Division of assets during one's lifetime and the forced share: precautions so it is not challenged

Anticipating the division of assets during one's lifetime, through gifts, is a strategy adopted by many families that wish to organize succession. Well conducted, this measure can bring predictability. Carried out without the proper precautions, however, it can be a source of future challenges.

What it means to divide assets during one's lifetime

Dividing assets during one's lifetime consists, generally, of transferring assets to the future heirs while the owner is still alive, usually through gifts. It is common, for example, to gift real estate or equity interests, often with a reservation of usufruct in favor of the person making the gift.

The reservation of usufruct is a frequent device: it allows the person to transfer ownership but retain, as a rule, the right to use the asset and receive its fruits while they live. This tends to reconcile planning with the security of the person making the gift.

The limit of the forced share

The most sensitive point of dividing assets during one's lifetime is respecting the forced share. The law reserves to the necessary heirs a portion of the assets that cannot be freely disposed of to the detriment of those heirs. The person may dispose more freely only of what is known as the freely disposable portion.

When a gift improperly encroaches on the forced share, it may be challenged and, depending on the case, adjusted or annulled. For this reason, carefully calculating what may be gifted is essential so that the organization done during one's lifetime does not turn into litigation later. Attention is also needed to the treatment among heirs of the same class, since unequal gifts, when not properly explained, may create the perception of favoritism and fuel disputes.

• Identify who the necessary heirs are
• Distinguish the freely disposable portion from the forced share
• Assess the appropriateness of a reservation of usufruct
• Consider the levy of taxes, such as the ITCMD, on the gift
• Properly formalize each act to reduce risks

Precautions that make a difference

Dividing assets during one's lifetime involves legal, financial, and family aspects that need to be analyzed together. Proper documentation, respect for the legal limits, and attention to equality among heirs, where applicable, are usually decisive factors for the security of the operation.

It is also important to remember that the transfer of assets usually involves the levy of the ITCMD (Imposto sobre Transmissao Causa Mortis e Doacao, a state tax applicable to gifts). The way the operation is conducted must take this aspect into account, always within what the legislation permits.

This content is for informational purposes only and does not constitute legal advice. Each case requires individual analysis by a qualified professional.