Inheritance law in Portugal is quite handy by default for locals, but it might not be the best option for expats.
Inheritance law differs for country to country. When someone decides to move to Portugal and to hold a property and other assets, such as bank accounts here, it is advisable to take some time to consider what will happen in the future to these assets, when an inheritance takes place.
Inheritance law Portugal: default is generally good
The general rule in Portugal is that when one dies, their properties and assets pass on to their heirs. There is a list in the Portuguese Civil Code that defines who are the heirs, and the list refers to the immediate family members like husband/wife, children, parents, brothers.
This is why many Portuguese citizens don’t even bother to make a Will, it is not necessary if they accept the general rules. In some cases though, it’s possible to choose and decide the jurisdiction that will be applied to a case in the future. This can have an enormous impact on the amount of taxes, for instance, since Portugal does not impose an inheritance tax, (although stamp duty is payable in some cases).
But it does not mean necessarily “good” for an expat
On the other hand, it can mean you can choose different rules to apply. Being an expat in a foreign country implies that if you do not want the local general rules to apply, you must and should create a Will that reflects the way you would like you inheritance to be shared, that can reflect your country’s laws.
Let’s say your intention is not to leave a part of your inheritance to one of your immediate family members, such as one of your children. This might be possible under the law of your country of origin, but it is contrary to the Portuguese law. This means that if you do not leave a written Will, duly registered and certified with a Public Notary, in a case of disagreement between the heirs in Court, the Portuguese law will prevail. In that case, your last wishes regarding the distribution of ownership of your assets will not be considered.
That is why when our clients reach us, they know that it is mandatory to get specialized legal advice because not every lawyer or notary knows how to ensure the rules of the origin country are applies, even in a Will in Portugal. This is a specific area of law that combines rules from several countries.
There are many international and European rules and laws to apply – depending on where you come from – that must be studied and understood in advance to ensure the Will in valid and enforceable, once needed.
We can unfortunately imagine a situation where your inheritance and assets will be the source a long and expensive disagreement in the Portuguese courts, just because the Will was not written in accordance with the correct rules or was not done at all. An independent legal expert can provide you with general advice on inheritance law, taking into account all of the applicable laws, and can give you more details on the best structure for your Will, prepare and also advise the solution that can legally minimize or even eliminate the taxes that will be due.
This can make the difference between an enforceable Will, with the elimination of taxes due on the inheritance, and a long and acrimonious debate over the estate in the Portuguese courts.