When it comes to succession planning and protecting large estates, two structures are often mentioned: the Family Holding company and the Private Interest Foundation (Offshore). Although both aim to organize and protect assets, they operate in very different legal and strategic spheres. Understanding this difference is crucial to making the right decision.
What is a Family Holding Company?
A Family Holding is essentially a company created in Brazil whose main activity is to hold shares in other companies and manage the family's assets (real estate, investments, etc.). The family members become partners in this company.
- Advantages: It centralizes asset management, can offer some tax savings in succession (depending on the regime), and facilitates the organization of inheritance into corporate shares, avoiding disputes among heirs over specific assets.
- Disadvantages: The structure is 100% under Brazilian jurisdiction. This means it remains exposed to the country's legal, political, and economic instability. It does not protect against currency devaluation, and the assets can still be targeted by lawsuits and seizures, albeit with an extra layer of difficulty.
What is an Offshore Foundation?
A Private Interest Foundation is a legal entity established in a stable foreign jurisdiction (such as Panama, Liechtenstein, or the British Virgin Islands). The founder (owner of the assets) donates their assets to the Foundation, which becomes the legal owner. The founder defines in a document (the regulations) who the beneficiaries are and how the assets should be managed and distributed, now and in the future.
- Advantages: It offers the highest level of protection, as the assets are no longer in the founder's personal name. It ensures complete privacy, maximum tax efficiency (often with exemption from inheritance and income taxes), and succession occurs automatically and privately, without the need for probate.
- Disadvantages: It has a higher setup and annual maintenance cost than a Holding company and requires highly specialized consulting for its correct establishment and management.
Quick Comparison Table
| Characteristic | Family Holding | Offshore Foundation |
|---|---|---|
| Jurisdiction | Brazil | International (e.g., Panama, BVI) |
| Legal Protection | Limited (subject to Brazilian laws) | Maximum (total segregation of assets) |
| Tax Efficiency | Moderate | Very High |
| Succession | Via probate of shares (simplified) | Automatic, private, no probate |
| Privacy | Low (public records in Brazil) | High |
Conclusion: Which to choose?
The choice depends on your objective. For families with assets concentrated in Brazil who are primarily seeking succession organization, a Family Holding can be an excellent first step. For those seeking robust protection against instability, international diversification, maximum tax efficiency, and a completely fluid and private succession, the Offshore Foundation is the definitive tool. Often, a hybrid structure combining both can be the ideal solution. An analysis of your profile by a specialized consultant is indispensable.