The use of a patrimonial holding company is common in succession planning and offers benefits like streamlined asset organization, decreased tax liabilities, and safeguarding of assets.
A patrimonial holding company is established specifically to manage the assets and properties of individuals or organizations, focusing on asset management rather than operational activities like production.
Understanding the operations and legal consequences is crucial for lawyers specializing in business and family law. This article explores the key types and advantages of a wealth management company and the role of lawyers in guiding and supporting clients.
Planning and guiding customers in managing their digital heritage.
Types of Patrimonial Holdings
There are various kinds of assets, each serving distinct objectives.
Pure Heritage Holding – a company with an unadulterated lineage
- Designed specifically for the handling and supervision of assets and privileges.
- It does not engage in operational or business activities.
Mixed Heritage Embracing
- You can engage in business or commercial activities in addition to managing assets.
- A company that oversees real estate properties and offers rental services.
Family Heritage Holding – Ancestral Legacy
- Created to safeguard and oversee a family’s legacy.
- Simplifies the inheritance process and prevents disputes among beneficiaries.
Managing Real Estate Holdings
- Specializing exclusively in property management, whether for leasing or selling.
- Utilized for tax optimization and to prevent consecutive risks.
Holding company with investments
- Manages other businesses by owning shares in them.
- It can help centralize control of a family business.
Different types of ownership serve particular purposes and advantages, which vary based on the goals of the partners or family involved. Selecting the right structure depends on the partners’ objectives and considerations related to legal and tax planning.
Guide for lawyers on how to create a will
Creating a Heritage Holding involves following a series of steps in a structured manner.
Establishing a heritage holding company is a legal approach that can provide numerous advantages to its clients.
It is crucial for lawyers to have a clear understanding of each step in the legal process and to be able to explain it to clients in a way that is both technically precise and easily understandable.
Identification and Examination of Heritage Objectives
Conduct a thorough analysis of the client’s financial situation before beginning any formal process.
A patrimonial holding company can serve various purposes, so it is crucial to clearly establish its specific priorities. Encourage the customer to contemplate the following:
- Successful inquiries: detail how the estate aids in the generational transfer of wealth without relying on the customary inventory procedure.
- Explain how personal assets can be safeguarded from legal actions by being appropriately incorporated into a company’s framework.
- Certain activities conducted through holding structures can lead to legitimate tax savings, known as tax efficiency.
- Centralized management shows how the holding enables a cohesive control over various assets and investments.
Choosing an appropriate societal framework
It is crucial to advise your client about the legal consequences of each business structure at this point. Provide a thorough explanation.
- Limited Company (Ltda.): This choice is emphasized for its minimal operational expenses, straightforward organization, and decreased advertising needs.
- Anonymous Society (S.A.): it is important to note that this arrangement provides more flexibility for partner involvement and departure, issuing various types of shares, and may be better suited for intricate or high-value assets.
- SLU, or Unipersonal Limited Society, is a new entity that can be used as an alternative to EIRELI in cases with only one partner, but it is crucial to outline its constraints for future reference.
The decision should take into account the intricacy of the inheritance, the quantity of heirs or recipients, and the particular financial goals.
Preparation of the Constitutional Document
Guide your client about the significance of having a properly organized document. Explain to them the reasons why it is important.
- The social contract or statute acts as the holding company’s “constitution” and should cover all necessary scenarios to prevent potential conflicts.
- Administrative provisions must be carefully written to specify the individuals with decision-making authority and the circumstances under which it will apply.
- Rules for distributing profits require careful consideration, outlining the frequency, proportions, and standards for holding back.
- Succession procedures and quota transfer rules need to be clearly defined, including priority rights and acknowledgment of the assets.
- Conflict resolution provisions like mediation and arbitration can help prevent potential legal conflicts.
Integration of Assets into the Estate
Explain to your client that this stage necessitates careful strategic planning and focus on financial considerations.
- Goods need to be evaluated by a certified expert to establish their accurate market worth.
- Goods transferred to the holding company are subject to ITBI, except when they are used for capitalization with real estate per partner for predominantly non-real estate purposes.
- The best timing for the transfer should take into account the client’s overall tax planning to avoid incurring avoidable tax obligations through rushed transactions.
- The transfer paperwork needs to be flawless, with documentation kept in offices and official entities for all types of assets (such as mobiles, vehicles, and corporate assets).
Governance and Compliance Implementation
Advise your client that maintaining the asset is just as crucial as establishing it.
- The holding company’s assets must be managed separately from the personal assets of the partners to prevent any confusion of ownership.
- Corporate meetings should be scheduled and recorded regularly, even in family-owned businesses, to emphasize the consistency of decisions.
- Financial and tax statements must be prepared diligently to prevent scrutiny from tax authorities.
- Rental agreements, comodato, or other arrangements between landlords and tenants should adhere to prevailing market conditions to prevent being considered as a simulation.
