Estate planning in Portugal requires proactive preparation during lifetime rather than waiting for death, as inheritance disputes often arise from lack of planning, leading to costly legal processes and tax burdens. Key strategies include making wills, lifetime donations to equalize heirs, and utilizing family holding companies to protect assets and optimize tax outcomes. The Portuguese inheritance tax system exempts direct heirs (children, spouses, parents) from inheritance tax but imposes a 10% tax on nephews, nieces, and siblings. Properties acquired before 1989 are exempt from capital gains tax, while those inherited after 1989 face significant capital gains tax upon sale due to low tax registry values. Common-law partners have limited legal protection and should consider lifetime donations or usufruct arrangements to secure their position.
Webinar "Planeamento Sucessório e Patrimonial" c/ Dr. Francisco Serra LoureiroHinzugefügt:
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Hello, hello, hello. Good evening, good evening to all. First of all, the usual tests, can you see them?
Can you hear us? Is the image good?
Tell us in the comments.
Tonight is going to be a spectacular night, a night to talk about a topic that is rarely discussed in Portugal, a night where we will address, and perhaps, I say, touch on a sensitive issue, because talking about death is complicated, but talking about inheritance and division of assets after death is even more complicated. And that's why it's up to us, as lawyers, as people who work with this daily, to also bring a little bit of this harsh reality to those on the other side.
Therefore, I can already see that they can see us. Excellent. As soon as I see and hear, I hope. And while we're at it, out of curiosity, tell us in the chat where you're from, where you're from, and whether you already know us or not, right? We'll also introduce ourselves to those who don't know us, but feel free to tell us in the chat so we can get to know each other a little better.
Goodnight. Look, I'm already wanting to say goodnight, Cláudio Francisco. Clearly, Vasco already knows us here.
Goodnight. Goodnight. Ponta Delgada, Lagos, Seixal. Yes, gentlemen. Aveiro.
Look, Terceira Island. Do we have anyone living outside the country? It is not? I was going to say "wow," but I really don't see anything wrong with the faces.
So far, only people from Portugal. Paris.
Top, top, top, top.
My dear friends, welcome.
So, sit down, grab a chair, a pen, a notebook, because today we have a lot of material to share with you, many practical cases, many examples of what you can and cannot do, and you can believe that what we are going to share will, at one point or another, relate to your situation, because we, as solicitors, as lawyers, have seen many different cases, haven't we? And we were able to recognize that there are traces, there are principles that are repeated, the people are completely different, they don't know each other, they're from another place, but the history behind it, the decisions that were made behind it are exactly the same. At the end of the day, we are all human beings. Human beings tend to be more irrational than rational. OK? That's why today is a different day. We're going to talk about estate planning, wealth planning, right? Because, in truth, if there are no assets, there's very little estate planning that can be done, but the truth is that it's a gift we give to those on the other side, so they can take it from here and apply it to their lives, to their families as well. And above all, this is something we usually say that one day, later on, or when we're old, we'll see, and you'll see that it's not quite like that, OK? Nobody knows when they are going to die. Chapteu, who has already decided that I will die at 94 years old, so nobody knows when I will die. Therefore, this is something that we start working on from day one. Actually, Francisco, you were sharing this with me off the record.
At what age have you had a will? I don't have. I've had a will since I was 32 because this is shocking. People have this idea that talking about a will is like bringing about death. Forget it, you're going to pull her anyway. That's what Cláudio is saying at 94, and I'm saying it at 132. We'll probably reach roughly the same age, but the truth is, everyone's going to die. So, the issue of bringing up the idea of making a will is that, well, not talking about it because it's too early is the worst thing people can do; it's about having everything planned out. Well, it's not about peace and quiet, because when you're not here, of course there are no worries anymore, but there are many situations where people say: "I should have taken precautions, there are times when death is already imminent." Oh, and if you do it at a conscious, calm time, earlier on, things go much better.
Okay, but let's not delay, let's start sharing content. We have a lot of material for today. Okay, so let's get started with our little introduction. We've also included some material here to make it more visual for you. Don't worry, we'll have a space here for questions and answers at the end. So, if anyone has any questions, please write them down in that little notebook I told you to get earlier. Write this down in your notebook because we'll definitely talk about them at the end. Feel free to ask us questions anonymously, without mentioning your name. You can change the values, feel completely free to do so, because at the end of the day we are sometimes talking about very, very sensitive situations here. Well, starting here a little bit with who we are, what brought us here, because before getting into the subject matter and before talking about estate planning and wealth planning, it 's also important for you to know who we are, what we're doing, what we're doing here today live on YouTube, on an open channel and free of charge for so many people. We are part of the PA group, H. My name is Cláudio Alfaiate, Francisco Serra Loureiro, and the PA group, which initially started as PA solicitors, has been developing and today we have a group of four companies, four companies dedicated to legal services within P Legal, which is currently a multidisciplinary firm of solicitors and lawyers. And then we have two training brands, Legal Factor for investors and consultants, Legal Lev for other colleagues, other lawyers, other solicitors, and finally, Detaimento Imobiliário. And in fact, this addition of companies means that we have many different realities within the scope of the PA office, within the scope of the legal office. Then we move on to the inner workings of estate planning, because we delve into the division of assets, the disagreements, the lawsuits between heirs, and the number of lawsuits and probate proceedings that drag on for years, discussing things that sometimes have no patrimonial value whatsoever. And this is where we experience this the most.
But also at Legal Factor, we don't provide training to consultants who bring us day-to-day cases of attempts, or at least sometimes attempts, to sell properties that belong to inheritances. At Liga Lab, we have many senior colleagues and lawyers who also bring us their cases. And since Tanti Forte is also a real estate investment company, you end up finding some inherited properties that are for sale. Well, and with that, the truth is that we have here an ecosystem of processes that pass through us or go by us, which gives us some experience in the area of ancillary planning, also real estate and asset planning, which allows us to bring together two realities: the legal reality and the patrimonial and family reality. Because, even before I move on to my presentation, everything we're going to talk about today in terms of inheritance law might make sense on paper, might make sense from a tax perspective, might make sense legally, but often it doesn't make sense at a family level. So, estate and wealth planning enters into a reality where I would say it almost clashes, because many times the best tax situation is one that will cause discomfort within the family. Therefore, the first priority you will always have from now on is to ensure everything is OK, aligned, and planned in terms of family matters, and then take that to the financial aspect.
I'm a partner at PA, I'm also a solicitor, I have a postgraduate degree in real estate law from the Catholic University, I'm in charge of judicial sales, which has already brought me a couple of funny stories that anyone with 5 hours of their life could tell you about how I ended up in a police chase in Entroncamento, but today is not the day for that. I'll now pass the word to Francisco. Okay, thank you, Claudio.
Ah, okay, my name is Francisco Serra Loureiro. I'm a solicitor too, obviously I'm almost a prostitute by now, right? Now here with PA.
Hmm. I have a degree in law, a master's degree in law, and I also give a few classes, although I confess it's my passion.
I'm teaching classes right now, I'm teaching two postgraduate courses, but we can't just be everywhere at once. And that's it, and they decided to post this here from time to time. Yes, I have some airtime on television, and on the radio too. And I confess that it was something I discovered, however, that even something I enjoy, which is communication, is something that those who teach and communicate also do. The logic is that in order to teach and communicate, we have to know what we are doing. And what we're going to do here today, this sharing, is somewhat based on this; it's somewhat what happens in our offices. Of course, we're going to change some things here to protect the entity, the identity of the people, but this is very much based on our daily lives, and the truth is, this is probably the area where there is the most conflict and there is no planning, and then when the time comes, it's often said that you only get to know the families after the deaths, because from then on everything changes, and people who are doing wonderfully well stop talking to each other, or people who disappeared who knows how many years ago, then suddenly come back from Australia and nobody knows what happened. Well, we've been dealing with cases where I want to find people but I don't know who they are, and inheritances are blocked because of that. In other words, it's always a very complicated time, so things end up not going well. Hmm.
Yes. And why are we here today?
We're not here today to spread fear, OK? What you're going to see here are some practical cases, some examples that have come our way of showing how good organization, sometimes good reorganization of planning, ensures that dealing with the topic of death and estate planning, and part of the assets, is not a taboo, not a problem, and there is no lack of resources, no lack of time. Often, there is no shortage of time. Francisco denied it when he was 32 years old. Well, the truth is that in Portugal, most people still don't deal with this. Well, they die, and then after death, that's when the problem arises.
