Superior Court of Justice rules that estate distribution is not conditioned to the payment of Estate and Gift Tax

Ruling simplifies and relaxes the distribution of estates valued at 1,000 minimum wages or less

On October 26, the First Section of the Superior Court of Justice (STJ) held, by unanimous decision, that Brazilian courts must not demand the payment of Estate and Gift Tax (ITCMD) until the end of the probate process, provided that all beneficiaries agree on the partition of the estate.

The ruling settled Court Issue No. 1.074 and is enforceable through the summary probate process, a simplified process in which all heirs are of age and agree to the distribution of the estate, whenever its value does not exceed 1,000 minimum wages. In the past, the payment of the ITCMD tax used to be required before a court order could be issued setting out the definitive distribution of the estate, even when heirs were in full agreement as to how the property should be shared.

Such requirement entailed several problems, especially because heirs without liquidity in their assets to settle the tax right away ended up hindering the probate proceedings, which could take years to complete. This situation even posed challenges when managing companies in the event of the death of a partner, due to obligations that remained for as long as the probate process was still ongoing.

The court's ruling speeds up estate distribution whenever there is an agreement of heirs and simplifies probate procedures, transferring issues related to the assessment and collection of the ITCMD tax back to tax authorities, who can now collect it at a later time, once the property has found its way to the heirs' own estates.

It should be noted, however, that the justices upheld the decision that other taxes levied on the estate’s assets and earnings must still be paid before a final judgment of distribution can be issued.

Support to individual taxpayers

DPC has a department dedicated to assisting individuals in their tax assessment and in remaining in compliance with estate-related tax obligations. You can rely on our support: dpc@dpc.com.br.