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Making a Will

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This topic contains 27 replies, has 8 voices, and was last updated by  Jacksmith 1 month, 2 weeks ago.

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  • #258838

    pawstoola
    Member

    Not sure if this is the correct category for this question but here goes..
    Anyone know what is involved in making a will here? My main concern is if something happened to myself and my husband, we would want our daughter to live with my brother/ sister in law in the US. How can I make sure there is legally something in place so that happens? I’m sure my husbands family would not be too happy about it but would respect it if we had something in place. Otherwise there would probably be some major issues considering we have been living here awhile. Also, she is not baptized and therefore doesn’t have official padrinhos.
    Any advice would be appreciated.

  • #258844

    sven van ‘t Veer
    Participant

    You make a will at the Cartorio de Titulos é Documentos.

  • #258848

    Wellington
    Member

    If you think her parents will resist the terms of the will, then you can bet that is what is going to happen. My wife’s parents have the same attitude as all Brazilian grandparents: they assume they have rights and freely exercise them to the general disregard of the wishes of others. Furthermore, if the kids have a well-established life in Brazil, and the GPs can continue to provide them with that continuity, I think it’s not likely a judge would agree to their relocation, especially if they have limited experience of living in that country. Even if that is eventually granted, it will take years as the case is enrolado in the Brazilian courts.

  • #258849

    Anonymous

    i think the general question, even if you register the will, is how the will would be executed. how will the kids be moved? who exactly is going to bring them to your family in the US? how will your family even know if something happens to you? i think probably calling the consulate is in order to find out these things.

    We have the opposite situation, if anything happens to us I think I’d like my kid to stay with our family in Brazil and knowing that the crazy red tape would probably keep her in Brazil even if my US family wanted to take her makes me a little calmer.
  • #258850

    Wellington
    Member

    The legal situation here is very imprecise and action to rectify perceived wrongs moves at a snail’s pace. They have most of the same statutes as the more ordered societies in the world, but they just can seem to implement them in an effective way. They are mostly ignored on that basis.

  • #258852

    sven van ‘t Veer
    Participant

    It’s the last wish of the parents. It’s a testamentary clause provided by law:

    Art. 1.634. Compete aos pais, quanto à pessoa dos filhos menores:

    IV – nomear-lhes tutor por testamento ou documento aut√ɬ™ntico, se o outro dos pais não lhe sobreviver, ou o sobrevivo não puder exercer o poder familiar;

    Art. 1.729. O direito de nomear tutor compete aos pais, em conjunto.

    Par√ɬ°grafo √ɬ∫nico. A nomea√ɬßão deve constar de testamento ou de qualquer outro documento aut√ɬ™ntico.

    If you feel insecure (with some reason as mentioned above), Just have the wills signed by them too as witnesses.

    Art. 1.864. São requisitos essenciais do testamento p√ɬ∫blico:

    II – lavrado o instrumento, ser lido em voz alta pelo tabelião ao testador e a duas testemunhas, a um s√ɬ≥ tempo; ou pelo testador, se o quiser, na presen√ɬßa destas e do oficial;

    That way it’s uncontestable, at least by them.
    You might want a lawyer to set up the clauses.
    Make the parents in the will the executors:
    Art. 1.976. O testador pode nomear um ou mais testamenteiros, conjuntos ou separados, para lhe darem cumprimento às disposições de última vontade.

  • #258865

    Marc Maserati
    Participant

    We had a will created, signed and notarized in the US. All the documents are at my lawyers office in the US. Is there any need to do anything with thes documents here in Brazil?

    Marc

  • #258877

    sven van ‘t Veer
    Participant

    As long as noone dies, no, after that, it should be consularised and legally translated to be aplied here.

  • #258982

    miguel
    Participant

    [QUOTE=mmaser]We had a will created, signed and notarized in the US. All the documents are at my lawyers office in the US. Is there any need to do anything with thes documents here in Brazil?