Either because there are children who don't get along, or because some of the assets have been kept hidden and now the heirs have no way of resolving the problem. I'll ask you the question here, the question here for the chat.
Anyone from the villages is fully aware that on the day some of the old folks who live there die, nobody will know how to identify the boundaries of the land, things as small as this. And sometimes these are plots of land that aren't even worth much, but on the other hand, it could be a plot of land that brings in a lot of money because the son either emigrated or went to university and never returned to the land, never had that interest in the culture. Well, we do n't have a great principle right now, and especially for those in this situation, there's a high risk of losing this property because we have the Búpid system. It's mandatory to identify the land, but those who don't identify it will have their land transferred to the state. In other words, this is a small example of how land can be transferred from the sphere of inheritance to the state. Just a small example here, so, OK, in Portugal it's not treated, it needs to start being treated. It is also up to us, as active voices in the legal field, to bring this to the local reality and to the reality of each of our homes. Now, without planning, three things will happen. First, avoidable taxes, OK? And here I've added a note that nephews, siblings, and people outside the immediate family pay the tax. Well, there are ways to reduce it, but there are no ways to prevent it after death. OK? I want to be blunt and direct with you all here. There are ways to do it in this lifetime. postmo.
Now, in Portugal we still have an exceptional system in place; it's one of the best systems in the European Union. Uh-huh.
Actually, we have some parties trying to end it, which is that direct heirs don't pay the tax. OK? And here I make it clear that direct inheritances don't pay the tax, so there's no optimization if it's already zero, there's no way to optimize it except for a few things I'll show you, and the conflict and the reduction of conflict are also the reduction of conflict. Exactly. That's all that comes next. But there are many taxes involved, especially when we're talking about uncles who will be giving to nephews, or siblings where one sibling doesn't have children, so the other siblings will inherit. Many things are subject to a 10% tax, which is very heavy in Portugal. And we have a strategy here that we'll discuss next. Interpersonal conflicts. So, in this case, it doesn't matter if they're nephews, children, or siblings, this happens.
There are many conflicts between heirs.
Actually, someone in the chat was saying they have a lawsuit, I don't know how, that's been going on for 50 years, which, in my case, means I've had everything tangled up for 50 years, my friends. Well, this happens in Portugal, OK? The lawsuit hasn't been approved for 50 years. I believe there is a sharing that has been pending for 50 years. Well, and inheritance disputes can be prevented while one is still alive.
This leads us to, if we are not careful, long and expensive processes, processes that drag on.
We also know very well that the judicial process in Portugal is slow and comes with all the associated costs in terms of court fees. The lawyer also works for free; if we have 20 properties in an inheritance, we're going to have to appraise those 20 properties. Someone will have to go there.
This is not free. So, all of this means that if you don't deal with estate planning, whether it's because of the taxes on heirs or to avoid conflicts between heirs, which inevitably leads to a long and expensive process, it makes sense for you to deal with your ancillary planning while you're still alive, OK? Always in advance, right? And we have to realize that after this, let's imagine we have a family and we have two children, the children don't get along, each of them has two or three children, and that wasn't our reality. We had families with five, six, seven, eight children.
We have that now too, but in the past we used to say that it was common for this to happen.
My grandmother is 11. That's it. In other words, imagine this: this isn't addressed in the first generation. Two people having difficulty understanding each other, then they stop being two, become six or seven, and then continue to multiply until there are 30. And this situation we had here about those 50 years, I believe that at this moment there are perhaps 70 or 80 heirs. If it 's difficult with two people, then imagine what happens and how we're going to resolve situations with 80 people, each with their own idea. Most of them will say something like, "80 people, what am I going to get out of it?"
Oh, I'm not even going to bother with that.
Of course.
There it is. Well, sometimes it's not just about money, it's the fact that we ca n't get together and solve the problems. Why? Because people don't know where the land is or other things, and they don't even want to bother. This is what we're going to bring up here, obviously it's a little bit like this, we were n't going to bring up the most complicated cases because otherwise it would really get confusing in some situations where this isn't exactly easy. However, those situations that happen to us more systematically, and which in this case are real cases, we have always been careful to change the names, obviously so that we are not talking about people who, in some way, might even feel like they are here and say: "I have something very similar. Could it be me? Could it not be me?"
Completely changed names, anonymized.
Now, the case itself, obviously, is being handled based on what has come to our attention in the office. OK? Very good. This is a typical situation, and one that often arises, and we have a problem. I would start here: we have laws that emerged in 1970, and there were six minor changes to the inheritance regime. There have been a few already, but let's start from there. The foundation comes from there. Family context, what did we have, man? We had a traditional family, we had the father, the mother, the children, a very strong family bond. Today, our reality is completely different. But this didn't follow through. This means that nowadays, many people live in common- law relationships. Society is prepared for this; nowadays it's more than normal that common-law marriage is often chosen over marriage itself.
But the law hasn't kept up. And what happens? Let's imagine this situation where the man died at 45.
It's always the man who dies, and now it's just a matter of time before it's over.
Yes, we always die first.
Okay, not a hypothesis.
And they lived together in a common-law relationship here, by chance, the children were from the couple, although they might not have been. And there are many situations where we have second marriages, well, not second marriages, uh, a marriage followed by a common-law partnership, where people live together and even the children belong to only one member of the couple. But in reality, as you can see here, the partner is not an heir under the law. Point. In short, you have some rights: you can continue living in the house, it's a long-term family home; you have the right to rent it out after 5 years or more, and the term can even be longer; you are entitled to social benefits; you have the right of first refusal to buy the house later; you have the right to the contents and use of the house, but you have no property rights whatsoever, zero. They have no right to the house, basically not the house and other things, meaning they won't be able to claim anything.
So, what's going to happen now? The children, in this case the couple's own children, wanted to kick them out of the house because a certain amount of time had passed and things weren't progressing. And the truth is that after X amount of time, she loses the right to be there. It's as simple as that, because there are absolutely no property rights involved, strictly speaking.
What can be done? And speaking of tax matters, uh, regarding the part, that is, during his lifetime, he assigns to his partner the available share of the assets because he is able to do so. And often what you can do is allocate this available share, you can, for example, leave the usufruct of the house.
Yes.
For example, and OK, even if whatever happens, she will be protected for the rest of her life, because the fruit, since it has a lower value than the property, theoretically adjusted to the age of the people, will be guaranteed and safeguarded. And you mentioned the 10% a moment ago.
That idea that OK, descendants, ascendants, they don't pay, but the de facto unit also doesn't pay the 10% tax, which is something very few people know, meaning that in these situations, even from a tax perspective, she was protected. Essentially, the question is about staying in the house. OK? Therefore, things continue as normal, the children are not financially harmed, they just have to wait a little longer, because this way she gets to enjoy the house and the problem is solved. In other words, it's very easy with a will, with a very simple operation. This is one of the simplest cases that exists and also one of the most recurring that we have, because believe me, at this moment there are many situations like this in the United States. In fact, I remember, I had a funny situation on RTP (Portuguese public television) that was precisely about people who had lived together for 40 years and the woman wanted to protect her partner and didn't know how. So, I gave him two solutions. Or, more effectively, it was a matter of the will because she did n't even have children, and therefore it was a question of everything going to her siblings, etc. Or else they would get married.
And the truth is, those gentlemen in their 80s got married.
I was invited, but I couldn't go; it was a brutal party.
So you were invited to the wedding as well?
And Tania too. Well, actually, I couldn't quite remember, but it must have been one of those parties in Romba, 80-something years old and all that, it must have been cool.
Ah, José is here saying, "Uh, and the mutual renunciation that now also already exists."
Ah, so I can talk about that before you pass by.
Of course it is, and it's a good thing that this issue came up. Well, we often, instead of planning ahead—and I know this might be confusing, but think about it— if we consider inheritance issues right away at the time of marriage, and you rightly say so, because sometimes there's a myth that "I'm getting married under a prenuptial agreement, I'm not an heir"—and many people believe this.
