, an international will is a 100% private document. While there are no maintenance costs, its limitation is precisely that it does not eliminate the probate procedure in the structure’s home country: the will organizes the probate abroad, but does not dispense with it.

When is an offshore company worth it?

That is the golden question, and there is no recipe that fits every investor. Sensitivity to a risk that is a fact varies from person to person: more sensitive and urgent for some, less relevant for others. Factors such as the investor’s age, marital status, having children or not, and holding insurance or assets with immediate post-death liquidity, among others, influence the ideal moment to set up an international company.

At 4Tax, we recommend starting the analysis of whether an international company makes sense when the estate reaches between US$ 300 thousand and US$ 400 thousand. At that point, the Estate Tax approaches 25% of the amount invested, a quarter of the estate.

To reach that conclusion, you need to consider the maintenance costs of an offshore company, which run around US$ 3 thousand per year, covering the local providers (registered agents, mandatory figures in the country), government fees and the accounting of the structure for both Brazilian and local purposes.

As noted above, there is no magic number at which the offshore becomes mandatory. However, it becomes hard to justify not having the structure when the estate exceeds US$ 500 thousand, considering that the tax in this case runs around US$ 150 thousand (27.5% of the estate), not counting local attorney fees and the time it takes to transfer the wealth. It would take more than fifty years of maintenance costs to equal the amount that will be due, sooner or later, in an event that depends on no one’s choice.

And in Brazil: how are foreign inheritances taxed?

For years, charging ITCMD on inheritances or gifts of assets located outside Brazil was not possible. The Constitution, through Article 155, created the ITCMD but did not provide for taxing foreign inheritances without a complementary law. In addition, the Brazilian Supreme Court, in ruling on Tema 825, confirmed that states could not levy the tax while that law did not exist.

In parallel with Law 14.754/2023, Constitutional Amendment 132/2023 was enacted, providing the basis to begin taxation and making progressive rates mandatory for the states. The Complementary Law required by the Constitution, however, was still missing.

In January 2026, Complementary Law 227 was published, granting the authorization and regulating the cases of incidence for transfers with an international element. For now, ITCMD remains capped at 8%, with the tax set by each state of the federation.

We note that actually charging the tax depends on each state enacting its own legislation after LC 227, observing both the annual and the 90-day anteriority rules. In practice, the ITCMD change only takes effect the following year or 90 days after publication, whichever is later, which may represent a concrete planning window over the coming months.

Talk to 4Tax

We take care of our clients’ structures, from planning to the design and implementation of the succession instrument best suited to each family, monitoring the obligations in Brazil and in every jurisdiction throughout the entire international investment journey.

Invest abroad and count on us to protect the legacy you have built and ensure it reaches the next generation without surprises. Talk to us on WhatsApp or write to contato@4taxgroup.com.