    Marc [/QUOTE]
    If your US-based will deals with disposition of assets that you hold in Brazil, then you honestly don’t expect a Brazilian probate judge to automatically rubber stamp it and carry out your plan, do you? Your heirs would end up paying a fortune for some local lawyer to deal with completely unnecessary conflict-of-law and jurisdiction issues, with no guaranteed resolution that your wishes will be carried out. In such a case you’d need a Brazil-based will to cover your local assets. Then your heirs would wind up paying a lesser fortune.
    Probably around 11-14% of your local estate, from what I understand. That would be 4% in state estate taxes (SP & Rio), around 4-5% for court and probate costs, and around 3-5% for their lawyer (note: they’ll need to negotiate this last one carefully).
    Disclaimer: I am not an estate lawyer, this is all based on discussions held with US and Brazil estate lawyers.
    Obviously, some estate planning is in order to try and minimize these absolutely exhorbitant costs.
    When I have some free time, maybe I’ll start a general thread on potential estate issues for binationals (Brazil & US), as I don’t recall that having been covered lately. But someone feel free to beat me to the punch.
    miguel2013-11-18 00:24:17

  • #258983

    [QUOTE=miguel]When I have some free time, maybe I’ll start a general thread on potential estate issues for binationals (Brazil & US), as I don’t recall that having been covered lately. But someone feel free to beat me to the punch.[/QUOTE]
    Yes please, that would be great Miguel! Thumbs Up

  • #258984

    sven van ‘t Veer
    Participant

    Miguel, in Latin lawyer babble, we say lex locus regit actus. That basically means that the law of the place defiance the legitimacy of a legal act, such as the making of a will. It means that a Will made in the US is valid if it meats the legal requirements in the US, and can be applied in Brazil as long as it does not brake Brazilian law.
    It really doesn’t make a bit of a difference where the will is made up in relation to the costs. Estate tax is 4% in most states. A decent lawyer will charge 5% and court costs depends on each state, but not 4 or 5%.
    Of course it is smart to have a Brazilian will made up in Brazil, as it, in theory, should not break Brazilian law. Since the guy at the cartorio is not a probate lawyer either, he might just write down anything you say.

  • #259000

    miguel
    Participant

    [QUOTE=sven]Miguel, in Latin lawyer babble, we say lex locus regit actus. That basically means that the law of the place defiance the legitimacy of a legal act, such as the making of a will. It means that a Will made in the US is valid if it meats the legal requirements in the US, and can be applied in Brazil as long as it does not brake Brazilian law.
    Of course it is smart to have a Brazilian will made up in Brazil, as it, in theory, should not break Brazilian law. [/QUOTE]
    Sven, thanks for your response. It sounds like, in practice, we are ending up at the same place. Certainly most US lawyers will not have a clue as to whether the US estate document they drafted for you complies with Brazilian law, or not. Indeed the risks are extremely high that it won’t.
    Two very quick examples come to mind
    1. Revocable Trusts, or Living Trusts – are very common in the US, but my understanding is that Brazil does not recognize such trusts or even trusts in general. Is this the case, and if so, how would a Brazil judge then proceed, if at all? We all know the snail’s pace that Brazilian courts move at in general, and in these estate matters specifically, and it is difficult to contemplate the extra time that this potential ‘monkey wrench’ would entail for one’s loved ones….
    2. Choice of Beneficiaries – US folks have a great deal more leeway as to whom they can leave their assets to, particularly if they don’t live in a community property state. In Brazil, as you know under the civil code there are predetermined herdeiros necessarios, or mandated heirs, with certain minimum percentages, that you must leave your assets to, according to your individual circumstances. How would a Brazil judge proceed if your US will left your assets to the “wrong” people under Brazilian law? Presumably your will would be invalidated, and then you end up leaving your assets to the “default” option under the Brazil civil code?
    [QUOTE=sven]It really doesn’t make a bit of a difference where the will is made up in relation to the costs. Estate tax is 4% in most states. A decent lawyer will charge 5% and court costs depends on each state, but not 4 or 5%.[/QUOTE]
    It sounds like we are nearly in the same estimated range for costs, but with differences in the actual breakdown. Naturally I defer to you on this. Folks need to be aware of these elevated costs for planning purposes, often just the state tax is considered. Just a couple of questions. In a previous post I believe you mentioned that the minimum legal fee as determined by the OAB to settle estate matters for SC was 3%; what are those minimums for RJ and SP? Also, can you provide a “guestimate” % range for the approx. state court costs would be for say RJ (as I believe that is where you practice) just to give us an idea.
    miguel2013-11-18 08:54:38

