US estate tax: how can an offshore structure benefit your international wealth?

Investing abroad has become an increasingly common choice among Brazilians seeking diversification and access to global opportunities. However, when allocating assets outside Brazil, especially in the United States, it is essential to understand not only the financial aspects but also the tax impacts involved in succession planning.

One of the most relevant issues in this scenario is the US estate tax, and this is where the offshore can make all the difference.

What is the US estate tax?

In the United States, foreigners who hold assets on American soil — such as shares in US companies, ETFs, funds, real estate or accounts at American brokerage firms — may be subject to the estate tax (estate tax) upon death.

This tax applies to the value of assets located in the US held in an individual's name and can reach up to 40%. The exemption is low: only US$ 60 thousand. Above that amount, the tax becomes mandatory for non-residents, ranging from 18% to 40%, according to the wealth bracket.

Why does this matter to the international investor?

Imagine a Brazilian investor with US$ 200 thousand invested in American stocks in their own personal name. Upon death, the heirs may be required to pay up to US$ 56 thousand in estate tax, depending on the valuation and the rules in force.*

This taxation can have a significant impact on families that were not prepared to bear such high costs, and it can also freeze access to the assets until the tax situation is regularized in the US.

How does an offshore help avoid this tax?

An offshore is a company registered abroad, generally in jurisdictions that offer tax and administrative advantages. When American assets are transferred to an offshore company, ownership passes to the company — and no longer to the individual.

As a result:

• The assets are no longer considered to belong directly to the investor, but to the offshore;
• Upon death, there is no US estate tax, since the company continues to exist and to hold title to the assets;

Succession takes place more efficiently, through mechanisms such as a will, a trust or a JTWRS clause.

Planning is essential

If you invest or plan to invest more than US$ 60 thousand in American assets, considering the incorporation of an offshore may be a smart move — both to protect your wealth and to plan succession in a strategic and cost-efficient way.

Relying on specialized guidance is essential to ensure that the chosen structure is safe, efficient and compliant with the legislation in force in Brazil and abroad.

* This example is for illustrative purposes only. Individual cases may vary. Any information provided is not a complete summary or statement of all available data necessary for making an investment decision and does not constitute a recommendation.