Smart Contracts in Inheritance Law: Technological Innovation as an Asset Planning and Shielding Tool

The unstoppable digital revolution has profoundly transformed legal relationships and introduced new modalities that challenge the traditional institutes of law. In the field of inheritance law, this transformation is manifested in the emergence of digital assets, cryptoassets and the possibility of using smart contracts as instruments for estate and inheritance planning.

Objectively speaking, smart contracts represent one of the most significant technological innovations of the digital age, allowing the automatic execution of contractual clauses through programming codes stored on blockchain networks. In the Brazilian context, the Civil Code does not specifically contemplate the regulation of digital goods or smart contracts, giving rise to the need to analyze how these technologies can be integrated into the country's legal system.

The blockchain network can be understood as a digital, decentralized, public and immutable ledger, where each block contains transactions, timestamp and hash of the previous block. This technology operates through a distributed network of computers, eliminating intermediaries and guaranteeing immutability through cryptographic mechanisms.

Thus, smart contracts are self-executing contracts, written in code and stored on the blockchain (or eth) network, executed automatically when predefined conditions are met. 

The Brazilian legal system has not yet kept pace with technological development and therefore does not have specific legislation on the subject, but the requirements for contractual validity set out in the Civil Code must be considered (capable agent, lawful object and form prescribed or not prohibited by law). In other words, the absence of specific regulations does not prevent its use, as long as the fundamental contractual principles and data protection rules (LGPD) are respected.

Bill 4/2025 is currently going through Congress, proposing general recognition of smart contracts and establishing the basis for their use in the Brazilian legal system, which means that regulation will probably take place in the short to medium term.

The application of smart contracts can have a direct impact on Brazilian inheritance law, which is regulated by Articles 1,784 to 2,027 of the Civil Code. These tools can automate the transfer of digital assets, reduce probate costs and speed up inheritance processes, especially for cryptoassets and other digital assets.

This means that smart contracts can implement "dead man's switch" systems, monitoring digital wallet activity and executing automatic transfers after periods of inactivity. This functionality is crucial for preserving cryptocurrencies, which can be permanently lost if private keys are not properly passed on to heirs.

There is also the digital will, which uses blockchain technology to guarantee security and enforceability in the destination of digital assets, including cryptocurrencies, NFTs, social media accounts and digital files. It is essential to clarify that smart contracts do not replace formal wills, but serve as complementary instruments for the automatic execution of validly established testamentary dispositions.

It is true that the succession of digital assets presents unique challenges, because unlike traditional assets, they depend on passwords and private keys that can be lost with the death of the owner. Documented international cases show losses of hundreds of millions of dollars in crypto-assets due to a lack of proper succession planning.

In terms of asset shielding, the use of smart contracts can implement legitimate strategies, protecting assets against business risks and litigation. Structures such as digital trusts can manage assets for the benefit of third parties, distributing income according to pre-established rules. However, such structures must strictly comply with legislation on fraud against creditors and other mandatory rules.

In April 2024, the São Paulo Court of Justice, through the 3rd Chamber of Private Law, handed down a paradigmatic decision in Appeal No. 1017379-58.2022.8.26.0068, reported by Judge Carlos Alberto de Salles. The case involved a mother who requested that her deceased daughter's cell phone be unlocked in order to access her digital collection.

The decision established that the digital assets of a deceased person, considering their emotional and economic content, can be part of the estate and be subject to succession. The court considered that there was no justification for blocking the right of the sole heiress to have access to her deceased daughter's memories, especially in the absence of any specific provision against the family having access to digital data.

This decision sets a precedent for the use of succession smart contracts by recognizing that digital assets are part of the estate. Recognizing the dual nature (affective and economic) of digital assets in itself justifies the implementation of automated succession mechanisms. The presumption that heirs have the right to access digital assets, in the absence of any manifestation to the contrary, provides legal certainty for smart contracts that automate transfers of digital assets.

It is true that implementation faces significant technical and legal challenges with integration into traditional registry systems, civil liability for possible technical failures, the volatility of crypto-assets, LGPD compliance, the need for update mechanisms for family or asset changes.

The issue of governance is particularly complex, as Smart contracts are immutable once implemented, making it difficult to adapt to unforeseen circumstances. Technical solutions such as updatable contracts or decentralized governance systems may therefore be necessary.

Thus, smart contracts represent a viable and promising technological tool for Brazilian inheritance law, offering innovative solutions to contemporary estate planning challenges. The TJSP decision sets an important precedent by recognizing the transferability of digital assets, creating a solid jurisprudential basis for the development of more sophisticated digital succession planning practices.

That said, we can mention the benefits of automating the execution of testamentary dispositions through Smart Contracts in reducing probate time and costs, as well as the proper preservation of digital assets. Future prospects are promising, considering the continuous growth of digital assets and the increasing technical sophistication of legal professionals. 

Our law firm is available to advise, draw up and establish conditions for the use of smart contracts to enable succession planning, asset shielding and others.