Clarify that this system is not an unbreakable “lock”, but a legal heritage arrangement that, when correctly established and upheld, offers reliable protection in accordance with existing laws.
Benefits of owning a patrimonial holding.
The establishment of a patrimonial holding company can provide numerous advantages to its owners and beneficiaries. Key benefits include:
Protection of heritage
The ownership arrangement shields family assets from financial risks and legal actions by transferring ownership to a company, thus hindering legal intervention.
Successive planning
Owners can transfer assets to heirs during their lifetime by utilizing usufruct-reserved quotas, which helps to minimize inheritance tax expenses and streamline the process, thus reducing bureaucratic hurdles associated with inventory management.
Tax Charge Reduction
Taxing real estate rental income can be greatly decreased by using a holding company. Instead of facing income tax rates of up to 27.5% as an individual, the rate can be lowered to 11.33% under the assumed profit regime.
Heritage Management Facility
Having all assets managed by one company makes it easier to handle inheritance and prevents disputes among heirs or business partners.
The lawyer’s involvement in setting up a Patrimonial Holding
Lawyers involved in estate and succession planning find the patrimonial holding company to be a valuable strategic instrument.
Understanding the structure and advantages of it enables customers to be advised on safeguarding assets, minimizing taxes, and managing inheritance effectively.
Choosing the right model and effective legal management are crucial for ensuring the security and efficiency of asset management.
Read the article on Bens Sharing to learn about its occurrence and how to do it.
What is a patrimonial holding company and what is its primary purpose?
A patrimonial holding company is established solely to oversee the assets of individuals or entities, without engaging in operational activities.
Its primary role involves consolidating the management of assets to enhance oversight, improve financial efficiency, and streamline inheritance planning.
It specializes in managing assets such as real estate, corporate holdings, and investments, as opposed to operating companies.
What are the primary forms of heritage assets?
There are five primary categories.
Pure Heritage Holding is solely for managing assets.
Managing a combination of heritage preservation and business operations.
Family Heritage Holding specializes in safeguarding and overseeing family heritage.
Specializes in managing real estate holdings.
– Company that controls other firms through shareholder ownership.
The selection of the right model relies on the particular objectives of the partners or family.
How does the heritage holding help with future planning?
The holding company aids in the transfer of assets to heirs during the owner’s lifetime by donating shares with a reservation of enjoyment, thus facilitating patrimonial succession.
This helps to bypass the formalities of standard inventory procedures, cuts down on expenses related to estate taxes, and decreases the likelihood of disputes among inheritors.
The company’s organizational framework already outlines how inheritance distribution will occur, providing increased predictability and security in the following steps.
What tax advantages does a family holding company offer?
A patrimonial holding company can greatly lessen tax obligations, particularly in managing rental properties.
Transferring assets between generations and managing investments can offer tax benefits when structured correctly within the holding.
How can a patrimonial holding safeguard the property against legal threats?
The holding company transfers the ownership of the individual’s property to the company, which can complicate legal actions. This separation of assets provides extra protection, as long as there is clear accounting separation between personal and company assets.
It’s essential to realize that this framework is not an unbreakable endeavor, but a valid heritage system that, when correctly applied, offers reliable protection under the law.
What is the best corporate setup for a wealth-holding entity?
The most popular forms of business organization include the Limited Liability Company (Ltda), which has lower operating expenses and minimal advertising needs, and the Public Limited Company (S.A.), which allows for easier entry and exit of members and the issuance of various types of shares.
The best option varies based on the intricacy of the inheritance, the number of heirs, and the particular tax objectives in each situation.
What precautions should be taken to finalize assets for an estate?
Goods need to be evaluated by a qualified professional to establish their fair market value.
The best timing for the transfer should take into account international tax planning, and thorough documentation with accurate records should be maintained at offices and relevant authorities.
What should the founding document of a heritage holding company look like?
The social contract or statute should serve as the holding company’s “constitution,” outlining specific administrative provisions (defining decision-making authority), guidelines for profit sharing, procedures for succession and transfer of shares (including preferential rights), and protocols for resolving conflicts. A meticulously crafted document is crucial to prevent potential disagreements and uphold the effective operation of the holding company.
What precautions are necessary when taking care of a heritage property?
Proper maintenance involves separating personal belongings from those of the holding company, documenting corporate meetings, preparing financial and tax statements diligently, and establishing contracts between the holding company and partners.
These governance and compliance practices are crucial to prevent scrutiny from tax or judicial authorities.
How can a lawyer assist their client in setting up a patrimonial holding company?
The attorney needs to begin by thoroughly examining the client’s financial status and clearly defining the goals, such as inheritance planning, asset protection, tax optimization, or centralized management.
It should provide advice on the best corporate structure choices for the specific situation, outlining the legal consequences of each option, potential tax benefits, and the process for implementation, while taking into account the existing laws.
