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Property Inheritance Thailand

No one likes to think about the day it will eventually happen. But for property owners it is essential to plan ahead.

Wills
There are many types of property rights, duties and liabilities that can be included in an inheritance. Having a will is therefore of great importance as it is the core document associated with the transfer of property upon death.

To make the will valid in Thailand it must be in compliance with Thai law, with the following basic requirements:

  1. The testator must be minimum 15 years old and have full mental capacity.
  2. The will can be in Thai or English.
  3. The will must be dated and signed by the testator in presence of two witnesses who can not be beneficiaries or persons lacking full mental capacity.

The testator can make and execute the will in the District Office, where a record of such will will be kept secret as long as the testator lives. The will can be altered at any time through a subsequent will or a codicil that states whether the first will is completely or partially revoked.

Trusts do not exist in Thai law. If a testator wants to leave a property to a minor (person younger than 20 years of age), an executor can hold the property for the minor or appoint a guardian to hold the property until the minor reaches majority.

While wills made overseas are acceptable it is advised that it may be more cumbersome if the executor named in the will is not in Thailand and the will is in a foreign language. It is preferred that a person makes separate wills applicable in each country in which they own property to speed up the process of estate administration.

When a person dies without a valid will, property is distributed according to the law. There are six classes of statutory heirs.
Entitlement applies in descending order:

  1. children
  2. parents
  3. siblings
  4. half-siblings
  5. grandparents
  6. uncles and aunts

If no statutory heirs exist, the surviving spouse receives the entire estate.

If the deceased is survived by a spouse (Thai or foreign) and children, the spouse receives fifty percent of the property and the children divide the remaining fifty percent into equal shares. Similarly, if one is survived by a spouse and parents and siblings, the spouse receives fifty percent and the parents or siblings share the other fifty percent.

If the deceased leaves a spouse and heirs in the latter three classes stated above, the spouse gets two-thirds of the estate while the statutory heirs in the applicable class get one-third in equal shares.

If the deceased was not legally married or there is no surviving spouse, the entitled class of statutory heirs inherits the whole estate in equal shares.

Condos, Compantes, Leases and Land
There may be special conditions that apply to the transfer of property for foreign beneficiaries. For condos, the ownership is transferable only in case that the total amount of condos owned by foreigners in that particular development does not exceed 49%. If it does, the unit must be sold within a year or transferred to a Thai national.

In the case of a leasehold property, where foreigners may lease land and homes for a specific period of time with options for renewals, the lease terminates when the lessee dies and does not pass to the heirs. If the lessor dies, the heirs can take over the rights and obligations of the lease without the right to renew the lease. In other words, the clause regarding the renewal is not enforceable by other parties; heirs can not force the lessee to renew the lease.

If a beneficiary is bequeathed land, which in general can not be owned outright by foreign nationals, the consent of the Interior Ministry is required. This may be granted in certain cases but if permission is refused, the land must be sold within a year or transferred to a Thai national.

For foreigners who acquired an interest in land as minority shareholders in a Thai Limited Company, the shares are not automatically transferred to the beneficiaries. This request will have to be considered by the company’s Board of Directors who may have the discretion to refuse the request. If the nature of the business is restricted under the Foreign Business Act (FBA), the transfer may be refused if its effect would cause foreign partnership in the business to exceed 49%.

Taxes 
There is no inheritance tax or death duty in Thailand. But if land or buildings and certain other assets have to be transferred to beneficiaries, then the Land Department fees and other fees and/or taxes are applicable. As for recent reports (April/May 2009) that the government is considering to introduce the country’s first property, land and inheritance tax legislation, the signs are that such laws will probably pass the bill in the foreseeable future.

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