Gabriel Augusto Caetano Vieira Cardoso
Lawyer at Marcos Martins Advogados
When a particular family group seeks legal advice in order to find out about legally viable possibilities that can protect its assets through structures capable of facilitating succession in a practical and financially secure way, it is not uncommon for scenarios to be proposed that include the creation of companies that manage their own assets and hold stakes in other companies (be they Ltda. or S.A.), known as holding companies.
Without losing sight of the maxim that each proposed legal solution must be adapted to the specific case and the needs presented, and without the intention of exhausting the subject, we have that holding companies are traditionally considered in estate planning structures as companies through which the assets targeted by the planning will be centralized, through the transfer of such assets to the respective holding company, bringing greater asset security compared to scenarios in which the assets are invariably in the name of individuals, in a sparse or random manner, thus offering the possibility of managing the assets in a consolidated manner.
However, the simple, isolated creation of holding companies may not satisfy the wishes of the family group, or rather, it may not be the solution that will bring the greatest number of advantages, from the point of view of tax, organizational and financial returns on the assets targeted by the planning.
It is at this point that the lawyer should analyze the feasibility of suggesting estate planning that uses investment funds in conjunction with holding companies, which are nothing more than formal structures that make investments possible, but which accept assets that, in turn, will make up the assets of the fund created, whereby these assets are divided into shares, which, in this case, will correspond to the assets that are the target of the estate planning, without prejudice to the possibility of direct contributions to the fund, in addition to the assets of the planning that will form part of the fund’s assets.
In addition to the lawyer, a manager duly certified by the Securities and Exchange Commission can and should be called in, as they will carry out a careful analysis of the family group’s assets and objectives, not least because estate planning with trusts is often more bureaucratic and expensive than simple holding structures.
However, depending on the value of the assets being planned and the family group’s objectives, it may be more advantageous to create a trust, because in an estate planning structure where there is an investment trust (which can be created for a single shareholder, if exclusive, and for up to 20 shareholders, if restricted), the assets of such a fund will be managed professionally by an asset manager, whose main function is to allocate the fund’s financial resources on the market, in accordance with the interests of the family group and respecting the limits on the allocation of resources, in accordance with the nature of the fund itself.
In this way, we consider the strategic and business-oriented vision that the corporate lawyer must have to be of the utmost importance, in order to be able to ascertain and suggest personalized solutions, taking into account the minutiae of each of their clients. On the other hand, the family group should seek qualified advice to ensure greater security and use of legal and financial tools.
Lawyers and asset managers must work together to make estate planning perfectly feasible.
