Since 2020, the number of Brazilians with an account abroad has grown dramatically. This growth was driven by three factors: lower interest rates in Brazil, the search for diversification and the ease of opening an international account. However, these investors are unaware of two risks that their families are subject to.
Investing abroad has always been something distant for the average investor. The growth of BDRs opened the eyes of Brazilians to the diversity of possible alternatives to diversify the portfolio.
From 2020 to 2021, low interest rates in Brazil were an invitation for investors to look for these alternatives to monetize the portfolio.
At that time, several international digital financial institutions with platforms in Portuguese appeared on the market. It was hunger with the desire to eat.
Opening an investment account in the United States through these institutions is as simple as opening a digital account in Brazil.
This facility draws investors’ attention away from two certain events: death and taxes.
In the event of the investor’s death, his family members may find it difficult to recover the money from international accounts. Brazilian judges are not competent to proceed with the inventory and sharing of assets located abroad. Therefore, the family may be forced to hire lawyers in the United States, for example.
Therefore, the investor’s family may have difficulties in recovering the resources and have higher costs associated with the inventory.
There are ways to simplify the transfer in the event of death. For example, using joint account or adding a Transfer on Death (TOD) to the account. The latter already leaves the designated beneficiaries. But, they are details that investors miss in the investment impulse.
Attention should also be paid to the inheritance tax, which may be higher than the Brazilian tax. Although there is an inheritance tax exemption of up to US$ 60,000 in the US, the tax rate on the amount that exceeds this limit can reach 40% of the total.
I do not want to discourage investors from seeking international diversification. This is very important for a good balance of return and long-term risk. But, you don’t need to open an account abroad to invest in international assets.
The intention here is for the investor to be aware and better evaluate the alternatives. A proper understanding of the risks and costs associated with each investment is critical to your safety and that of your family.
Michael Viriato is an investment advisor and founding partner of Investor’s House
(Follow and like De Grão em Grão on social networks. Instagram.)
If you have questions or suggestions for topics that you would like to see commented on here, please feel free to send them by email.
I have over 8 years of experience in the news industry. I have worked for various news websites and have also written for a few news agencies. I mostly cover healthcare news, but I am also interested in other topics such as politics, business, and entertainment. In my free time, I enjoy writing fiction and spending time with my family and friends.