  • #259001

    sven van ‘t Veer
    Participant

    [QUOTE=miguel]
    1. Revocable Trusts, or Living Trusts – are very common in the US, but my understanding is that Brazil does not recognize such trusts or even trusts in general. Is this the case, and if so, how would a Brazil judge then proceed, if at all? We all know the snail’s pace that Brazilian courts move at in general, and in these estate matters specifically, and it is difficult to contemplate the extra time that this potential ‘monkey wrench’ would entail for one’s loved ones….
    [/QUOTE]

    In all cases, Brazilian law provides that only Brazilian courts have jurisdiction over real estate in Brazil, and Brazilian courts don’t have jurisdiction over real estate abroad. If real estate exists in Brazil and abroad, probate has to be done in both contries. That means that the clauses creating trusts will be valid for the inheritance abroad. In Brazil, these clauses will be interpreted according to Brazilian law. But that of course is a very general indication.
    [QUOTE=miguel]
    2. Choice of Beneficiaries – US folks have a great deal more leeway as to whom they can leave their assets to, particularly if they don’t live in a community property state. In Brazil, as you know under the civil code there are predetermined herdeiros necessarios, or mandated heirs, with certain minimum percentages, that you must leave your assets to, according to your individual circumstances. How would a Brazil judge proceed if your US will left your assets to the “wrong” people under Brazilian law? Presumably your will would be invalidated, and then you end up leaving your assets to the “default” option under the Brazil civil code?
    [/QUOTE]

    √Ç¬ß 1√Ǭ∫ A sucessão de bens de estrangeiros, situados no Pa√ɬ≠s, ser√ɬ° regulada pela lei brasileira em benef√ɬ≠cio do c√É’njuge ou dos filhos brasileiros, ou de quem os represente, sempre que não lhes seja mais favor√ɬ°vel a lei pessoal do de cujus.
    That means that, if your testament desinherits your foreign family, that clause will be held up in Brazilian court.

    [QUOTE=miguel]
    It sounds like we are nearly in the same estimated range for costs, but with differences in the actual breakdown. Folks need to be aware of these elevated costs, often just the state tax is considered. Just a couple of questions. In a previous post I believe you mentioned that the minimum legal fee as determined by the OAB to settle estate matters for SC was 3%; what are those minimums for RJ and SP? [/QUOTE]

    In RJ it depends on the value of the estate. But 3% acording to the tabela. Obviously this is the minimum price. Inheritance involving a will is likely to be a lot of work. Most lawyers will charge 5% or more.
    [QUOTE=miguel]
    Also, can you provide a “guestimate” as to what the approx. state court costs would be for RJ.
    [/QUOTE]
    Also depends on the estate, Type of real estate involved. Site not working now.
  • #259002

    Miguel and Sven, I hope you continue this conversation. Now that I’ve naturalized, it will be necessary for me to have two estate plans. As Miguel mentioned, trusts don’t exist in Brasil. This is a huge bummer, for as you’re probably aware, revocable trusts bypass probate (and the various fees associated with probate). It costs more to have an attorney draw up a trust as opposed to a will on the front end, but the benefits (and savings) later on far outweigh the initial expense.
    I was given the reference of an estate attorney in Miami who supposedly specializes in ‘international clients’, but haven’t pursued the lead just yet. Once I have more info, I’ll be sure to share it here. In the meantime, again, please continue this convo….

  • #259014

    miguel
    Participant

    Thanks Sven for the response, which I know a number of us will benefit from. Please see queries in red:
    [QUOTE=sven]
    [QUOTE=miguel]
    1. Revocable Trusts, or Living Trusts – are very common in the US, but my understanding is that Brazil does not recognize such trusts or even trusts in general. Is this the case, and if so, how would a Brazil judge then proceed, if at all? We all know the snail’s pace that Brazilian courts move at in general, and in these estate matters specifically, and it is difficult to contemplate the extra time that this potential ‘monkey wrench’ would entail for one’s loved ones….
    [/QUOTE]