Okay, that's not true; even if you're married under a prenuptial agreement separating your assets, you're still considered an heir. What the law allows today is that I can, at that same wedding, OK?
in a formal agreement, to make what is called a reciprocal renunciation of the status of a forced heir. We like to complicate things with difficult names sometimes, but the idea is, I remember, we talked about this a little bit here, that we can't exclude certain heirs—husband, wife, children, parents—we can never exclude them unless we mutually renounce that condition. Which means that the part I used to have to save for my wife or husband, I no longer need to do, because we agreed on this. And this is only possible under a separation of property regime. In other words, they want to address this right from the marriage, with a prenuptial agreement separating assets and mutual waiver, resolving the situation immediately. Because if you both want to mutually exclude yourselves from each other's inheritance, since you already have assets, etc., why not take care of that right away?
Yes.
And then you just let it continue in reverse.
Well, we didn't even bring up this topic because we're talking about estate planning here, but often estate planning begins with marriage, OK? And there's a lot, a lot, a lot more to say about marriage here.
Now, to start complicating things here—well, not really complicating them, as this case is still simple—the complication comes later.
Here we have the Ferreira family, in this case, two brothers, a house, without any kind of plan, after Mrs. Ferreira passed away, leaving behind two children.
Basically, this is a very typical case when people come to us and say: "Oh, my daughter, poor thing, she took care of me while I'm old, and my other son is a good boy, but he's far away, he never had that job, he never went to the doctor with me, he never took me to my appointments, he never took care of my things." And it's very, very common to want to give something to this child who took care of people, to want to privilege at least a little bit this child who took care of things. And the truth is that in this case nothing was done. Nothing was done. There were two brothers who, looking at the law, are exactly equal when in fact one had a much more active role than the other. What happened was that after the death, the daughter lived in her mother's house, OK? In that house where she grew up, she lived there, and the brother, the immigrant, didn't have money, he wanted to sell the house, he didn't want to give up his right to half of the inheritance.
What did he do? He initiated probate proceedings. Probate proceedings, which is probate proceedings, to explain here... Just a little something for those who aren't familiar with the context, it's the process of a forced inheritance, a forced division of assets.
And it's a quick thing. Well, it's not a quick thing, uh, just to give you an example, we're talking about a property and two siblings, and the process dragged on for 3 years. Imagine what it's like to see more assets and more heirs. And this process took 3 years.
Uh, and in reality, what happened here was the brother wanted money, the sister didn't want to sell because it was the house where she lived, the house where she grew up, she didn't have the money to pay the brother's share. What did the brother do? OK, you don't want to sell, let's proceed with the inventory process, the forced division of assets, any heir can do it. Oh, and taking this opportunity to talk a little about the new law that's coming, what happens is that currently any heir can force the sale. I'll even switch to this screen here to talk more intimately about how any heir can currently force the sale. Regarding the sale of an inherited property, the current law, as of the date of this webinar, establishes the inventory process, which is a judicial division, a forced division.
If an heir claims their right to a share of the inheritance and proceeds judicially, OK, this is a judicial process, requiring a lawyer. However, if they proceed to the inventory process, what the inventory will do is gather all the inherited assets. There will be a point where the law attempts conciliation between heirs, which the judge will promote through a conference of interested parties. If there is no agreement on the fate of the inherited assets, all assets will be sold, and the money will be divided proportionally to each person's share of the inheritance. That is, if one person has half, they receive half the money. If there are two others, each with 1/4, each receives 1/4 of the money. The outcome of all inventory processes where there is no agreement is the sale.
So, if anyone believes they are currently involved in an inheritance, please tell us in the chat that there is no possible end to that inheritance, at any time. In short, being an heir, whether you own 1% or 99%, you can proceed with this process and receive money in the end. OK? Done. The new law is trying to do something that, instead of a full inventory process covering the entire estate, as is currently the case, allows for a mini- process. OK? And now, the description I'm going to give isn't very legal. It allows for a mini-process that will only focus on that specific property. Let's imagine you have a holiday home in the Algarve and a house where you live in Leiria. For example, you can file a separate process just for the Algarve house, and the Leiria house remains part of the inheritance.
It's a process that aims to be faster. The assets are valued, put up for sale, and sold in a judicial sale. OK? So, but remember that it's not in effect yet. OK?
Yes, that part isn't in effect yet, it's not there, that idea doesn't exist, it's not possible to do it yet. It's been widely discussed in the media, but remember, look at the VAT issue. 6%, the time it took when it was announced, only now that the 6% VAT has come into effect today.
So, there you have it. Now, what could be done here? Something very simple: lifetime donations. Besides, a will applies after death, OK? So much so that a will can only be applied after a person dies. In fact, we have these donations that can be made during life. That is, basically, the mother, while alive, could take the house and donate it to her daughter. And if she wants to equalize with her son, she can take money from the bank account, take gold, take whatever, and donate it to her son to equalize the shares. As simple as that. And now you ask me: "OK, but to make a donation to the daughter, didn't you need authorization from the other heirs?" No. OK. Purchases and sales between children require authorization. To make a donation to children, authorization is not required. What happens is that these donations will then be accounted for upon death. That's why we've been talking here about, OK, Let's equalize the children's share: the house for one, the money for the other. They're equal, each receives their share, no problem. One day later, when she passes away, she'll die without any assets, no problem at all.
What could be done here, even to reconcile things, and this is often done to protect the mother from potential debts, for example, that the daughter might have, is that instead of donating the house, she donates the bare ownership and retains the usufruct. That is, the mother has the right to use the property until the day she dies. Then, yes, the daughter gets full ownership of the property, she gets the entirety of the property. This donation, just to show that sometimes this is another myth that exists, which is that donations are only claimed by the children. That is, what Cláudio said, that donations are later claimed in the inheritance for accounting, for division, etc., applies to all donations, because otherwise it would be very easy, I mean, giving a child, what do I do? I'm making a complete donation to the neighbor on the third floor left, or to the butcher, or whoever, and my children are left with nothing. And this was a way of disinheriting, which cannot happen. Therefore, all donations made during life, if people want to, must be requested, they will be called upon for what? To calculate the value of the inheritance, and that is the value that will be divided. OK? Just this note, this is also important.
Good, good, good, good.
Then we'll go.
This is a situation that is no longer very normal. I mean, look, in my case, this is a fact. Uh, in the way that I can't say the content of the will now, but I don't have children. And therefore, at this moment, my heirs become my sister, and then, subsequently, my nephews. Augusto, uh, Mr. Augusto, uh, effectively uh, had the same situation, he didn't have children, so he didn't uh, the need to leave anything.
Regarding the inheritance, he had no children, wasn't married, and had no one else, as his parents had already passed away. He said, "I want to leave everything to my family." The problem, as we discussed earlier, is that leaving assets to nephews and nieces will imply paying 10% in taxes if the estate is small. Well, that's not so bad; I wouldn't mind paying €90,000 every week, which would mean receiving €900,000.
But the truth is, there's this expectation: "If I win the EuroMillions, it'll cost me 20% to the state."
The money wasn't mine, but now I mean, I was going to receive €900,000, and now they're asking me to pay €90,000 in taxes. So, each nephew and nieces— because it's a third for each one— would have to give 30% to the state. In other words, unless something is foreseen, that's it. That's what happens. In other words, there's no way around it. If we encounter a situation like this, people receive the assets and are then surprised by the payment of estate tax in installments over 6 months. But even then, €30,000, €1,000. We're talking about this, we had installments of €3,000 to pay, and often the fact that we have €900,000 means we may not have the solvency or financial liquidity to start paying this tax.
Yes, there are many heirs who receive letters from the tax authorities, put their hands to their heads, and think they don't have the money to pay, because, well, nowadays it's easy to sell, we just might not have a conscious decision to sell, often precipitated by the fact that we have to pay more taxes. What we could think about, and what was considered at the time, was the following: it's been addressed, it's not yet resolved, but it's a situation we are dealing with at the moment. The idea It will be because there's this idea, there's trust, the nephews will form a company, and the assets will pass to that same company. Obviously, he has other assets, but this specific one he wants to give to his nephews. And therefore, he sold the assets to his nephews' company. OK? Here, they will be taxed the same way as a sale, a purchase and sale, or IMT (property transfer tax), the CEL tax (a type of tax in Brazil). There's no ideal solution here. That is, they will pay IMT, they will pay CEL tax, but it never, ever, ever reaches 10%. OK?
It's completely different because at most, if we were talking here, the calculations are already done, CEL tax is 0.8% and IMT, as we have residential buildings, will fluctuate between 1% and 6.5%, much less.
What will happen when he dies, and in the meantime, safeguarding the assets, what does he do?
