3/1/2021
The successful examples of estate and succession planning prove that they constitute an effective and necessary measure, that seeks to preserve the assets of an individual or family, and also to the benefit of the next generations.
Depending on the complexity of the estate, an asset protection planning should be structured together with a succession planning, so as to avoid adverse circumstances that could expose the assets, such as sudden changes in the law, exchange rate risk, country risks, high competitiveness, market downfalls, family dynamics, the pandemic itself, among others.
As a result of adverse circumstances, lawsuits may be filed to seize assets, even if these assets are detached from business operations. These lawsuits can be often brought in an abusive way, especially if we consider lack of depth on some judgments. Given this scenario, asset protection planning can and should be always thought out and structured in advance, and never when there is already an ongoing enforcement lawsuit.
Also, asset protection planning is highly important given the latest improvements of asset constriction systems, which are becoming increasingly wide-ranging, and effective.
For instance, there is the updating of the former system (BACENJUD), recently replaced for Asset Search System of the Brazilian Courts (SISBAJUD). Besides forwarding online constriction orders to any financial institution, faster than BACENJUD, SISBAJUD has allowed judges to request detailed information about the debtor, such as bank statements; contracts for opening bank accounts; credit card invoices; exchange agreements; cheque copies; among others. Furthermore, the system allows the attachment of shares and fixed income securities.
Creditors are also entitled to request research and attachment of assets through the INFOJUD and RENAJUD systems. INFOJUD allows judges to have online access to the registration of taxpayers in the Brazilian IRS database, as well as to the income and rural land tax declarations. RENAJUD is connected to the National Traffic Department (DENATRAN), responsible for enforcing court order restrictions on vehicles registered in the National Register of Motor Vehicles (RENAVAM).
For the above reasons, individuals and families must think about the best structure to protect and manage their assets, either through their segregation from the business operations or through their diversification. Thus, when the appropriate legal tools are adopted at the right time, planning not only allows for the best asset structure, and better protection against adverse circumstances, but also makes the succession process smoother..
Coauthors: Maria Paula Meirelles Thomaz de Aquino e Marcelo Trussardi Paolini