    In all cases, Brazilian law provides that only Brazilian courts have jurisdiction over real estate in Brazil, and Brazilian courts don’t have jurisdiction over real estate abroad. If real estate exists in Brazil and abroad, probate has to be done in both contries. That means that the clauses creating trusts will be valid for the inheritance abroad. In Brazil, these clauses will be interpreted according to Brazilian law. But that of course is a very general indication.
    So let’s see if you are understood correctly. Would you agree then with the following, in the case of a US citizen with Brazil permanent residency, with real estate and financial assets in both the US and Brazil:
    – his US lawyer can draft a US estate document (let’s say it’s a trust) covering his US assets (see * below)
    – his Brazil lawyer can draft a Brazil will covering his Brazil assets (see * below)
    – the Brazil courts will not review, interfere with or question the validity of the US trust covering his US assets because they lack jurisdiction, nor will they approve, they are effectively neutral.
    * alternatively, the US trust could make reference to the Brazil assets, and this US trust could well be recognized as a valid instrument in Brazil but as you state ‘these clauses will be interpreted according to Brazilian law’, which introduce a certain level of risk and uncertainty, and potential delays owing to the fact that the clauses themselves have not been vetted under Brazilian law
    [QUOTE=miguel]
    2. Choice of Beneficiaries – US folks have a great deal more leeway as to whom they can leave their assets to, particularly if they don’t live in a community property state. In Brazil, as you know under the civil code there are predetermined herdeiros necessarios, or mandated heirs, with certain minimum percentages, that you must leave your assets to, according to your individual circumstances. How would a Brazil judge proceed if your US will left your assets to the “wrong” people under Brazilian law? Presumably your will would be invalidated, and then you end up leaving your assets to the “default” option under the Brazil civil code?
    [/QUOTE]

    √Ç¬ß 1√Ǭ∫ A sucessão de bens de estrangeiros, situados no Pa√ɬ≠s, ser√ɬ° regulada pela lei brasileira em benef√ɬ≠cio do c√É’njuge ou dos filhos brasileiros, ou de quem os represente, sempre que não lhes seja mais favor√ɬ°vel a lei pessoal do de cujus.
    That means that, if your testament desinherits your foreign family, that clause will be held up in Brazilian court.

    Let’s provide another example to see if you are understood correctly, in this case a single American with no children and a sole surviving parent (let’s say father).
    – IF the example above were instead a single BRAZILIAN with the same fact set, then my understanding from previous discussions is the following: the Brazilian has one herdeiro necessario(his father), who has a right to 50% of the son’s estate. The Brazilian can dispose of the other 50% (a parte disponivel) to whomever he wants with the use of a local will. (FYI from previous discussions apparently the father cannot waive his right to this, even if he wants to; in fact an attempt to do could potentially invalidate his son’s entire will.)
    – With the example above with an ESTRANGEIRO, are you saying that the American could disinherit his American father via his local will from his Brazil assets, the fact that the father is an herdeiro necessariois somehow trumped by the fact that his estrangeiro??
    [QUOTE=miguel]
    It sounds like we are nearly in the same estimated range for costs, but with differences in the actual breakdown. Folks need to be aware of these elevated costs, often just the state tax is considered. Just a couple of questions. In a previous post I believe you mentioned that the minimum legal fee as determined by the OAB to settle estate matters for SC was 3%; what are those minimums for RJ and SP? [/QUOTE]

    In RJ it depends on the value of the estate. But 3% acording to the tabela. Obviously this is the minimum price. Inheritance involving a will is likely to be a lot of work. Most lawyers will charge 5% or more.
    This pretty much confirms what I had heard, 5% being the most prevalent.
    [QUOTE=miguel]
    Also, can you provide a “guestimate” as to what the approx. state court costs would be for RJ.
    [/QUOTE]
    Also depends on the estate, Type of real estate involved. Site not working now.

    [/QUOTE]
    Let’s make it simple and state that the local estate consists solely of a couple residential condo apartments in Rio and financial assets with a couple of Brazil banks as custodians.
    Point is just to have a reference range for folks to have. We’re up to 9% now of folks’ total local estate being consumed by probate costs (4% state estate tax + 5% lawyers fee).
    miguel2013-11-18 14:15:17

  • #259015

    [QUOTE=miguel]Point is just to have a reference range for folks to have. We’re up to 9% now of their total local estate (4% state estate tax + 5% lawyers fee). [/QUOTE]
    Let’s say I burn through all my cash before my ‘zone is called for boarding’, yet I leave behind some nice real estate holdings. Seeing that appraisal services don’t really exist here in Brasil, how would those assets be valued in order to arrive at what those estate tax and attorney fees would be? In my IRPF, when my accountant declares my bens, the original purchase priceis used. Would this be the same for making an inventory for probate?
    Gringo.Floripa2013-11-18 14:22:12

