Inheritance tax: the race of wealthy families to anticipate donations.

The rush to manage estate planning and avoid the new rules of the Inheritance and Gift Tax (ITCMD), also known as inheritance tax , has gained a new sense of urgency. With the supplementary law, which was enacted earlier this year, it became clear that the tax base will be the market value of the assets, including intangible assets.

Law firms and wealth managers have begun to treat 2026 as the last window to anticipate lifetime donations, before the bill becomes heavier, more complex, and more litigious. This is especially true in the case of asset holding companies, which hold portfolios of real estate or shares in family businesses.

Since the law is a general rule, each federative unit still needs to regulate these guidelines in its own legislation, which is expected to happen this year. With this, the new state rules would come into effect in 2027.

It is precisely in this interval between the enactment of the supplementary law and the future local regulation that the window of opportunity has opened, which the market is trying to exploit. Families are racing against the clock to bring forward the donations.

“This year should be one of the last windows for family reorganization, which will mainly impact illiquid assets, such as real estate, farms, and corporate equity stakes. The tax base can make the tax ten times, or more, more expensive,” says Octavio Arruda, director of Wealth Services at Andbank. “That’s why families are moving a lot this year to anticipate this scenario.”

The change that most worries the market is the determination that equity holdings not traded on the stock exchange be valued using a technically sound methodology, with the minimum valuation being the net worth adjusted to market value.

There was also the surprise of adding the market value of goodwill, which means including intangible assets whose value rarely appears clearly on the balance sheet, such as the potential for future earnings and even the value of a brand.

In practice, this means that it is no longer enough to look at the historical value recorded in real estate holdings or operating companies. It will be necessary to observe the market value and even carry out an appraisal of it.

To illustrate the impact, the law firm Cescon Barrieu created a fictional simulation for NeoFeed involving an asset holding company in São Paulo.

In the current scenario, with three properties valued at R$ 5 million and financial investments worth R$ 2 million, the company would have a net worth (NW) of R$ 7 million. Under the system currently used in São Paulo, with a fixed tax rate of 4% and using NW as the basis for calculation, the full donation of the shares would generate an ITCMD (Inheritance and Gift Tax) of R$ 280,000.

In the post-new rule scenario, however, the same assets would be revalued at market price. The properties, then, would be worth R$ 25 million, and adding a conservative goodwill (propensity for future appreciation) of R$ 3.2 million (estimated based on historical profitability), the minimum tax base would be R$ 30 million. Maintaining the 4% tax rate, the tax would jump to R$ 1.2 million.

If São Paulo also migrates to a progressive system with an 8% ceiling, the cost could approach R$ 1.95 million. In other words, a succession that currently costs R$ 280,000 could become almost seven times more expensive in this example.

A succession that currently costs R$ 280,000 could become almost seven times more expensive in this example.

“Holding companies have always used historical asset values, without proper adjustment over time. The law combats this, but it also introduces great complexity in its execution and leaves it open for states to decide on the valuation methods to be used, turning it into a box of surprises,” says Lucas Babo, senior tax and estate planning lawyer at Cescon Barrieu.

The bill will go up even after taxes are deducted.

The market valuation will have to be paid for by taxpayers and will not be cheap. It will be necessary to hire independent appraisals, auditors, experts, or specialized consultancies to justify the market value of the donated asset.

“To arrive at a market valuation, a well-founded report must be prepared, and money must be spent on it to avoid challenges from the tax authorities, which may occur. We anticipate that the new law will lead to many legal disputes regarding this,” says Michel Siqueira Batista, partner in the tax & customs and estate and succession planning areas at the Vieira Rezende law firm.

In the case of operating companies, the asymmetry is even greater. If it is already difficult to close a price in real M&A transactions, with buyer and seller sitting at the table, it will be even more difficult to transform this into an objective tax rule.

To make matters worse, the leeway the law provides for the incorporation of intangible values, such as projected future profits and even a company's brand value, makes this assessment quite subjective.

“Intangible assets are already difficult to value in M&A sales; it’s not an exact science. Imagine how states will assess them. We are facing an increase in tax litigation in this area,” says Roberto Freitas, partner and head of Wealth Planning at G5.

For real estate holding companies, the difference is that the value of the properties they held was previously assessed at purchase price, even if that was many decades ago. Now, they need to be estimated at their current value.

A recent decision by the Superior Court of Justice (STJ) recognized that states can reassess the value of assets when they believe that the amount declared by the taxpayer is below market value, provided that automatic tables or administrative indices, such as the IPTU (Property Tax) or ITBI (Real Estate Transfer Tax) values, are not used.

State finance departments can use real estate sales websites to establish values or the average price per square meter in the region.

The map of the states

If the supplementary law has already outlined the national direction, the crucial point now is to understand how each state will regulate the legislation.

