Succession and estate planning in Brazil will become even more relevant in 2025, with the changes brought about by the Tax Reform.
Possible changes to the Inheritance and Gift Tax (ITCMD) include the adoption of progressive rates and an increase in the maximum tax ceiling, which requires extra attention to ensure efficient asset transfers and the preservation of family assets.
In addition to facing new tax challenges, carefully structuring planning can prevent family conflicts, protect assets, and ensure the continuity of companies and legacy between generations. Below, we highlight the three main impacts of the tax reform on succession and estate planning:
1. Changes to the ITCMD Rates: The Tax Reform provides for the introduction of progressive rates in the ITCMD, which may double the tax burden in some situations. Currently, in states where the maximum tax rate is 4%, the ceiling is expected to be raised to 16%. This significant increase directly impacts the costs of asset transfer, requiring a strategic assessment by families.
2. Window of Opportunity for Early Donations: Before the implementation of the new state regulations, families can benefit from the lower tax rates currently in force. Early donations and strategically structuring estate planning are measures that can significantly reduce tax costs, ensuring greater efficiency in the succession.
3. Personalized Planning and Alignment of Interests: Successful planning goes beyond tax management. Identifying the interests and skills of heirs allows for personalized asset distribution that respects family values and ensures harmony in the succession process. This approach contributes to the perpetuation of family assets and legacy.
In a context of significant tax changes, succession and estate planning becomes essential. Anticipating strategic decisions, taking advantage of the window of opportunity offered by current tax rates and adopting good management practices are fundamental steps to protect assets, minimize tax impacts and promote a harmonious transition between generations. Well-prepared planning is not only a tool for financial protection, but also an instrument for consolidating family legacy and values over time.
