Thai inheritance laws
If you have NOT made a Last Will or Testament, or valid will, the law (intestacy rules) will determine what happens to your assets when you die. Under Thai inheritance laws this generally means that the assets will be distributed amongst the statutory heirs. Under section 1629 of the Civil and Commercial Code of Thailand there are 6 classes of statutory heirs and they are entitled to inherit in the following order:
- brothers and sisters of full blood
- brothers and sisters of half blood
- uncles and aunts
- The surviving spouse is a statutory heir, subject to the special provisions of Section 1635 Civil and Commercial Code.
Distribution in the absence of a will
Thai inheritance laws designate intestate heirs and 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.
Legal foreign wills are acceptable in Thai Courts subject to being translated and authorized at the Ministry of Foreign Affairs, but the legal procedure to enforce it can take a long time. The execution of a foreign will in Thailand is always subject to a court procedure.
Making a will in Thailand
If you have NOT made a last will rules of intestacy will determine what happens to your assets when you die. The legal situation could be different if you live in Thailand and are married to a Thai national, or if you are unmarried and have no family relationships in Thailand. Either way it is recommended to make a last will and testament, but it is not required to make a Thai last will or testament. Making a valid Last Will in Thailand does not have to be difficult, a person must follow the requirements in the Civil and Commercial Code read more...
There is no minimum portion of the descendant's estate that must be assigned to the surviving spouse in Thailand, but before distribution half of the common property between husband and wife must first be given to the surviving spouse.
Trusts created by last will
Under Thai law trusts (the relationship where someone else holds the property (trustee) subject to certain duties to use and protect it for the benefit of others) created whether directly or indirectly by will or by any juristic act producing effect during lifetime or after death have no effect whatever (section 1686 Civil and Commercial Code). If the testator wants to dispose of his estate in favour of a minor or adjudged incompetent person or quasi-incompetent person he can entrust the custody and management thereof to a person other than the parents, guardian, custodian or curator, he can appoint a controller of the property by will.
Inheritance of foreign owned real estate in Thailand
- Land ownership (successors by Thai inheritance laws or under will)
- Condominium (succession and foreign ownership)
- Company assets (inheritance of control and assets in a company)
- Leasehold (succession of lease rights when the lessee dies)
Foreign land ownership by succession
Section 93 of the Land Code Act: "A foreigner who acquires land by inheritance as statutory heir can have an ownership in such land upon a permission of the Minister of Interior. However, the total plots of land shall not be exceeding of those specified in Section 87".
Any foreigner who is married to a Thai national is under section 1629 Civil and Commercial Code a statutory heir (i.e heirs who are so entitled by Thai law) and it seems that he can apply for permission of ownership of inherited land from his Thai spouse pursuant to section 93 of the Land Code Act. But ownership will not be given to the foreign spouse. The over fifty year old Section 93 of the Land Code Act is written for inheritance of land by foreigners under a treaty (section 86 of the Land Code Act) and does not apply to foreigners acquiring land by inheritance from a Thai spouse. There is currently no treaty with any country allowing any foreigners to own land therefore no Minister of Interior will or can give permission to any foreigner to own land in Thailand. Note that it is only since 1999 that Thai nationals married to a foreigner are legally allowed to acquire land (read up).
The answer to the question 'can a foreigner inherit land in Thailand' is yes, as a statutory heir, but he cannot register ownership of the land because he will not be given permission. Under present law he must dispose of the land within a reasonable period (meaning up to 1 year) to a Thai national. 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.
Note: inheritance of a house separate from the land relates always to having an interest in the land (superficies, lease, usufruct).
Condominium ownership transfer and inheritance
A foreigner who acquires a condominium unit by inheritance, either as statutory heir or inheritor under will, shall acquire ownership, however, unless the foreigner qualifies for ownership under Section 19 Condominium Act'1 - Foreigners permitted to have residence in the Kingdom under the Immigration law; 2 - Foreigners permitted to enter into the Kingdom under the Investment Promotion Law; 3 - Juristic persons as provided in Section 97 and 98 of the Land Code and registered as juristic persons under Thai law; 4 - Juristic persons which are aliens under the Announcement of the National Executive Council No.281 dated November 24 B.E. 2515 (current section 4 Foreign Business Act), and have obtained promotion certificate under Investment Promotion Law; 5 - Foreigners or juristic persons regarded by law as foreign who have brought in foreign currency into the Kingdom or withdraw money from Thai baht account of the person who have residence outside the Kingdom or withdraw money from a foreign currency account.', it is required by law that the foreigner shall dispose of the unit within 1 year from the date of acquisition. The Condominium Act divides foreign heirs in eligible foreigners (19 section 19/ 5) and ineligible foreigners (section 19/ 7).