A survey conducted by the Cescon Barrieu law firm for NeoFeed , covering seven states with significant models for holding companies (São Paulo, Minas Gerais, Rio de Janeiro, Bahia, Ceará, Distrito Federal, and Rio Grande do Sul), shows differences in both the tax rate and the current valuation criteria, as well as the degree of aggressiveness of the tax authorities in revaluing assets.

São Paulo continues to be seen as the most emblematic case of this window, as it currently has the safest and most attractive conditions. Today, the state has a fixed tax rate of 4% and a law favorable to the use of book value for company shares. Therefore, the change to the new legislation will have a significant impact.

São Paulo continues to be seen as the most emblematic case of this window, as it currently has the safest and most attractive conditions.

The opposite extreme is the state of Bahia, where the law generically defines the tax base as the assessed value determined based on market values, thus aligning it with the new federal regulation.

"São Paulo has a very clear law regarding book value, not including a market value like other states are already trying to do, such as Bahia, which is already up-to-date," says Babo, from Cescon Barrieu.

Minas Gerais is one of the states that explicitly treats market value as the basis for valuation, and the State Treasury Department already attempts, in many cases, to assess real estate within companies at market price, instead of accepting only the balance sheet.

In Rio de Janeiro, the legislation is considered modern and detailed, already establishing that the assessed value corresponds to the market value, and empowering tax authorities to disregard declared values below what they deem appropriate. Similarly, in Ceará, the legislation already works with the concept of current market value and authorizes arbitration.

In the Federal District, the legislation makes an important distinction: for operational companies, the reference tends to be the balance sheet; for asset and participation holding companies, the tax authorities may work with an inventory of assets, rights and obligations, which brings the assessment closer to an economic criterion.

In Rio Grande do Sul, the scenario is historically more controversial. The state had already been using its own valuation formulas, which were heavily criticized for not necessarily reflecting the real market value and for already incorporating a strong degree of subjectivity.

And, for states that already have a progressive tax rate in their law and a provision that refers to the market value as the base, the application of the new law is already being debated by the tax authorities.

The argument is that there was no creation of a new tax nor a formal increase in the rate, but only an update of the evaluation criteria. This invalidates the need for ninety-day and annual prior notice.

“This argument is far from being settled, but it is already circulating among tax experts and deserves attention. And, in this case, if there is an agreement, it could come into effect at any moment,” says Manoela Vargas, head of wealth planning at TAG Investimentos.

What families need to do

The new ITCMD rules don't mean that every family should rush to donate shares immediately. What the professionals interviewed by NeoFeed argue is that the analysis needs to begin now, because the process is rarely simple and almost never resolved overnight.

"The focus now is on preparing the company for the donations, adjusting what is needed or not within the company, and seeing if it is truly ready for this step," says Freitas, from G5.

The professionals interviewed by NeoFeed argue that the analysis needs to begin now, because the process is rarely simple.

In his view, the issue is not just about taxation, but involves the business's long-term viability, preparedness for unforeseen events, and building governance for future generations.

Freitas summarizes the profile of those who should move forward now: entrepreneurs with a mature, healthy, and ideally harmonious successor generation. It's also necessary to understand if the assets within the holding company are for the medium and long term, with no prospect of sale in the near future.

This is because the donation generates an immediate cash outlay for taxes and may not make sense if the future strategy is to sell the business or bring in a strategic partner.

In the case of operating companies, preparation is usually more laborious. It may require prior corporate reorganization, the creation of sub-holdings by family branch, the definition of voting rules, usufruct, restrictive clauses, and a review of the shareholders' agreement.

In many situations, estate planning also needs to be coordinated with other tax matters. Vargas, from TAG Investimentos, points out that many families have been led to discuss succession not only because of the Inheritance and Gift Tax (ITCMD), but also due to concerns related to the taxation of dividends and asset reorganization.

“The limit of up to R$ 600,000 per year in dividends, which are payments from holding companies, gave it an extra push. And we see that especially those who are older want to resolve the issue quickly,” says Vargas.

According to Arruda, from Andbank, for families still planning this move this year, it's crucial to analyze a few points: what is the company actually worth; what is a fair valuation of that asset that has been held for so many years, or even decades, in income tax returns; and whether it makes sense to make the donation now or not.

In some cases, the natural succession may involve a sale or the entry of a strategic partner, which completely changes the logic. But a simple lifetime donation may not always be viable, either due to a lack of preparedness on the part of the heirs, or due to restrictions imposed by investors or institutional partners.

In this case, the market is seeing growth in demand for alternatives. "Those who realize that anticipating the transfer of assets is not an option are taking out life insurance and retirement plans as tools to deal with the lack of liquidity and mitigate the impact of a more expensive inheritance in the future. The fact is that, in any situation, organization is necessary," says Arruda.