Asset Protection through Holding, Trust, or Offshore Structures: Efficiency, Legal Limits, and Risks

This article examines the use of three structures — the family holding company, the international trust, and the offshore company — as instruments of lawful asset protection, focusing on legally accepted mechanisms, the limits of Brazilian law, and the risks of disregard or liability.The purpose is to provide a technical and impartial analysis, enabling entrepreneurs, executives, and families to understand the differences among these tools and select the structure most suitable for their circumstances.

The protection of assets — especially in times of economic instability and legal uncertainty — has become one of the main objectives of corporate and succession planning. However, asset protection does not mean concealment or fraud: it consists of a set of lawful, proactive, and transparent actions designed to preserve assets against foreseeable risks, such as corporate disputes, executions, bankruptcies, or contentious divorces.

Within this context, structures such as the family holding, the international trust, and offshore companies have been used for asset protection purposes.Nevertheless, their legal effects, risks, and efficiency vary significantly, requiring technical analysis.

2. Holding Company as an Asset Protection Instrument

A family holding company is a legal entity (LLC or corporation) created to centralize an individual’s assets and property.

How it protects:

·         Converts personal assets into corporate assets (asset segregation);

·         Allows the inclusion of restrictive clauses such as inalienability, non-attachment, and non-communicability;

·         Facilitates succession and prevents asset dissipation by heirs or third parties.

Risks and limits:

·         Does not protect against debts existing prior to its incorporation;

·         May be disregarded if misuse of purpose or asset commingling is proven;

·         If improperly used, may constitute fraudulent conveyance (Article 792, IV, of the Brazilian Code of Civil Procedure).

Relevant case law:

The Superior Court of Justice (STJ) has held that creating a holding company during enforcement proceedings solely to shield assets may constitute fraud (REsp 1.462.315/MG).

3. Trust as a Mechanism for Asset Protection

A trust transfers the ownership of assets to a trustee, who manages them according to the settlor’s instructions, thereby protecting them from local risks.

How it protects:

·         Assets are removed from the settlor’s estate, preventing seizure by creditors in Brazil;

·         Can be structured with specific purposes (education of heirs, lifetime income, distribution upon certain events);

·         Operates independently of Brazilian court decisions.

Risks and limits:

·         Not regulated in Brazil, which may lead to judicial resistance or the need for international recognition;

·         May be disregarded by Brazilian courts if characterized as simulation or fraud;

·         Income tax on offshore profits (Law No. 14,754/2023) may reduce fiscal benefits.

Warning:Trusts created without a legitimate business or family planning purpose — or during a period of indebtedness — may be judicially disregarded under the theory of fraud against creditors.

4. Offshore Companies and the Presumption of Unlawful Shielding

Offshore companies are entities established in tax haven jurisdictions that manage financial and property assets outside Brazil.

How they protect:

·         Assets are outside the direct reach of Brazilian jurisdiction;

·         Provide confidentiality (depending on the jurisdiction) and diversification;

·         Enable the creation of international holding structures with potential tax benefits.

Risks and limits:

·         Mandatory declaration to the Federal Revenue Service (DCBE and DIRPF);

·         Tax authorities and courts may presume tax evasion in undeclared or simulated offshore structures;

·         As of 2024, profits not yet distributed are subject to automatic taxation (Law No. 14,754/2023).

Concrete risk:

Assets placed in an offshore company, if not justified by a lawful business or economic purpose, may be judicially reached under theories of fraudulent conveyance or abuse of legal personality (Article 50 of the Civil Code).

5. Technical Comparison

Criterion	Family Holding	International Trust	Offshore Company
Regulation in Brazil	Fully regulated	No specific regulation	Partial tax and criminal regulation
Protection against debt	Partial (post-incorporation)	High, if valid	High, if declared and compliant
Risk of disregard	Medium (if misuse or commingling)	High (if lacking economic purpose)	High (if undeclared or simulated)
Taxation	ITCMD and income tax upon distribution	Possible double taxation	Mandatory annual taxation (from 2024)
Judicial acceptance	High	Relative (case-by-case)	Variable, depending on transparency

6. Conclusion

Asset protection is lawful and advisable, provided it is implemented in advance, with a legitimate business purpose and full respect for legal and ethical boundaries.

·         The family holding is secure, effective, and well-accepted by Brazilian courts, especially when combined with restrictive clauses and family governance mechanisms.

·         The trust can be efficient if structured with proper international legal assistance, observing Brazilian tax rules and the lawful origin of funds.

·         The offshore company should be used with caution, fiscal transparency, and robust compliance, otherwise it may be disregarded.

To shield is not to hide.

It means planning, protecting, and ensuring the continuity of wealth based on legality and good faith.