  • #259018

    sven van ‘t Veer
    Participant

    [QUOTE=miguel]

    So let’s see if you are understood correctly. Would you agree then with the following, in the case of a US citizen with Brazil permanent residency, with real estate and financial assets in both the US and Brazil:
    – his US lawyer can draft a US estate document (let’s say it’s a trust) covering his US assets (see * below)
    [/QUOTE]
    Yes, it would determine 2 things, the will only applies to the estate in the US, and point to a will in Brazil that resolves the estate in Brazil

    [QUOTE=miguel]
    – his Brazil lawyer can draft a Brazil will covering his Brazil assets (see * below)
    [/QUOTE]
    Correct, stating it only applies to the estate in Brazil in conformity with Brazilian law.
    [QUOTE=miguel]
    – the Brazil courts will not review, interfere with or question the validity of the US trust covering his US assets because they lack jurisdiction, nor will they approve, they are effectively neutral.
    [/QUOTE]
    If there is a will in the US, and that will is valid acording to US law, and the Brazilian will points to that will, then yes, they are bound to ignore it.
    [QUOTE=miguel]
    * alternatively, the US trust could make reference to the Brazil assets, and this US trust could well be recognized as a valid instrument in Brazil but as you state ‘these clauses will be interpreted according to Brazilian law’, which introduce a certain level of risk and uncertainty, and potential delays owing to the fact that the clauses themselves have not been vetted under Brazilian law
    [/QUOTE]
    There is something that *remotely*, *very*, *very*, *remotely* resembles something as a trust, but that just would not apply. It’s called fideicomissio. But just forget agout it.
    Interpreted under Brazilian law would probably mean that anything to do with the trust is ignored and that the heirs get their parts.
    There is no way to get out of the estate tax in case of death. The property does not change owner by the probate court, the moment of transmission is the death of the person leaving the estate. The tax’s “fato gerador” is “death”, and not “probate”.


    [QUOTE=miguel]
    Let’s provide another example to see if you are understood correctly, in this case a single American with no children and a sole surviving parent (let’s say father).
    – IF the example above were instead a single BRAZILIAN with the same fact set, then my understanding from previous discussions is the following: the Brazilian has one herdeiro necessario(his father), who has a right to 50% of the son’s estate.
    [/QUOTE]
    Correct
    [QUOTE=miguel]
    The Brazilian can dispose of the other 50% (a parte disponivel) to whomever he wants with the use of a local will.
    [/QUOTE]
    Correct
    [QUOTE=miguel] (FYI from previous discussions apparently the father cannot waive his right to this, even if he wants to; in fact an attempt to do could potentially invalidate his son’s entire will.)
    [/QUOTE]
    Yes he can, but only after the death of the son.
    This would also apply to a SINGLE AMERICAN with no kids and only a living father.
    [QUOTE=miguel]
    – With the example above with an ESTRANGEIRO, are you saying that the American could disinherit his American father via his local will from his Brazil assets, the fact that the father is an herdeiro necessariois somehow trumped by the fact that his estrangeiro??
    [/QUOTE]
    No.
    [QUOTE=miguel]
    Let’s make it simple and state that the local estate consists solely of a couple residential condo apartments in Rio and financial assets with a couple of Brazil banks as custodians.

    Point is just to have a reference range for folks to have. We’re up to 9% now of folks’ total local estate being consumed by probate costs (4% state estate tax + 5% lawyers fee).
    [/QUOTE]
    Doing that would actually have me fill out the Guia de Recolhimento.
    So I need:
    1) Number of real estate and size (sq meters)
    2) total value of the estate
  • #259019

    sven van ‘t Veer
    Participant

    [QUOTE=Gringo.Floripa][QUOTE=miguel]Point is just to have a reference range for folks to have. We’re up to 9% now of their total local estate (4% state estate tax + 5% lawyers fee). [/QUOTE]
    Let’s say I burn through all my cash before my ‘zone is called for boarding’, yet I leave behind some nice real estate holdings. Seeing that appraisal services don’t really exist here in Brasil, how would those assets be valued in order to arrive at what those estate tax and attorney fees would be? In my IRPF, when my accountant declares my bens, the original purchase priceis used. Would this be the same for making an inventory for probate?
    [/QUOTE]