Section 19 Septem (7) Condominium Act: "A foreigner or a juristic person which the law treats as foreign, except one prescribed under section 19, which has acquired a condominium unit through inheritance as legitimate heir or legatee of a will or through any other means, as the case may be, shall give written notice to the competent official within sixty days from the date of ownership of the condominium unit and shall dispose of that unit within a period of not more than one year from the date of acquiring possession of the unit. If it is not disposed of within such period of time, the provisions of the fourth paragraph of Section 19 quinque shall apply mutatis mutandis".
If the foreigner does not qualify for ownership under the Condominium Act (the vast majority) he must dispose of the unit within 1 year. If the foreigner fails to do so, the Director-General of Land Department shall have the power to sell the condominium unit on the foreigner's behalf (condo inheritance section 19 of the Condominium Act)
Read more: Acquisition of a condominium by inheritance, inheritance leasehold apartment
Partly foreign owned Thai real estate holding company
More complicated, should a foreign director in a Thai limited die the shares (and thus the assets) and control in the company will not automatically transfer to the heirs. Officially, in a normal company, a general meeting of shareholders must be called and a shareholder decision is needed to appoint a new director. The shares (and the most important position of managing director of the company) of the deceased must be transferred at the Ministry of Commerce, however, without the managing authorized director able to sign on behalf of the company this is less simple. It may be recommended to have more than one director in the company and/ or someone authorized to sign on behalf of the company.
Civil and Commercial Code:
Section 1155: "Any vacancy occurring in the board of directors otherwise than by rotation may be filled up by the directors, but any person appointed so appointed shall retain his office during such time only as the vacating director was entitled to retain the same".
Section 1132 : "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".
NOTE Many foreigners, especially prior to 2006, have set up Thai companies to receive ownership of land in Thailand on their behalf. In this case the foreigner is considered legally the principal and actual owner of the shares and assets (chapter 'Agency' in the Civil and Commercial Code). The company and Thai nominee shareholders are considered his agent holding the land (shares) on his behalf. This is what is illegal is this structure, but as the company (different from a normal company) is holding the assets on the foreigner's behalf the company must hand over the assets (real estate) to the heirs of the principal (the deceased foreigner). The nominee shareholders cannot claim ownership over the company's assets and the foreign heirs cannot register ownership but can demand, as the successors of the principal, the transfer of shares and control in the company. If not, the foreign heirs as the actual owners by succession have the right to claim the company assets by legal action, but will have to sell the real estate involving land pursuant the Land Code Act within 1 year from the date of acquisition by inheritance.
Lease termination due to death
A lease agreement is terminated on death of the lessee as a lease agreement in Thailand is in essence a tenancy contract and as such a personal contract right of the lessee (as confirmed by the Supreme Court) and not an asset or property of the lessee. If the lessee dies the remaining lease term and lease agreement will not automatically transfer to the heirs of the lessee. If succession is not included in the lease the land/ property owner may prohibit the lessee's heirs from taking possession of the property as the lease is terminated and the lessee's heirs have no rights to the property. The lease agreement must have an inheritance clause in the agreement granting succession to the lessee's heirs.
There is controversy on the legal status of a succession clause in the lease, meaning if it is a mere contract promise of the owner party to the lease or a real lease right that will automatically be binding upon third parties should ownership of the leased property transfer (e.g. at death of the owner). Under present interpretation of hire of property laws in Thailand this clause will not transfer with ownership under section 569 Civil Commercial Code as it is considered a contract right. If an inheritance clause has been included the heirs of the lessee have the right to claim performance directly from the original lessor (section 374 Civil and Commercial Code), but may not be able to successfully enforce this clause by legal action against a successor of the property. It may be recommended to include co-lessees in the lease agreement who each can independently continue the lease in the event of death of one of the lessees - read more...
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- Inheritance tax proposed (article)
- Administration and distribution (law translation)
- Foreigner's will and winding up the estate (opinion)
- Overview Thailand property law (knowledge)