While he is alive, he has the administration of the company, that is... He manages the company, therefore he is responsible for all the management of those assets. He's still being cautious, he's of a certain age, but nevertheless he 's still quite active and wants to continue managing. As long as that happens, he manages the assets. Of course, it's not the ideal scenario, there have been payments, but considering what we have, when he passes away, there will be no transfer of ownership.
Yes.
What do we have? We have to appoint a new manager because he can no longer manage, but the assets are already safeguarded.
But let me just say this, Cláudio, which is this particular situation. What we're talking about here doesn't apply to all cases, because this example involves a high degree of trust, because what happens here is the nephews get together, remove their uncle as manager, and take over the company. Okay? This involves trust. But this case here, what... Francisco will also talk to you about this; this is the kind of case that's worth the money we 're asking you to attend this webinar for, because there are many people in this situation, and pay attention: capital gains tax, income tax payment to the state. There are many people in this situation where the parents are exempt from paying capital gains tax, and if the children inherit that property, they will pay hundreds of thousands of euros in capital gains tax. Hundreds, I'm exaggerating. Many thousands of euros in capital gains tax. OK? So, in this particular case, talk about it, see when things were done, because this type of exemption from capital gains tax for having acquired before 1989 is only valid, and now write this down, in fact, get a tattoo if you want, it's only valid if the person who bought before 1989 is selling or if you inherited before 1989. If your father bought in 1980 and passed away this year, you are not exempt from capital gains tax. OK? So, let's pay attention to this fact, because the idea is... Even this one. Uh, I even bought the property in the 80s or 70s or whatever and built on it, man. In other words, the property ended up with my father before '89. Ah, so if it ends up before '89, we're guaranteed.
No, because if the father sells it later, that's one thing, but and this is one of the moments that hurts the most, and I'm even a defender of the entry into force of the issue, we've already talked about the action of the inheritance tax, about the issues, we've talked about that.
Yes, but what will happen is that there's a death now, the moment of acquisition of the property is now. The heirs receive the property now. The date of '89 has already passed, forget about that.
And then what will happen, which is the big problem we have, is what value will be considered for capital gains purposes? It's the VPT, which is the taxable property value, which is the value that's in the land registry, which is very low compared to the market value. So, the logic is, obviously, Once again, the expectation. I didn't even spend any money on buying that property. My father or someone else did, but when I sell it, it will hurt to hand over all that money to the state. And unlike a purchase and sale, where there's a value that's even higher, in a sale of a property that comes from an inheritance, the acquisition value is very low, and sometimes properties that are below €100,000 (VPT) are being transacted or sold for €400 less.
I'll give you this example. Let's imagine that you, your parents, buy an apartment in Lisbon, in the center of Lisbon, for €900,000 ( they bought it last year for €900,000).
And meanwhile, the VPT (value for the Tax Court), which is the reference value for us to pay the IMI (Municipal Property Tax).
For those who have seen a... Regarding the property tax records, that value is ridiculously low. We're not going to alert the state about this, because the day the state remembers this and starts taxing property tax based on the real value, we'll all start paying much more property tax. OK? So, we're not going to talk about this here, just the state, but what happens is that that building, that apartment was bought for €900,000 but is worth € 60,000 in the tax records. This is entirely possible. So, listen Lisbon, this is entirely possible.
If the parents bought it for €900,000 and sell it the next day for €900,000, we'll have zero capital gains, because they bought and sold it for the same value.
OK? If, by chance, the parents die and the children inherit, the parents gave €900,000 for that property last year. But when the children inherit, they will inherit the property for €60,000 or €1,000 because What matters is the VPT value, the value for tax purposes, at the date of death.
Now, they take that property worth €60,000 and sell it on the market again for €900,000, a profit of €840,000.
They will have €840,000 in profit which will be taxed as capital gains, even though the parents paid exactly the same amount a year ago for the property. Therefore, this is the type of case where we will see some exemptions. Be careful, because this case can save a lot of money, even for direct heirs.
I said at the beginning: "Ah, direct heirs don't pay anything, they don't pay any tax on their own." "Here they pay capital gains tax and it's tough." Okay, Francisco will tell you what you can do here.
No, you tell us, Cláudio, maybe because you were the one who handled this case.
Yes, OK. So, can I tell you what you do here? You have to be careful because there are reference prices and a few things you should pay attention to. It's not that straightforward; there are risks in these operations. But what you can do here is the children will form a company, and the parents sell a property to this company at its real value, OK?
At market value. Why? Again, because the parents are exempt from income tax. The parents don't have capital gains tax. If they sell to a third party, if they sell to a child, if they sell a company, a company owned by them or their children, there are no capital gains tax. So what you do here is sell the property to the company. Or that could also be a solution, if you want. To dispose of assets, don't wait for the person to die to sell them. Sell the money, sell the assets while they are still alive, and then distribute the money. That 's also an option, but if you want to keep the properties, sell them while you're still alive. It can be to the children, it can be a company owned by the children, it can be to a third party, there's no problem at all.
Why? Because they don't pay income tax. And then that money or that company, when the parents die, it falls under the rule that it's exempt and passes to the children completely tax-free. What's the difference in these types of cases? It's that if the children want to sell, remember the apartment I mentioned earlier? If the children want to sell, the reference value of their purchase price will no longer be €60,000 ( asset value), it will be a reference price of €900,000. Why? Because what they will be selling is a property that is within the company. They didn't inherit it. They didn't inherit the property; they inherited shares in the company, and within the company, the book value of that property is €900,000. This is something for those who like to read and understand what's going on here. This is a difference between a share deal and an asset deal. With an asset deal, we're talking about the property itself; with a share deal, we're talking about a structure that includes the property.
This is a share deal.
Reference values, real values, OK? Don't sell properties below market value, otherwise, you'll set off alarm bells at the tax authorities.
And with this, I present to you a new concept for some of you, which is a family holding company.
Holding companies are very fashionable— business holding companies, family holding companies. And often, when we're talking about family assets with some structure, it's advisable to have a family holding company to protect the assets and the succession, because through restructuring, we can shape things differently and leave the assets much better protected. Distributed. It does n't avoid all conflicts, not being transparent about it, but in a family holding company, for those who have assets, I would say, above half a million euros in movable and immovable assets, it makes sense to have a family holding company also because of the reference values for when sales are made, because here you are protected, you are stabilized regarding the basic concepts of how much capital gains tax will be paid, OK? It's the company that pays. Hmm.
And then the company, how is the distribution done then? We enter another game, do you want the money in your pocket or do you want the money in the company's pocket? If you want it in the company's pocket, there's no problem at all. The company pays corporate income tax on the profit and continues to invest. If you want the money in your pocket, then you will have to pay 28%, or there are situations in the law that allow you to distribute income and pay 14% personal income tax. And 14% personal income tax in Portugal is a low rate, very Okay. Okay.
We have here an engineer named Monteiro.
What is an engineer named Monteiro? He's someone who worked in construction and built a company here, valued at the time at €900,000. How do you value companies? EBIT times the multiple. In this case, the construction company was worth around €900,000. It had workers, vans, all that, including a headquarters, but the headquarters did n't have much commercial value. He had two sons, one of whom was a manager, meaning one had been involved in the operation for over 8 years, and the other had no involvement whatsoever. He's in Portugal, not one of those immigrant situations, but there's no involvement whatsoever.
He died without a will or a partial agreement. The shares are divided 50/50. The son without involvement demanded his share of the money, demanded that his share be paid to the other brother. The company lacked liquidity.
What did the brother do? He went to the bank, sought the liquidity to pay his brother to remove him from the company so he could continue working. In two years, what took 25 years to build was partially liquidated. Okay? Because this company went through a very aggressive restructuring. In the case of companies, a shareholder agreement and a will are not enough. What do I mean to explain this to you? In a will, we state upon death that we want this, this, this, and this to be done. In a shareholder agreement, we can state within the company, if the partner dies, this, this, this, and this will happen. So we have to reconcile the two things in the bequest and the shareholder agreement, so that it is well protected, especially not only the part concerning shares and money, but also who will have shares, who will take action, who has decision-making powers, right of first refusal clauses, causes of shares, amortizations, all of this must be included in the agreement and must make sense with what was decreed in the will.
Well, uh, This is the last one, the last one we have to present here, we're already stretching it a bit. We 're already stretching it.
Uh, but let me just mention something important from the donations section, which relates to a question that's here. Be careful, there's this idea that a donation is a pure donation, there's no money involved, but in the donation I'll assign it a higher value.