    Valor venal. It’s the price set for IPTU purposes. HOWEVER, if you’ve added to the building and didn’t report that before, it must be reported before taxes.
  • #259025

    miguel
    Participant

    Sven, thanks for your value-added response to my post.
    I’m not going to respond quoting that post, as it’s getting too bulky, and anyway there are just a couple of points that I would like to make:
    1. That’s interesting that you mention to reference the other will in each document, supposedly for completeness. I have heard different informal views on this. Some of the lawyers I have talked to specifically suggest not to reference the other will referencing the other country’s assets, at risk of somehow delaying that country’s probate process of your estate. But those same lawyers mention, as you did, that that will or trust refers exclusively to one’s assets in that specific country.
    2. On the RJ court costs, just trying to get a mean, median, or some reasonable guestimate, without beating a dead horse, you mention that 4-5% is too high. Does 2-3% seem about right, or just 1-2%. We’re now at 9% and the former would mean 11-12% of your estate is eaten up by probate costs and the latter would mean 10-11%.
    miguel2013-11-18 16:46:47

  • #259027

    miguel
    Participant

    [QUOTE=sven][QUOTE=Gringo.Floripa][QUOTE=miguel]Point is just to have a reference range for folks to have. We’re up to 9% now of their total local estate (4% state estate tax + 5% lawyers fee). [/QUOTE]
    Let’s say I burn through all my cash before my ‘zone is called for boarding’, yet I leave behind some nice real estate holdings. Seeing that appraisal services don’t really exist here in Brasil, how would those assets be valued in order to arrive at what those estate tax and attorney fees would be? In my IRPF, when my accountant declares my bens, the original purchase priceis used. Would this be the same for making an inventory for probate?
    [/QUOTE]

    Valor venal. It’s the price set for IPTU purposes. HOWEVER, if you’ve added to the building and didn’t report that before, it must be reported before taxes.

    [/QUOTE]
    Well, that’s what I thought. Until just having run some ‘official’ simulations. Too bad it’s not that pretty a picture!
    First I went to the RJ Estado website for the ITD state estate tax. From there I went to the RJ Prefeitura site, not for the IPTU – but for the ITBI.
    The two simulations are identical.
    The ITD simulation makes it clear that they are referring to the “Valor de Mercado” while the ITBI simulation refers simply to the “Base de Calculo.”
    Each number is greater than 20x the amount of Valor Venal printed on my last IPTU!
    What a huge difference …. considering the implications for the overall probate cost. (see post above)
    Still, the “Valor de Mercado” is around 30-40% below the actual market value I calculate from recent market comp’s. That is, for now….
    GF: Check out this link for SC, and let us know your findings:
    http://www.sef.sc.gov.br/servicos-orientacoes/diat/itcmd-heran%C3%A7as-e-doa%C3%A7%C3%B5es
    miguel2013-11-18 17:14:17

  • #259032

    [QUOTE=miguel]GF: Check out this link for SC, and let us know your findings:
    http://www.sef.sc.gov.br/servicos-orientacoes/diat/itcmd-heran%C3%A7as-e-doa%C3%A7%C3%B5es
    [/QUOTE]
    Went to the link Miguel, and other than the first item, ‘Contatos’, which is a pdf file, all the others are Win-doze programs (even an executable file?). I’m on a mac, and no MSoffice application to open them. Ugh. Will try later….

  • #259126

    miguel
    Participant

    [QUOTE=Gringo.Floripa][QUOTE=miguel]GF: Check out this link for SC, and let us know your findings:
    http://www.sef.sc.gov.br/servicos-orientacoes/diat/itcmd-heran%C3%A7as-e-doa%C3%A7%C3%B5es
    [/QUOTE]
    Went to the link Miguel, and other than the first item, ‘Contatos’, which is a pdf file, all the others are Win-doze programs (even an executable file?). I’m on a mac, and no MSoffice application to open them. Ugh. Will try later….
    [/QUOTE]
    Typical! Haven’t checked out Floripa’s municipal web site yet GF, but if it’s like Rio’s, you can calculate the ITBI online for your property, which may be an interim proxy for you. In Rio the ITBI and the ITD simulations yielded identical results, which makes sense since they’re after all both (different forms of) transmissions taxes on the same property.

