PERU Law and Practice Contributed by: Percy Castle, Violeta Moncada, Angel Quispe and Dayana Evangelista, Casahierro Abogados
acterised under Rule XVI, the general anti-avoidance rule.
As a general rule, two-thirds of the estate are pro - tected in favour of forced heirs, so only one-third may be freely disposed of. This framework reduces testa - mentary flexibility, although within the freely dispos - able portion it is possible to structure more tailored allocations. In practice, planning is complemented by lifetime estate reorganisations, provided these remain The Peruvian legal system mainly recognises two property regimes: community property and separation of property. Under the community property regime, assets acquired during the marriage are considered common, whereas assets owned prior to the marriage and those of a strictly personal nature remain separate property. within the legal limits. 2.4 Marital Property Dispositions over common property generally require the consent of both spouses, especially when they involve a relevant disposition or encumbrance. By contrast, under the separation of property regime, each spouse retains full ownership and administra - tion of all of his or her assets, which provides greater succession flexibility. The matrimonial property regime may be agreed upon before or during the marriage, provided that it com - plies with legal formalities and does not violate man - datory provisions. Its validity depends on its proper formalisation and registration. For tax purposes, spouses married under a separation of property regime are each taxed individually on their respective income. In contrast, within a community property there are two alternatives: each spouse may be taxed on 50% of the partnership’s income, or they may elect for one spouse to act as the declarant of the community property and be taxed on 100% of its income. This election must be exercised in January of each year. This framework creates opportunities for tax planning, as spouses can evaluate the most advantageous allo - cation of income. Such planning may be beneficial given the progressive tax rates applicable to employ - ment income and foreign source income.
2. Succession 2.1 Cultural Considerations in Succession Planning In Peru, succession planning is strongly influenced by the central role of the family as the economic and decision-making core. Therefore, there is a frequent concentration of wealth within the close family group, especially in the context of family businesses and real estate assets. This creates a tendency to preserve the unity of the estate rather than to fragment it among multiple structures or vehicles. In practice, intergenerational transfer processes are usually gradual and not always formalised from an early stage. Founders or holders of wealth tend to retain control into advanced age, delaying the imple - mentation of structured succession mechanisms. For this reason, instruments such as family protocols and corporate reorganisations acquire particular relevance as tools for order and continuity. It is also common that high-net-worth families and individuals set foreign structures in order to secure or maximise their foreign financial and other kind of assets. 2.2 International Planning Wealth transfer and gift taxes are partially simpli - fied domestic planning, but they do not eliminate the effects of foreign taxes or foreign succession rules. In practice, coordinated planning across jurisdictions is used, including multiple wills by country, corporate structures to centralise assets, and a comprehensive review of the heirs’ tax residence. 2.3 Forced Heirship Laws Being a civil law jurisdiction, Peru has a forced heir - ship system that limits the decedent’s freedom of dis - position. The law reserves a significant portion of the estate in favour of forced heirs, mainly descendants, the spouse, and, in their absence, ascendants.
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