Yes, and I pay stamp duty for a bit more, but then what happens?
As the code tells me that the acquisition value is the value that was used for the tax calculation, let's imagine that property worth 60,000 was donated for 900, and we put that it was 900,000. Great. Uh, now when I go to sell it, the acquisition value would be good if it were 900. But the truth is that the law has anti-abuse rules, and the idea is for people who are exempt from item 1.2, In other words, you're at 10%, we're talking about the children, the ascendants, the husband, the wife, these people automatically, if the property ended up waiting for donation and they decide to assign a higher value, forget it, the state thanks you for paying more taxes, but the value that will be considered for capital gains purposes, they 'll go back to that value that's in the tax register, that very low value.
Sometimes we have that idea of being able to get around it, this was already possible, the rules keep emerging, it gets more and more complicated. I usually say that the tax blanket is short, we pull too hard on one side, we slap our feet, you don't have a chance.
Exactly.
Okay, this part here, the idea was basically, what we had was a person who, in this case, was even from the legal field and therefore had more ease in understanding these matters.
Basically, what he did was this, everything he had, the apartment that was already rented, he had savings. Well, he essentially didn't want to leave anything, and the children, who were doing well, were perhaps shaped by the fact that he was always in the legal environment. What did he do? Something very simple: I'm going to keep everything within my own patrimonial sphere. Again, this doesn't apply to all cases, but I'm going to donate the assets to my children. Let's imagine.
This case involved an apartment, or rather two, one for each of the children, but until the moment of death, he reserves the usufruct for himself. We can reserve usufruct for one, two, or three people. For example, a couple, the idea of leaving everything to my children and establishing a usufruct, which is a simultaneous and successive usufruct. It's for both people, a joint and successive usufruct. Why?
Because when the first one dies, the usufruct remains. Only upon the death of the second one does it effectively pass to the children. Or someone else. Let's imagine you don't even have children and you want to create a solution here, like, I want money now, I even want to take a vacation, enjoy myself, I'm going to spend the rest of my life on cruises, I'm going to be a digital name. I've already thought about that. Hmm.
But the logic of me selling the property now, eh, I don't have to bother with this, but until I die, I have usufruct. And then, in this case, what was it? The will was very well outlined. We had several options.
Eh, either we leave a will where we leave the available share to Cláudio, for example, eh, and to João, 1% for Cláudio and 99% for João.
Eh, or we leave specific assets, which are called legacies. This happens often, we leave, for example, the issue of leaving the usufruct to the spouse that I mentioned earlier is very common because it's no longer up to people to decide what goes to whom.
Yes.
It is. I want that asset to go to that person. So, my friends, it's sometimes difficult to talk about this or to think that it is, but the truth is that I made my will 3 years ago, I'm 32, I'm 35. That's right, I made my will almost 20 years ago and I'm still alive. So let's go, we have a little space here for questions and answers and we also have some big questions in the chat to bring up at the end. And the truth is that we promised this, which is OK, what are the five critical decisions you should make before you turn 60? Attention, it's not before you turn 60, it's what you should do in your lifetime. We left it here before you turn 60 because we had to define a date, right? And when I say before you turn 90, people would say: "OK, then I won't reach 90 years old, so it doesn't make sense." Well, there are five, which can be two together, three together, only one of them doesn't matter, but you have to Think about your families and your association. One will, two lifetime donations, three family donations for those who have businesses, corporate structure, and social agreements. Why? A will, man, is our wish. Our will is binding after our death. Many times, if we want to leave a taboo, we can leave a taboo, because we simply go, do it, and say: "Look, the day I die, the will is done, and we don't say what's in the will." OK? So we can continue to leave it as a taboo. But the truth is that a will often also works to protect those who are not protected by law. We are, or those who are less protected by law. Uh, we are talking, for example, about children born out of wedlock; we want to give something additional, because perhaps the others will inherit from the mother's side, and those not. Although, if the daughter is a son, she will inherit equally. Caregivers. Someone who cared for people in the... I'm not saying after death it's not possible, but before death you can take care of the... From the ashes.
Exactly. That is, anyone who is left out, if we have children but want to leave something to our sibling, that is, all of this must be prepared here, and especially legacies. OK? Legacies. If we have someone who, despite being direct heirs, we think will cause problems, well, we force the division and leave: "OK, I have X assets, this goes to this side, this goes to that side, okay?" "It's a done deal."
Then there are lifetime donations for those who don't want to wait, to resolve things while they're still alive. I'm also a big fan of this approach: OK, my assets are this, I have my pension, and I don't know if I'll have more assets later, let's make a lifetime donation, let's divide the assets among the different heirs. Look, I want to donate to someone who isn't my heir, OK, I'll make the donation now, because that way, at least, they'll never complain after I die, because I do it while I'm alive, it's done, it's done. Then, a family holding company, to manage and transform family assets, not to leave the assets or take care of them to the heirs, because when there are many heirs, it all belongs to no one. If we leave it in a holding company, it can be easier for one party to manage it and even be compensated for the management, while the others receive their dividends.
It's well thought out, once again, for large estates, a corporate structure, when we have a company behind it, to take that company, to think...as well as how the structure will be, who will be the manager, who will make the decisions, or simply the tax issue of selling properties that are exempt from capital gains tax, not leaving them for death. I already told you about the € 900,000 apartment, €1,000. So, I think you've already had a good idea of what you can do regarding the shareholder structure, defining, together with the will, how the post-mortem distribution will be handled within the company. The paths change; you've seen five cases here, plus one more where the paths really do change. That is, we present different cases that will apply at least 10%, 15%, 20% to each of you. But these are practical cases we've seen happen that you'll feel some connection to, but the truth is that many of them make sense for you, others may not. There are times when a holding company makes sense, others may not.
Donations, wills, it always makes sense to do something.
Now, what... Does this make sense to you? Because the path is different, but the end is always the same, which is a structured estate and asset planning. And the truth is, the answer is to structure it beforehand. We at PA have an estate planning structuring service that we will briefly discuss here before moving on to your questions so you can get to know it.
This estate and asset planning program involves three stages: an in-person or online diagnostic session where you can include one or all of the heirs to understand the 360º financial and family situation. To understand what is already there, what makes sense to do within the family context, what assets exist, if there have been any lifetime donations to the children. For example, my son has already built a house on the family land. OK, let's match the rest of the siblings. With this, we will create an estate planning plan. We will have an interim validation within these 90 days, where we will present our plan, discuss it, adjust it, Making decisions together with the family, seeing what makes sense for you. And in the end, we have a complete estate and asset plan to implement for the whole family. And you can also count on our support, from companies and deeds to will preparation, all of that. Besides creating the plan, we also handle the implementation. However, this is work that requires a lot of study, analysis, and follow-up.
We are opening 10 slots now before the judicial recess, 10 slots for inheritance support. And if you're on the other side and think your case might require estate planning—which I honestly think it does, I think it's difficult not to—we're opening these 10 slots for support.
How will it work? We have this QR code here that you can fill out; it takes about 2 minutes. Our team will contact you within the next 48 hours and we'll schedule a diagnostic session to see if it makes sense to proceed with the plan. If it makes sense for both parties... Let's move forward.
OK? Each case is evaluated uniquely because the truth is we won't accept all processes, because some processes may not be worthwhile or, from our side, we may not add the necessary value. If we have an inheritance where there is only one heir, there isn't much that can be done.
So we like to analyze, we like to ensure that our process will have value, because the truth is that this is an expensive process, OK? It's a process that has a lot of value, a lot of study behind it, so we only proceed with inheritance processes that are worth being handled by our office. At this moment, then, please fill out the questions here and if it makes sense for us and for you, our team will contact you to talk a little and see if we can proceed with estate planning for your inheritance. We have 10 slots available, so at this moment we are open to questions. We have about 15 minutes for your questions. Whether it's about estate planning, there's a QR code here, or... Regarding any doubts you may have about inheritances, feel free to leave them here in the chat, and we will answer them now. Hey Cláudio, there was one that came up recently that's really important for people to understand: sometimes there's this idea of "I'm going to renounce the inheritance because I have problems, the inheritance has debts, and so on." I'll tell you about a case that happened, which is this: the idea is, first, I 'll renounce, and from there I'll distance myself from the heirs, distance myself from everything. It's not always like that. Renunciation is open to challenge. Therefore, that's why each case is different.