  • #259134

    sven van ‘t Veer
    Participant

    It makes sense and doesn’t at the same time. ITCMD are state taxes, not federal. So they may change from state to state.

  • #259140

    miguel
    Participant

    Ultimately it comes down to valuation methodologies, and whether the estado & prefeitura adhere to the same.
    In Rio they do, in no small part given the uncommonly close relationship between [the regimes of] Prefeito Paes & Governador Cabral.
    miguel2013-11-20 07:04:02

  • #259841

    miguel
    Participant

    Updating a previous post in this thread, with the help of a local lawyer colleague (note: I am not a lawyer), regarding the estimated costs of leaving your local estate to your beneficiaries:
    – total court costs involving probate, if there are no conflicts among your beneficiaries: less than 1%of your estate in RJ. If there are conflicts: all bets are off.
    – as previously posted: state transmission taxes (ITD) of 4%of your estate in RJ & SP.
    – as previously posted: standard lawyer retainer for this process of 5%of your estate.
    Conclusion: count on roughly 10% of your estatebeing consumed by court costs, lawyers fees, and state taxes as part of the local probate process (if conflict-free).
    miguel2013-12-02 13:20:29

  • #259845

    miguel
    Participant

    That 10% hit can be a problem for your beneficiaries, particularly if they don’t have the liquidity to pay out these costs.

    However, the first and third costs will be parceled out throughout the process, and the second paid out toward the end.
    (*) Question for Sven: would typically say 50% of the lawyer retainer be paid out at the end of this process?
    However, the much more critical question is whether your beneficiaries will have the cash to live off on – during the years that this probate process can play out. Remember, they won’t have access to your bank accounts until after this process is complete.
    What can you do to reduce these estate costs and/or assure that your beneficiaries have access to cash during this process?
    1.Make gifts, including cash, during your lifetime. You’ll still end up paying the 4% ITD tax (it’s taxed on donations as well) but will forego the other expenses on this.
    2. If you have offshore assets (say in the US), you can use a (US) Trust instrument for your Successor Trustee to transfer those assets. In the US, assets inside of a Trust are not subject to US probate.
    3.Look into and fund a local Previdencia Privada instrumentat your local bank, for a year or two’s living expenses for your beneficiaries, along with a good chunk of the above 10% estate costs. Typically this will be either a PGBL or VGBL. This deserves its own thread or at least its own post but through these instruments you can:
    a)leave your financial assets inside this instrument to whomever you want! But be careful. If courts decide you are doing so to avoid your legal obligations to your herdeiros necessarios, these can be voided.
    (*) Perhaps Sven can give us some insight into how far one can go here!
    b)avoid payout of your state’s ITD entirely for this part of your estate. This sounds appealing but be very careful about the up-front taxa de carregamentoof this instrument, along with exorbitant taxas de administra√ɬßao, which could completely offset this advantage if not carefully negotiated.
    c)avoid payout of court costs and lawyer’s fees entirely for this part of your estate.
    d)avoid probate entirely and ensure an estimated payout time of one month to your beneficiaries for this part of your estate.
    e) note that while estate-tax free, it is not income-tax free to the beneficiaries. They will pay Progressive or Regressive tax rates on either the Account Value or the Income Accrued in the account (this would deserve a separate thread or post).
    4. Look into local Life Insurance.
    – This has the same advantages a) – d)as above.
    – however, unlike e) above, it is also income-tax freeto the beneficiaries.
    Be careful. Seguros de Vida here are usually Term Insurance, and usually very costly, with annual increases for Inflation and for your Age, up until you are forced to drop it owing to reaching maximum Age, with all those premiums potentially down the drain. There are some other types of insurance, which make use of at least some of your premiums, typically expensive, make sure you read all the fine print, you may well be better off self-funding through 3) above.
    miguel2013-12-02 14:16:22

  • #26799

    pawstoola
    Member
  • #311867

    Jacksmith
    Blocked

    It’s long time now to reply here but before taking so much trouble of paying taxes and all i will recommend to hire a probate lawyer who can help me to go through the legal process of the will.

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