Inheritance
Horrible to think of but important to do
If you have relocated, retired to or bought property in Portugal, it is important to take time to look into Portuguese inheritance law, inheritance tax and making a will. Although there is no legal requirement to draw up a will in Portugal, when you buy a property in a different country making one can save a lot of extra heartache (and possibly expense) to those left behind, especially when they might be living in a different jurisdiction.
Portugal’s inheritance law says that the inheritance process is governed by the laws of the home country of the deceased. If the spouse is a different nationality to the deceased, Portuguese inheritance law allows that the laws of the country of residence are applicable. So, unless stipulated in your will your inheritance will be dealt with under the laws of your home country.
You can have two wills – one in Portugal and one in your home country – as long as they don’t negate or revoke the other and there are benefits to doing so. The cost of translating a foreign will into Portuguese can sometimes be more expensive than writing an original one and it could save your family time, as using a foreign will may mean having to wait for the Grant of Probate to be issued.
If your estate is dealt with according to Portuguese law there are directives on how it can be distributed – a system known as forced heirship.
Forced heirship means that certain relatives are entitled to a portion of your estate. Legitimate heirs – the spouse, biological and adopted descendants as well as ascendants of the deceased – are entitled to a minimum of 50% of your estate. If there is more than one legitimate heir, then this goes up to 60%. The only way that forced heirship can be negated is if the deceased has stated that a particular beneficiary should be excluded on the grounds of unworthy behaviour, although this can be challenged by the courts.
The portion of your estate remaining after the distribution to legitimate heirs can be distributed however you wish. If no Portuguese will has been left and there are no legitimate heirs or other family to inherit your estate it passes to the Portuguese state.
Although inheritance laws in Portugal are more tightly regulated than in some other countries, inheritance tax rates are extremely low. In fact Portuguese inheritance tax was officially abolished in 2004, so you won’t have to pay inheritance tax on any part of your estate. However it has been replaced with a stamp duty – Imposto do Selo – a flat rate of 10% levied on all Portuguese assets but is exempt where legitimate heirs are concerned.
Any property that was donated/gifted by the owner during their lifetime will be subject to tax – property tax or capital gains if the property is sold, will need to be paid.
As mentioned before there is no legal requirement to draw up a will in Portugal however, if you have sizeable assets here and your estate is likely to be dealt with under Portuguese inheritance law, it can be worth considering, even just to safeguard that your home country will deal with your assets in Portugal correctly.
If you choose to have a Portuguese will the cost of doing so is around €230 plus VAT and fees. It is important to note that there is no legal requirement to appoint an executor – the closest legal heir will administer the estate. There are two types of Portuguese wills:
Public wills: This is done publicly and involves a notary who oversees the process, checks your identification and makes sure you understand the process. The will is signed by two witnesses. This is the most common type of will in Portugal.
Closed wills: You write up and sign this in private and it will be checked and confirmed by the notary.