Things have to be studied. The GPT chat is fantastic, Google too, but it gives you linear answers and not answers for specific cases. And sometimes it's necessary to understand what's behind it. And we had a situation, this happened to me quite a while ago, of someone who left a child—he wasn't married, there you go, a common- law marriage—everything went to the... Son. What happens? Debts equal to the value of his only asset, his only house. And look, it's better to renounce the inheritance. Why?
You'll receive the same amount, or you'll be at work, and then it all goes to the creators. He renounced the inheritance; it goes to his parents, because they discussed those issues a while ago. If there are no children, it goes to the parents.
If there are neither children, nor husband, nor wife, nor parents, it goes to the siblings. So, it went to the parents.
While things were going back and forth, while the execution didn't proceed because there were negotiations and whatnot, what happens to the value of the properties? The value of the properties has increased substantially, and that property that was worth, let's say, I don't remember exactly, €150,000, which was more or less the value of the debt, has since experienced an exponential increase in the market, and suddenly that property, instead of €150,000, is worth € 280,000 or so. 300.
Uh-huh.
Story time. You hadn't repudiated, you had paid debts and you weren't left with any money.
What was the idea? I went online, saw it, cleaned it up.
Yes. So, that is, it was a question that was there about repudiation and look, I started with that because I think it's important to understand, man, that not everything is the same.
Yes, yes, yes. This is really, really, really different. Now, we have here an excellent, excellent question regarding inheritance shares, but now it's escaped me. Okay. Oh, here it is.
Okay. Excellent question from Rosa.
Rosa, new tax guidelines, sale of inheritance share doesn't pay income tax, what to do? Okay, this is an excellent question. Sale of inheritance share doesn't pay income tax. That's true. Until the income tax code is changed, I can safely say that the sale of an inheritance share doesn't pay income tax. What is the sale of an inheritance share? It's the sale of the right to inheritance, OK? It's not the Sale of a specific inherited property. And at the time we warned that there were different understandings, there was an understanding that the sale of inherited properties would not be subject to income tax. And we said from the beginning: "Be aware that this is not what the law says." The law states, and in this case the agreements stated, that the sale of inherited shares is not subject to income tax. What does an inherited share entail? Inherited shares are difficult to sell because you're selling all your assets at once; banks don't finance them, you're selling both assets and liabilities. So they are different things. In the context of planning, selling inherited shares and shares can also be considered. But be aware, to sell an inherited share you have to inherit it, OK? If you inherit, you often have to pay 10% tax on it.
For example, here's the case of Luía. HH Francisco, if you want to answer.
Ah, but let me just conclude and say this. I said earlier that one of the things that could encourage sales is that inheritances could be exempt from income tax.
Inheritances, no, the sale of an inherited property. And just to simplify this, because people, after what has happened in the meantime, have had several Disclosures and people saying no, that properties could also be sold from inheritances that didn't pay taxes, think about this. And whoever has the settlement notes, perhaps all of you receive them at home with the properties you own, if you have an inheritance, the inheritance also pays taxes. In fact, the inheritance pays the taxes, and then they are divided proportionally among the heirs.
Therefore, the inheritance is a taxpayer. Therefore, there is no doubt about it. And I repeat this, and whoever comes to say the opposite, who even encourages people to go and complain to the tax authorities, excuse the expression, will get what's coming to them for a simple reason, because the tax authorities, man, as much as it pains us this time, are right, are right, are right, are right.
Here's an uncle who's 95 years old, he has no children, he just inherited his sister's assets, so he'll pay 10% of his tax, and now he wants to donate his assets to his nephews and nieces. There are 20 of us. Good heavens.
Man, being 20 It doesn't hurt that much, but the truth is that the nephews will also pay 10%.
Yes.
In other words, there's no way. And here's one of those situations where we can't do anything anymore, why? Well, I mean, here we still can, because he's still alive and can change the situation. If we go for a pure donation, 10% is out of the question. Well, actually, 10.8% to be more precise, because it will apply to two items.
And the situations we can have, as we discussed here, the various situations, and you can all, let's imagine, form a company with a social purpose, even to avoid, as we were talking a moment ago about situations of fiscal transparency, therefore, the social purposes, be careful with that, we're talking about 20 people, so it doesn't seem like that's the way to go, but the precautionary measure, or since there are 20, it's a matter of doing the calculations a bit and understanding if the tax is also divided, to see if it makes sense or not. Okay, Paulo, 10 spots. Uh, Paulo Miranda.
Yes, Paulo, there are 10 spots for a reason that is... I don't know if you're familiar with PA's way of working, but we work with two or three non-negotiable principles: rigor, impartiality, and professionalism. In that context, we can only guarantee 10 spots until the judicial recess. That's why we're only opening 10 spots now, 10 planning sessions. No, we're not going to do more.
Okay. We're not going to do more. Uh, but you're asking here, can Falso ao Património give an approximate value for the cost of preparing the inheritance? Yes, we can. That's why planning is also useful. Planning isn't just about telling you what you can do, it's about the best way to do it fiscally, how you can optimize your tax payments, and then we also do the implementation. Uh, now you can take the planning and do it, or we can also implement it, which makes much more sense because... We'll take your hand, we'll go all the way, and we'll do everything.
What will be taken into consideration here? The work involved. An inheritance of €1 million can be much cheaper to manage than an inheritance of €100,000, for example.
Imagine, let's imagine that the €1 million inheritance is a house in Cascais. It requires much less work than 45 plots of land lost in the middle of the mountains, which together are worth €100,000 and nobody knows where they are.
So, our work in estate planning is to analyze the situation, optimize it fiscally, and that's why we have an interim meeting to see if what we've prepared for the heirs makes sense or not, considering the family context.
Let's go back to the beginning. When I told you that many times these are situations decided by heart, not by head. It's a situation where we'll try to equalize siblings. Because there was some history behind it, not because it makes fiscal sense this way.
So that's also important; we're aware of that before doing it, and the best estate planning is for your processes.
OK. There was also a situation earlier where the legacies exceeded the quota, so it has to be reserved for the heirs. Uh, nothing prevents the legacies from being fulfilled.
Uh-huh.
Why? Because there's that idea, "Oh, you can't do that." You can, yes.
The heirs who are harmed, and that's why those donations, etc., are included in those accounts. And how does that work? Well, I have the list of assets here, and then I'll take the donations that were made and virtually impute them and put them all here. And then this list is the value to be divided by two, three, four, as the inheritances may be. Nothing prevents the legacies from taking effect if the people who are harmed don't... Complain.
In other words, it has to be their initiative.
They can even say: "It's all right because my father even wanted to favor his nephew and I can understand why." There 's no automatic reduction.
People have to move forward with the process in this area. OK.
Here, Miguel charges a percentage of the estate. We used to, but we don't charge a percentage of the estate anymore.
Paulo, I'll be honest with you, you have a daughter from your first wife, another daughter from your second wife, she's French, you don't speak to her, I might not leave anything to that daughter of yours. It's like this, uh, everything I can tell you can't be recorded, OK?
So there might be solutions, but there are shortcuts, not solutions. OK, but I ca n't answer that now if it's being recorded. Sorry, but we can tell Paulo, but at least we can favor others in a completely legal, legitimate way, etc. Right.
Maria Calado, question about inheritance rights, it presupposes the sale of everything that is part of the inheritance, correct? Or can we choose what is included? The share? OK. More or less an emptying, that is, a strategy, it's force, I don't detail everything.
Yes, but yes, there is a strategy here, that is, the shareholder involves the entirety of the estate. There is a strategy that can be done so that when you sell the share you already have what you want to sell. OK? Uh, you can also implement it here and here.
OK. You also have a question from Paula.
The heirs in case of death are the members of a married couple under the regime of marital property. If there are no children, but there are ascendants and siblings. OK? Very quickly. Uh, the line of succession is like this: first, it's spouse and descendants. Second, that is, if there are no children, we go to the husband and wife or the parents or the grandparents eventually. That is, and if none of these people exist, siblings, if there are no siblings, we go to the uncles, we go to the nephews, that is, up to the fourth degree of the collateral line. And even right at the very end we have that cousin who already Nobody remembers that the state is also our heir. In other words, everything is safeguarded. In the worst-case scenario, the assets go to the state, but there you have it, from the moment we don't have those siblings, parents, and children, then we can do whatever we want with our inheritance.
OK? There are no limitations.
