PORTUGAL Law and Practice Contributed by: Miguel Durham Agrellos, Paulo da Rocha Pichel and Ricardo Pereira Amaro, Durham Agrellos
• Elaboration of wills of the different family members. • Elaboration of a family business agreement. • Setting up of a family council and family assembly. • Corporate law instruments: (a) establishing rules to nominate the family mem - bers who may integrate the family business and the applicable requirements (age, academ - ic scores, etc); (b) establishing rules to determine the company’s value; (c) establishing (automatic) redemption mecha - nisms if some heirs become shareholders of the company; (d) shareholder agreements establishing limita - tions on the free transfer of assets, as well as establishing pre-emption rights; (e) establishing drag-along and tag-along clauses; and (f) establishing penalty clauses. • Adjustments to the memorandum of association: (a) considering the need for aggravated majorities for certain strategic options; (b) setting out remuneration principles; and (c) restricting the areas of free decision of board members. • Use of life insurance (unit-linked) policies and other similar instruments. • Designation of heirs by third parties (within the admissible legal limits) in order to cover different wills or circumstances (dynamic clauses). Optimal tax results derive from the considered use of the tax exclusion or exemption regimes mentioned in 1.1 Tax Regimes . 4.3 Transfer of Partial Interest When a partial interest in an entity is transferred, dur - ing lifetime or at death, the fair market value of the interest for transfer tax purposes is not adjusted to reflect a discount for lack of marketability and control. 5. Wealth Disputes 5.1 Trends Driving Disputes Disputes regarding estates usually result from lack of succession planning.
Division procedures are time-consuming, and it may be several years until a final decision is taken. How - ever, the parties do typically tend to conclude agree - ments. Regarding payments from life insurance policies, the Portuguese Supreme Court has confirmed that such payments are not subject to succession laws (although an insurance premium should be considered a donation for succession purposes). The use of arbitration for wealth disputes is increasing. 5.2 Mechanism for Compensation The calculation of damages follows general Portu - guese civil law rules, essentially aimed at repairing the damages suffered by the parties. No aggravated damages or punitive damages rules apply. Penalty clauses included in succession planning instruments also play a very important role in this context. 6. Roles and Responsibilities of Fiduciaries 6.1 Prevalence of Corporate Fiduciaries The use of corporate fiduciaries is not prevalent in Portugal. 6.2 Fiduciary Liabilities This is not applicable in Portugal. 6.3 Fiduciary Regulation This is not applicable in Portugal. 6.4 Fiduciary Investment This is not applicable in Portugal.
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