Wills and Inheritance in Portugal

What you need to know if you have immigrated to Portugal...

A few months back, a friend tragically and suddenly died. She had not been sick. She and I walked to the beach and back two days before she passed away. But suddenly, the unimaginable happened … an undiagnosed tumor exploded in her brain. She died within 12 hours.

Without a Will

Our friend was born in Mozambique, was raised in Portugal, then immigrated to the States for college. She married and lived the next 35 years in the US … she and her husband raised a son. She was a Portuguese citizen, but also a US citizen. She and her American husband dreamed of the day that they would be able to retire in Portugal. They enjoyed three wonderful years in this country before that tragic day.

On the last day and the months following, Denise and I focused on helping her husband. As you might expect, the shock and despair he is experiencing is overwhelming. There were also dozens of practical issues … they did not have a Portuguese will. We needed to understand the law and, of course, navigate the bureaucracy.

While our friend was Portuguese … the issues below apply to all fiscal residents of Portugal. If you live in Portugal … you likely want to have a Portuguese will.

We Started Thinking

As we watched our friend navigate the system we started to think. What if something like this happened to one of us … or both of us? We consulted an attorney. And I started to do my own research.¹ To be perfectly honest, while we know it is important, we still have not completed the process. We had to find and review our US documents to see if they still represent what we want today. Most of our estate is going to charity which opened yet another kettle of fish.² And, of course, there are about a million other things we would rather do than think about a will.

What We Learned

As we work through this process, we think we have learned a few things that I will pass on to you today.

• If you do not have a Portuguese will and are a fiscal resident of Portugal, the civil Portuguese law related to your estate applies to all your assets.

• The Portuguese follow a forced heir system (the law of intestacy). It states that your assets will be divided by your spouse, children, and parents.³ If these heirs do not exist, the assets will be distributed to other relatives such as siblings, etc.⁴ If these do not exist, the estate will go to the State.

• While there is a 10% inheritance tax in Portugal, this does not apply to “forced heirs”.

• EU Regulation 650/2012 (aka. Brussels IV) allows you to designate another country’s laws to your estate. This means we can write a Portuguese will stipulating that our American will be used for our US assets and our Portuguese will for our Portuguese assets.⁵ However, we must have a Portuguese will that states this and points to the applicable document.

• Portugal does not allow joint wills … so Denise and I will each have our own Portuguese will.

• Trusts are not used in Portugal.

• An attorney and notary are required to complete this process. It would also be helpful to have your “home country” Will translated into Portuguese. The estimates I have heard for the entire process are a bit broad: as low as 500€ and as much as 2000€. When I get our bill, I’ll let you know.

There are so many details yet to be decided. Who will care for Onix and how will they be compensated? Frankly, our US documents need to be updated. We need to complete this before we sign off on the Portuguese wills. We don’t want to bother the Executor of our US Will with our Portuguese assets, and most of our local friends are our age, so … who will be assigned as our Portuguese Executor, who will dispose of the house, and which charities do we want to receive the proceeds? There are probably more questions we have yet to think of.

Nobody wants to spend their “golden years” thinking about these things. Nobody wants to sit in attorney’s and notary’s offices or round up a few friends to act as witnesses. But we must. I doubt Denise and I are contemplating the inevitable as you read this. Yesterday we boarded a small boat cruise in Croatia. But when we get back we need to get on with it.

Do sljedeceg tjedna⁶,

Nanc

1. I have received different answers from Portuguese professionals to the same question. Do you lose your NHR status if you become a Portuguese citizen after 5 years? How will annuity income be treated after NHR? Do I need to register my marriage in Portugal or is my US marriage license enough?

2. We want our US-based assets (i.e investment accounts) to go to US charities. We researched US charities years ago to ensure the organizations used the donations for their mission rather than their executive teams’ wardrobes. But we want our Portuguese assets (house, Portuguese bank account, etc.) donated to local charities. Identifying the “best” ones is a time-consuming process.

3. As an American, this jumped out at me. I assumed all assets would go to the spouse and upon his/her death to the children. But no, the house our friend lived in with his wife is now jointly owned by him and their son.

4. You don’t have to like or have socialized with that relative recently (or ever).

5. We don’t want to burden our US Executor with our Portuguese assets.

6. “Until next week” in Croatian, according to Google Translate.