Look, here's a big question from Lília, which is a very common question : how can I know how much tax I'll pay after selling inherited real estate?
OK. If it's the sale of the property, then the inheritance will be taxed under IRS (Income Tax). If this always works, as the communication can sometimes be ineffective, people sometimes even forget to put it in Annex G, 4 years pass and that's it, but in fact we can't really, I mean, in inheritances it's even easier for a simple reason, because theoretically inheritances don't have other income. This is more of an accounting issue, but we can never say with absolute certainty. What is the amount of income tax we're going to pay there? For a simple reason: because this will be included with other income, salaries, pensions, any dividends, etc. It's all lumped together, and since income tax is a progressive tax, it starts at 14, goes to 18, passes through 20- something, ends at 48, and then... Yes, that's all. Imagine a withdrawal where you're putting everything in there, meaning we can never say precisely how much income tax will be paid on capital gains. Exactly.
Exactly. Look, in terms of cash flow, now this part I like best, you're already thinking about the business, does the value of the deed have to be transferred from the company account to the father? No. Deed registration and payment are two different things. If you control both sides of the spectrum, so to speak, you can, for example, create a payment plan, something like that, that allows you to make real estate transactions from one place to another. Right? Without any immediate transfer of funds. So, in terms of cash flow, you can play with that.
OK? In terms of taxation, it's as if you received it upfront, OK? It's, look, this is Conceição's question for you, Francisco.
And when the children supported the father more than the mother, do they intend to consider a part of the payment for a share of the house? Is that possible?
That is, basically, there was one child who supported more than the other and wants to receive a share in the payment for the house, wants to stay more with their sibling.
Uh, if they are all in agreement, then one of two things happens: either the father decides this with the allocation in the will, there you go, of that available share, one wants to favor one child, although the other will always receive something. Or even between them, let's imagine, one will get a property, will be greatly benefited relative to the other, but the other even says: "Hey, you're right."
Uh-huh. We can say that the equalization payments are paid as part of the... Default, that is, because there was a debt from one brother to the other.
That's also possible. And the arrangement between them—be careful, let's imagine we're brothers. Uh, there are separate ones, there's the saying, "Yes, I'm more handsome, much more so."
I don't know how I'm putting up with being next to you. It's difficult. Imagine the scene where, uh, I say, "Claudio receives everything and says, 'You have to give me money.'" And then you say you don't want me to give you anything. And forgetting about the exchanges. Be careful, because this between brothers leads to that 10% payment. Besides not receiving the money, I 'm also being taxed 10% on something I did n't actually receive. So, if it's honorable, everything's fine. That is, if there's a payment of money or just in full or something like that, and it could be one of those situations if it reflects reality. Yes.
Okay. Okay. There are some here. Regarding issues with people who are unable to submit the form, there's no problem at all.
We'll also upload this video to YouTube soon, a short while ago, but we'll upload it. We'll also leave the link in the first YouTube comment. Go check it out, no problem at all. If anyone still has questions, send an email to [email protected] and our team will follow up.
Now, for a person who owns properties valued at €1 million, according to the Tax Authority, and two children married under a community property regime, is it advisable to create a family molding? I'll give you the best answer, worth thousands of euros in consulting. It depends, OK? It depends on what you want to do. It depends on the level of trust you have with your children and between your children, and your daughters-in-law.
So, even if you're married under a community property regime, they still have to authorize everything. So it really depends, it depends if you have any kind of income from these properties and how you want to proceed.
Because, you know, if you were... Regarding nephews, I'd tell you right away that yes, being children is a big "it depends," OK? It's a great pity. OK. Look, here's the issue Sara mentioned: does a lifetime donation become null if there's no liquidity or other assets that can cover the donated property? It 's not the same situation I was talking about a moment ago, meaning they will be called upon, but people have to call them. If nobody does anything, those donations, and let's say 99% of the time this doesn't happen.
It depends on what we want and what we want to include in the inheritance, to make it fuller, more robust, so we have more money. Yes, otherwise they aren't called upon. So, as a general rule, I'd say 99% of the time this doesn't happen and the donations are made. Basically, that's it.
OK.
OK. So, we don't have that.
Nuno, if we opt for a family holding company, is it possible for one of the members of the holding company to sell one of the properties for their own benefit?
Thank you. HH, in a family holding company, the holding company doesn't cease to be a company, or So, it will depend on who you leave as manager.
And what we usually advise, and this is something we do in planning, is to leave, for example, two or three people as managers, and the company can only sign if two sign.
So you have at least 2/3 approval; you have 10 nephews, but only three are managers. Of those three, two have to sign. And when they sign, it's for the benefit of the company, OK? The mindset changes; it's no longer about inheritance, it's about the company.
But yes, if you leave people with bad intentions, those people will do bad things. OK.
There's the issue here, the daughter from the common-law marriage, that my properties worth over 1 million, 1 million, go to her and mine are divided between the two of us. What to do? Well, it also depends on the value of the investments, right? And the dividends that can be drawn. But what we have here is the possibility, as I mentioned earlier, of leaving the available share in a will.
In this case... So, we would leave 1/3, right? Well, since it's only one daughter, it's half and half, and therefore half can be left, but then it will depend on the value of our investments to see if we can balance the accounts that way. Yes, but you're in the best of both worlds here, which is that these two people, at least for now, can be exempt from your tax. OK? There's still room for maneuver here. We 're receiving many questions. If your question hasn't been answered, you can send it back to the chat to see if it gets overlooked. OK.
OK.
Property in ownership.
OK. OK. I only have one heir here, who is a niece. Does it make sense to form a company? OK. Be careful with family holdings. OK. I know it might be a new concept we've introduced here, but be careful, it might not make sense. OK? We 're introducing a degree of complexity here. I have an heir who is a niece. Does it make sense to form a company? So, what do you want to leave? Do you want "Leaving all your assets to her while you're still alive? OK, let's work on that.
Let's find a way to protect you and work with your niece now so that she's also protected. There are things that, within the scope of planning—not consulting, but planning, because they are two different concepts—are different.
Consulting is when we provide legal advice; we are lawyers. Estate planning is when we design a plan to address your inheritance in terms of tax, assets, and, in this case, family matters. Within this planning, there are two or three things that can be done that will make sense after death, but don't make sense during life.
Conversely, there are things that may make sense during life that don't make sense after death. Now, it depends on what you want to do, whether you want to have control, whether you don't want to have control, whether you trust her, whether you don't trust her, whether she's married and you want to trust the person she's with, because then all this also involves other people who are no longer family." Well, what if she dies before you? All of this needs to be weighed before making a proper plan.
Add another point to that. This one is interesting.
Let's go.
So, if a person has two children, but wants to leave one child more property than the other, and the other child agrees, you could do something that's essentially fiction, but exists in the code regarding inheritance division during life.
We can't make inheritance divisions during life because inheritance division happens after death. We do inheritance divisions during life, which are essentially donations, but when these donations are made to the children, there's already compensation between them, or possibly a waiver of compensation. There's already a document outlining the donations, and the parties involved agree: "OK, my sister received more than me, or I received another house, and you received more money." That's another possibility for making donations, but then balancing the inheritance so that the heirs don't... They might bother us. It's also possible, very possible. Yes. Donations made to three children during one's lifetime can be claimed at the time of inheritance. They can always be claimed. OK. This is because the donated properties were assessed as urban and are currently forested. OK. We have to understand that this is the value at the date of the donation. OK. HH But yes, that is, all donations that are made, what happens, I'll give you this in simple Portuguese, can be reduced.
Basically, if an excess was donated, the person who received the excess may have to pay the others. H, basically that's it.
Just to say that, let's imagine, the asset only returns to the inheritance if it's worth 50% more than the value, which is difficult to happen. That is, if I have to take 40,000 and the property is worth 50,000, well, then the property goes and I receive 10,000. But as a general rule, what happens are these reductions and there's a minimization.
OK. It 's not normal.
Look, a mother and two children have had an undue inheritance for two years, with several apartments rented out in the name of this undue inheritance. I advise dividing this undue inheritance. OK, now I'll be 100% honest with you. Sometimes it doesn't. OK. And we're talking against ourselves because I could even say: "OK, that makes sense, let's do the division, let's go to our office and do the division, do the planning and the division." If you 're okay, and this applies to everyone, if you're okay and you're all children of the same couple, so to speak, OK? There are no children outside of marriage, but it's worth doing the division when... dying of both parents than half. Unless there's some motivation there, like divorces, the issue of one of them having assets seized, or you wanting to take some assets and do something else with them, unless there's some motivation, it's better to divide the assets when you both die. OK? Why is this?
