Succession planning makes sense when the estate is significant, when it mixes different kinds of assets (real estate, equity interests, investments), or when the family carries seeds of conflict, such as children from different unions, minor heirs, partners who are also relatives, or a business that depends on fast decisions. A family holding company is one of the available tools, and not the only one: a gift with reserved usufruct, a will, a prenuptial agreement and a shareholders agreement solve many cases at lower cost. It stops paying off when the estate is small or concentrated in a single property, when the family has no appetite for corporate discipline, or when the structure is set up purely to reduce tax, which is precisely the scenario tax authorities tend to challenge.
Below is the full picture: how probate works today, how much it costs to transfer wealth in Pernambuco, what changed with the tax reform, and where a holding company helps or gets in the way.
Judicial probate and notarial probate
Since Law No. 11.441/2007, probate and the division of an estate may be carried out by public deed at a notary office, with no court proceeding, when all heirs are adults, legally capable and in agreement, and provided the parties are assisted by a lawyer. The National Council of Justice standardized the application of that law through Resolution No. 35/2007, detailing the requirements and the duties of notaries.
Notarial probate is faster and more predictable. Court proceedings remain mandatory in cases of dispute among heirs and, as a rule, where there is a minor or legally incapable heir, situations in which the interest at stake is not freely disposable and requires the participation of the Public Prosecutor's Office. A will, in turn, does not necessarily bar the notarial route, but it does require the prior fulfilment of its own formalities and judicial authorization in the form accepted by case law and local rules.
The two-month deadline
Article 611 of the Code of Civil Procedure provides that probate and division proceedings must be opened within two months of the opening of the succession, meaning the date of death, and completed within the following twelve months, with the judge allowed to extend those periods. That procedural deadline interacts with the state tax deadline: in Pernambuco, the ICD legislation provides for a penalty when probate or the simplified proceeding is not opened within sixty days of the death. The applicable percentage should be checked against the table in force published by the Pernambuco State Treasury (Sefaz-PE) before any calculation, because it is updated by state rule.
How much it costs to transfer wealth in Pernambuco
The state tax on transfers upon death and on gifts in Pernambuco, called ICD, the local name for the ITCMD (Brazilian state inheritance and gift tax), is governed by Law No. 13.974/2009. Rates are progressive and calculated on the value of each share, legacy or gift. Under the table in force from January 1, 2026 published by the Sefaz-PE: exempt up to R$ 80,000.00 (Brazilian reais); 2% from R$ 80,000.01 to R$ 350,000.00; 4% from R$ 350,000.01 to R$ 550,000.00; 6% from R$ 550,000.01 to R$ 750,000.00; and 8% above R$ 750,000.00.
Two points usually take families by surprise. First: progressivity applies per share, not to the estate as a whole, which makes the way the estate is divided relevant to the final cost. Second: gifts made during life are also taxable events, and the state tax authority tracks successive gifts precisely to prevent artificial slicing.
What the tax reform changed
Constitutional Amendment No. 132 of December 20, 2023 made progressivity of the ITCMD mandatory according to the value of the share, legacy or gift, in every state and in the Federal District, keeping the 8% ceiling set by a Federal Senate resolution. Complementary Law No. 227 of 2026, published on January 14, 2026, then established general rules for the tax, addressing jurisdiction, taxable event and calculation base, including cases involving assets, donors or heirs domiciled abroad, and amended the National Tax Code rules on the municipal property transfer tax.
In practice, two effects matter for anyone planning. States that applied a flat rate must now create progressive brackets, with a likely increase in the burden on larger estates. And the law widened the concept of a gift to cover situations that amount to a gratuitous transfer dressed up as an onerous one, which hits structures built to move value without paying the corresponding tax.
The tools, one by one
Will
A will serves to dispose of the freely disposable portion of the estate, appoint a guardian, acknowledge family situations, leave specific assets to specific heirs and reduce disputes over the deceased's wishes. It does not override the forced share of compulsory heirs, nor does it eliminate probate, but it does organize what will go through probate.
Gift with reserved usufruct
The owner transfers bare ownership to the children while retaining the usufruct, preserving the use and the income of the assets for life. It brings the transfer forward, pays the ICD at the time of the gift and reduces the estate subject to probate. It calls for care with clauses on non-communicability, non-attachability and reversion, and with the fact that a gift without reserved income may compromise the donor's financial security.
Family holding company
This means setting up a company that comes to hold the family's assets, followed by the gift of quotas to the heirs, usually with reserved usufruct and restrictive clauses. The real advantages exist: governance defined in a shareholders agreement, clear rules on entry, exit and succession, decisions about property without gathering every heir at a notary office for each act, protection against the paralysis typical of co-ownership among siblings and, in some configurations, tax efficiency in managing rental income.
The limits are just as real. A holding company does not eliminate the ITCMD, it only changes the moment and the base of the levy. It does not shield assets against debts incurred by the owner before the restructuring, and transfers made to the detriment of creditors can be annulled as fraud against creditors or fraud in execution. It does not override the forced share of compulsory heirs. And it protects nothing if the structure is merely formal: a company with no business purpose, without proper bookkeeping, without separation between personal and corporate assets, or created on the eve of litigation, is fertile ground for claims of sham, abuse of form and piercing of the corporate veil.
The right question is not whether the holding company cuts tax, it is whether the family can live with a company, with rules, accountability and decisions taken in formal meetings.
When it does not pay off
- Estates concentrated in a single residential property, where the cost of setting up and maintaining the structure exceeds the gain.
- Families with no appetite at all for corporate governance, where the holding company simply moves the conflict to another arena.
- Situations of existing debt or ongoing litigation, when a restructuring tends to be read as an attempt to frustrate creditors.
- Structures built purely for tax reasons, with no substance, especially after Complementary Law No. 227/2026 widened the concept of a gift.
A practical roadmap
- Map the actual estate, with ownership, values, encumbrances and debts.
- Map the family: marital property regime, compulsory heirs, previous unions, incapable persons, business partners.
- Set objectives in order of priority: business continuity, family harmony, liquidity for heirs, tax cost.
- Choose the tools according to those objectives, starting with the simplest.
- Implement with consistent documentation and review at every relevant change in the law, in the estate or in the family.
How our firm can help
We advise families and family businesses on designing and carrying out succession planning, including analysis of the marital property regime, wills, gifts with reserved usufruct, incorporation of holding companies with a shareholders agreement, conduct of judicial and notarial probate and disputes over the ICD in Pernambuco. Every family has its own configuration and no outcome can be promised, but decisions taken during life tend to cost less, in money and in family relationships, than those taken afterwards.
