Alternatives for the Succession of our Estate

By: Estefania Aleman

Explore the most effective and efficient alternatives for personal asset succession.

In my professional practice, I often encounter the following questions:

1. Who has the right to inherit my personal assets or those in my parents’ name? This depends on the estate planning structure established, such as a Trust, Private Interest Foundation, or Will. If none of these structures exist, the heirs of the assets will be the individuals designated by the law of the deceased’s domicile.
2. What is the fastest and most efficient mechanism for the succession of my assets? Establishing an estate planning structure like a Trust or Private Interest Foundation.
3. What is the least expensive mechanism for the succession of my assets? Transferring the assets during one’s lifetime.

Next, I discuss four (4) alternatives for the succession of personal assets, and address the questions above:

Alternative no. I: Private Interest Foundation or Trust

Transferring assets to an estate planning vehicle, such as a Private Interest Foundation or a Trust, is the most efficient and orderly way to plan the succession of our personal assets. Assets under a Private Interest Foundation or a Trust are transferred to the beneficiaries of these vehicles in an extra-judicial and automatic manner when the distribution event established in the foundation regulations or trust instrument occurs. For a Private Interest Foundation or a Trust to function efficiently in favor of its beneficiaries, it is necessary that the rules governing these vehicles are detailed and clearly established in the foundation regulations or trust instrument.

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Legal Vehicles with Automatic Succession

By: Domingo Diaz

Recent reforms in jurisdictions like the British Virgin Islands and Panama have shifted from complex to simpler corporate structures, facilitating clearer identification of economic beneficiaries and more efficient succession planning.

As we gear towards a more transparent corporate world, there has been a significant change in the use of the legal vehicles available in our jurisdictions. Previously, it was common to find complex structures with various levels of companies, or companies with bearer shares, which made it difficult to identify economic beneficiaries. Starting on 2011, jurisdictions like the British Virgin Islands (BVI) and later Panama, in 2015, implemented Due Diligence policies that made identifying the economic beneficiary much easier, which in turn changed the way that individuals structured their patrimony through companies. Today, clients seek to create simpler structures whereby they can arrange their succession planning, which helps avoid lengthy and expensive probates in the various countries where their assets are diversified.

The simplest structures, in terms of succession planning are companies established in Common Law jurisdictions, where shares can be issued to joint tenants with right of survivorship, and/or, on the other hand, BVI companies with special statutes with two types of shares (henceforth, “Companies with Class A and Class B shares”), which we will explain in more detail.

Joint Tenancy with Right of Survivorship

Amongst the jurisdictions our firm offers for the incorporation of international business companies, we may highlight BVI, Bahamas, Belize, Seychelles, Anguilla and the well-known “US LLCs”, all with legislation derived from the Common Law. Common Law jurisprudence allows for the use of Joint Tency with Right of Survivorship, which refers to a form of ownership whereby two or more persons jointly possess property and, if one of the owners passes away, their part of the property will be automatically transferred to the other owners, instead of passing to the deceased’s heirs.

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