If the plan is to divide the inheritance and leave everything to the widow, it's pointless, because sooner or later the widow will die according to the natural course of life, she'll die first with her children, and you'll have to divide the inheritance again. That's why we're saying here that even if we could sell the service, sell the follow-up, and sell the sharing, sometimes it's not worth it.
Or they can do something else, they can immediately divide the inheritance in the children's names, possibly sharing the proceeds with the mother, who continues to manage the income, which we even discussed in one of the cases, so it's all good.
Yes. They're already sorted out. Yes, but it depends on the case, it's a case-by-case situation. Let's imagine that, for example, one of you is getting married, and you're in a hurry to close a deal before the wedding. Perfect. On the contrary, one of you will get divorced. We wait, we wait, and then we act. OK? In other words, well, it depends a lot. Look, that's an excellent question. This is the type of question I address when reviewing the value of someone who 's here live at 10:15 on a Wednesday night: creating a holding company, and considering that we can't withdraw cash from the company via salary, it makes sense to create an operating company underneath. Spectacular. What you're talking about here is, if the company that's a partner in the family holding company is my holding company, in which I basically own at least, and now let's get to the tax aspect, I own at least 10% of the share capital of my family holding company, and when I distribute the assets to my company, with the exemption from double taxation, I pay zero taxes. Yes, it can be done.
Yes, it's possible to assemble this structure, there's no problem at all. The only cost you 'll realistically have is another accounting fee to pay, but if you combine both into one package, that won't be a problem. But often when we create a family holding company, we create a holding company underneath. For exemption from double taxation, a regime that is largely unknown to most Portuguese people, but in order not to pay taxes on the distribution of dividends, this company must own at least 10% of the other. So this is funny, it's put into practice as long as your share of the inheritance is at least 10%. OK? If there are 11 children, this ceases to make sense. Well, now for less than that, yes, it makes perfect sense.
OK. Now, Francisco, the widow of my late friend. Well, my deceased widow, who passed away in December 2025, filed a death certificate with the bank in March 2026 and emptied the bank account. Inheriting an apartment and a garage. They don't want a share, they inherit from the widow. my brother. And what I'm doing here is that we have to do what Cláudio said right at the beginning, which is that it's a very tedious process, very tedious because it's time-consuming, but it's the probate process.
Hmm, no, look, just so you have an idea, at a certain point this was passed on to notaries and it went very badly because it took even longer, because the judge's authority ends up being different, but even in court, man, we're talking about operations that take a long time. The logic here is to talk to everyone and say, "My friends, look, this is going to be divided, and that's it." Uh-huh.
Why? Because it's one of two things: either we resolve this amicably, or we go to court, and often there's no other option, man, it will eventually end in a sale, possibly through the allocation of assets, raffles, or awards to different people. If none of this works, well, it sells well. And so, ultimately, that's what they have to do.
Look, one last question before we wrap up: what does it mean that all donations and life are called inheritances, which is what happens when there are multiple heirs, including children? Okay, so this is the logic that refers to what isn't being used, but which is referred to as donations, in order to calculate the size of the pie.
In other words, let's imagine the person died and owned an apartment and had €300,000 in the bank. The apartment was worth 700,000.
Therefore, the assets to be divided amounted to 1 million.
I have it, we're together again, the two of us, the two brothers.
Well, and we have a third brother who at this point had already received a donation of £ 400,000 and then we had a will.
So we'll think of it this way: we have 1 million to divide, which will be divided by three, giving us 333,000, 300 each. Okay, if I claim the assets that were donated to my other brother, that's it, let's say €0.00 or €400 as I mentioned, the total inheritance would then be €1,500. Which means that those 2/3 were no longer going to be 2/3 of 1 million, but 2/3 of 1,500, and that they were going to recalculate and change the figures. That's why they are all called to the inheritance, but they are virtually only there for the sake of calculation. It is fine? It is not? We're not going to keep the assets, and now we're going to change the names again and transfer them to the deceased's name.
Forget about it. It's virtually only for the purpose of settling accounts.
Exactly. Bruno is here. And for the last question. The value assigned to a share after the death of a partner is the value considered in the case of the sale of that same share. This is for capital gains calculations. OK. When someone dies and leaves a company, the value of the share is the value of, in this case, the corresponding share, ideally, right? Simple rule of three, based on the value of the last equity balance sheet. Basically, the share capital is €1000, and it's a sole proprietorship, meaning the individual only owns €1000 in shares.
Is the inheritance worth 1000? No. If the company is worth 1 million euros, that's 1 million euros that will be allocated to corporate income tax.
What does this do? This means that family holding companies have to be very carefully considered from this perspective: are we playing two games? Are we playing the game where we want to avoid the 10% tax (which doesn't apply to the children) or are we playing the game where we want to avoid the reference price in the sale value? OK? Don't get involved in creating companies and transferring assets to others.
Seek help, find a good legal department. It could be us, it could be someone else, but seek support in this, in this, in this social planning. It really makes all the difference. It's even possible, we are the parasocials, they can even add a parasocial to the family holding company, a parasocial that is created and defines the rules of the game. This company is dedicated to managing the assets of the X family. The rules are as follows: when do we make the decision? When there is a majority of X%.
Who are the heirs? These are the people. OK. How much inheritance do these people have? 1 1/4? Okay. So, you have these powers within the company. All of this is carried out within the family holding company and within the parasocial group. OK? To tell you a little bit about our estate planning project, for which we will be launching 10 slots before the judicial recess, we have, and we fully believe, that a good inheritance is one that is prepared during life and not after death. Yes, it's still possible to do many things after death, but mostly while alive. That's why it's so important for you to properly structure your succession plan. In this context, we have our program here. The succession planning program consists of three sessions that can be online or in person. The first session is a diagnostic session, where we will understand what the estate is, what the family context is, and what the heirs' or the surviving person's ideas are. So, given all this, and since these are the heirs, what are we going to do? Either I want to protect my estate planning, there's no problem at all, or, and this happens to us often, one of the heirs wants to make a plan to present to their siblings so they can finally divide the inheritance. So, in the context of inheritance, we can provide support to a person who is still alive but wants to protect their estate after death, as well as to all heirs when they are in agreement, or to one of the heirs who wants to present the plan to their siblings, or eventually proceed with the judicial process, the probate process, in which case we also provide support; our law firm also provides support in probate proceedings.
We create the initial plan, and then we'll present an interim validation.
As I explained to you, there are times when the heart rules more than reason.
This is one of those moments, and sometimes we, as legal professionals, will present the best option for tax optimization.
You on your side will say: "That doesn't make sense because I want Y." OK?
So we'll have to combine the two here, the part based on heart and the part based on reason, and adjust our plan accordingly. In the end, we will have a final plan for tax optimization here. It can involve wills, lifetime gifts, company formation, this whole optimization plan, and in terms of legal fairness among heirs, we will do it, we will do the complete plan. Well, and here we can also move on to the implementation phase where we'll handle all of this—wills, donations, inheritances, businesses—all of that can also benefit from our services. We're opening 10 positions because this is a job that ends up being quite extensive. It's not a cheap job, OK? But it will be extensive and will be tailored to each of you, depending on your level of assets, the number of heirs, and the complexity of the entire process. To do this, simply fill out this short form (2 minutes). Our team will contact you within the next 48 hours. Let's schedule a session to explain how the planning process works and see if it makes sense for you or not. If they agree, we'll move forward with the plan. We have 10 openings for this program. You can submit it here and fill in the QR code. If it makes sense, our team will contact you. If it doesn't make sense, we 'll also say that, at least for now, this plan doesn't make sense.
So, for all of you who are here, we've surpassed 1200 people in the live stream. On my behalf, and on behalf of Francisco, all we can do is thank you all. Thank you so much for being there, thank you so much for dedicating, for investing more than an hour, almost an hour and a half of your time, being here one day, after a day of work, after a tiring day, to understand what more you can do, because it is in these moments that, by really putting it into practice, one day later we will be able to have either a good tax situation here, or at least continue to have some place or company for Christmas lunch and not argue with our siblings about the division of assets, which unfortunately is what we've seen a lot of. Therefore, my friends, thank you all very much.
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