Thailand inheritance laws: last will or testament
A will is something you know you have to deal with but you don't really want to, but remember that a last will and testament insures your assets are given to those who you have entrusted your estate to upon your death. If you have not made a last will your wishes may not necessarily be carried out.
Thailand inheritance laws
Inheritance in Thailand is governed by Book VI of the Civil and Commercial Code. When a foreigner with assets in Thailand dies and there is no last will the execution of his property in Thailand is governed by international rules. This means that his nationality could determine which law of inheritance will apply, or the laws of the place of his habitual residence will be applied on the hereditary succession. If he was more closely connected to Thailand (the foreigner is married to a Thai national and residing in Thailand) the situation will be different from a foreigner who is only periodically (on holidays) in Thailand.
When there is no last will or testament and Thai law applies the Thailand Civil and Commercial Code specifies that the assets will be distributed amongst the statutory heirs. There are 6 classes of statutory heirs (section 1629) and they are entitled to inherit in the following order:
- descendants
- parents
- brothers and sisters of full blood
- brothers and sisters of half blood
- grandparents
- uncles and aunts
So long as there is an heir surviving in one of the classes, the heir of the lower class has no entitlement to share in the assets. The one exception is where there is a descendant and a parent in which case they take an equal share (section 1630). If there is more than one heir in any one class, they take an equal share of the entitlement available to that class. The surviving spouse is a statutory heir but their entitlement depends on what other class of statutory heir exists. If there are surviving children of the deceased, the spouse and children take the estate between them. Therefore, if there are three children, then the estate is divided in to four equal shares. If you are married, in Thailand your spouse may not be entitled to your entire estate when you die, or if you are unmarried but living with a Thai partner, your partner may not be entitled to anything at all.
Inheritance tax in Thailand
There is currently no inheritance tax levied in Thailand. Inheritance tax is a tax paid on money or property you have received from someone who has died. The plans by the previous government to introduce inheritance tax in Thailand, as part of an effort to bridge income disparity, is no longer a priority and there are no plans for the implementation of such a tax at this time (June 2009).
Do I have to make a Thai will?
Unless there are specific reasons there is generally no need for foreigners with assets in Thailand to make a separate last will and testament in Thailand. A valid foreign will made under foreign law can generally be used to wind up a foreigners estate in Thailand. In specific situations (marriage to a Thai national) and/or for specific properties (real estate) in Thailand a foreigner could make a will under Thai law and chose for the application of Thai law, or in specific situations (and/ or permanent residency in Thailand) he could even have a Thai will made under Thai law for his world wide estate, unless this would lead to a conflict of law between Thai law and the laws of other countries.
A last will made in Thailand under Thai laws can have a limited jurisdiction clause, meaning it would only govern the distribution of assets located in the Kingdom of Thailand. When there is also a Will made in another country it is recommended to exclude Thailand (and vice versa) to prevent diputes over the validity of the will.
Inheritance of specific assets in Thailand
Inheritance of a Condominium in Thailand:
The fact that a foreigner inherits a foreign or Thai owned condominium unit in Thailand does not automatically qualify him for registration of foreign ownership of the unit in his name. Every foreigner must qualify for foreign ownership of an apartment unit under section 19 first paragraph (condominium act), and unless the foreign heir qualifies for ownership under this section he must under condominium laws dispose of the unit within 1 year of acquisition. If the foreigner fails to dispose of the unit within one year the Director-General of Land Department shall have power to sell it on the foreigner's behalf.
Inheritance of an apartment not registered under condominium laws:
Apartments not licensed under condominium laws do offer individual ownership but contractual rights of possession such as lease or tenancy. Death of the foreigner as a contract party in priciple terminates the contract and his rights and the heirs of the foreigner may not be entitled to succession of these rights at all (read below under inheritance of a tenancy).
Inheritance of land:
Under the Land Code Act foreigner are not allowed to own land and therefore land cannot be willed to a foreigner. Reading Thailand land laws (section 93) it seems that foreigners can inherit land as a legal heir and upon permission of the Minister of Interior. However section 93 of the Land Code Act refers only to foreign ownership of land under a treaty (foreigner with permission to own land his legal foreign heirs). There are currently no treaties or other regulations allowing foreign ownership, therefore no foreigner can own land pursuant to a treaty and no foreigner can inherit land. Any foreigner who inherits land as a statutory heir (e.g. from a Thai spouse) must dispose of the land within a period of up to one year. If the foreigner fails to dispose of the land the Director-General of the Land Department is authorized to dispose of the land and retain a fee of 5% of the sale price before any deductions or taxes.
Inheritance of a tenancy or lease contract:
Succession of lease rights in Thailand is a tricky subject as lease (hire of property) in Thailand is a personal contract right (tenancy) and the general principle of Thai law is that a lease agreement (as a contract between parties) is terminated upon death of the lessee (tenant). As confirmed by the Supreme Court of Thailand, the lessee is the essence of the lease contract, upon his death the contract is terminated. A correctly structured lease can be inherited but succession of the lessee’s rights must be anticipated and agreed upon with the owner of the land. The remaining term of a long term land lease term will in a normal hire of property not automatically transfer to the heirs and the heirs must be registered as the new lessee (there are exceptions in specific situations).
It is possible to use a foreign company as the lessee, or to include other persons in the lease agreement who can each independently act as the lessee in the event of death of one of the lessees..
Inheritance in case of controlling shares in a company:
More complicated is the situation if the foreigner is a shareholder and managing director in a company that owns a property or runs a business. Controlling shares and voting rights do not automatically pass on to the heirs of the managing director. Section 1132 Civil and Commercial Code says; 'In the event of death or bankruptcy of any shareholder another person becomes entitled to a share, the company shall, on surrender of the share certificate when possible, and on proper evidence produced, register such other person as a shareholder'. Who is allowed to sign on behalf of the company in this case? The foreigner’s controlling shares in the company must transferred at the Ministry of Commerce and at that stage the foreigner’s heirs may have lost any control in the company and it’s assets. It is possible to anticipate on this situation.
It should be noted that often in such legal arrangements the Thai company holds the property on behalf of the foreigner and the Thai shareholders merely hold the shares in the company on behalf of the foreigner. The true owner is the foreigner (this is what currently makes this 'nominee shareholders' arrangement illegal) and his heirs can claim the full assets of the company. The Thai shareholders cannot claim ownership of shares or company assets as they are merely nominees.
