What happens when the shareholder of a PIC dies and how to plan for it

Fraser Allister, Andrew Miller, and Daniel Altneu | Bedell Cristin

Many Brazilians have incorporated companies in the British Virgin Islands or the Cayman Islands in order to hold US real estate or to make their international investments. These companies are sometimes known as "personal investment companies" or "PICs".

PICs have been tremendously successful because they are relatively low-cost and easy to operate, because they are subject to light-touch regulation and reporting, and because they are tax efficient. As the population ages, it's very important to understand what happens when a shareholder of a PIC dies and what planning can be done.

Shares in PICs are located in BVI (where it's a BVI company) or Cayman (where it's a Cayman company), regardless of where the share register is kept. This means that, when a shareholder dies, his or her shares can only be transferred in accordance with the local BVI or Cayman legal process.

This process is different in BVI and Cayman compared to Brazil. In BVI and Cayman, the local court will appoint a personal representative (also known as an executor or administrator) who is responsible for administering the local estate; the court does not make an order naming beneficiaries and distributing the estate. The personal representative can be an heir of the deceased or a beneficiary o