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Contrary to what many think, there is no “obligation” to accept an inheritance. In certain situations, it may be more advantageous to give up the right to inherit. However, renunciation is a legal act with specific rules and one that requires formalization in order to have legal validity.
Meanwhile, the assignment of inheritance, frequently confused with renunciation, is a bilateral act. It involves the transfer of hereditary rights to another person, and may be free of charge or onerous.
Renunciation vs. assignment
Although they seem similar at first sight, renunciation and assignment of inheritance follow different rules. In addition, these actions produce distinct effects, both from the legal and the tax point of view.
In renunciation, the heir gives up the inheritance entirely, without indicating a beneficiary. Their portion is redistributed among the remaining heirs, as if they had never existed. “It is a unilateral, gratuitous and irrevocable act,” explains Alberto Feitosa, attorney at Lassori Advogados.
The assignment, in turn, is an act of transfer of rights, carried out after acceptance of the inheritance. It may be partial and involve a specific asset, provided that there is consensus among the heirs and that the asset is attributed to the assignor in the partition.
Fiscal effects of giving up the inheritance
From the tax point of view, the distinction is essential. In a pure and simple renunciation, there is no incidence of Income Tax nor of the Tax on Transmission Causa Mortis and Donation (ITCMD), since it is not a transfer of assets. As the heir never came to acquire the asset, there is also no triggering event.
In the assignment, on the other hand, the transfer of rights is considered a legal transaction and, therefore, may give rise to taxation. “The assignment may entail ITCMD, if it is gratuitous; Income Tax, due to the transfer of rights; and even ITBI, in the case of an onerous assignment of rights,” details Feitosa.
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