At present inheritance tax between spouses or
direct line (children, grandchildren, parents grandparents etc.) is exempt,
i.e. zero. Other inheritors will pay 10% inheritance tax.
The main laws regulating inheritance are the
Portuguese Civil Code, fifth book (articles 2024 to 2334) and book one
(articles 62 to 65).
The inheritance process in Portugal is
generally governed by the laws of the deceased’s nationality, thereby avoiding
potential conflicts of law; however, if spouses have different nationalities,
Portuguese law determines that the national law of the country where they both
usually reside is applicable. In the absence of a usual place of residence,
Portuguese law provides that the applicable law is that of the country where
both spouses have a close family connection.
In certain circumstances, the law of the
country where the property is located may become applicable. For example, if
the deceased was an owner of property in Portugal, and the law of his/her
nationality or residence determines that the law of the country where the
deceased’s property is located takes precedence, then Portuguese inheritance
law becomes relevant.
All inheritance issues concerned with residents
and non-residents, including disputes relating to property located in Portugal, and those outside Portugal where
Portuguese law applies, are brought before the Portuguese civil courts.
Inheritance cases usually take from 1 to 2 years to resolve, depending upon the
value and complexity of the assets in the deceased’s estate, the number of
heirs and their behaviour. If disputes are numerous and continuously
challenged, the court decision process may take longer.
A portion of
the estate must be distributed to legitimate heirs under the Portuguese System
of Law
Legitimate heirs include the spouse, biological
descendents, adopted children, and ascendants of the deceased. The reserved
portion generally covers a minimum of 50% of the whole estate, but this can be
exceeded, as illustrated by the following:
Spouse’s portion: 50%
Spouse and Descendents: The reserved portion is
60%; normally distributed per capita. If more
than 3 children inherit, the spouse is entitled to 1/6th, and 50% is
distributed between the descendents.
Only Descendents: The reserved portion depends
on the number of children. For one child it is 50%, for two or more it is 60%.
Spouses and Ascendants: 60% distributed per capita, as 4/9th for the spouse and 2/9th for the
ascendants
Only Ascendants: 50% for those of first degree;
1/3 for second degree or more.
The reserved portion must always be respected
whenever possible, irrespective of the terms of a will or the intentions of the
deceased.
If there is no will, and no spouse, ascendant
or descendant, the estate passes to the siblings and their descendents, other
collateral family up to the fourth degree, and finally to the State. Each
subsequent class of heirs is only called upon if the previous class is not
present.
Outside the reserved portion, the testator’s
freedom to leave the estate by will as he wishes is virtually unlimited, though
certain persons cannot inherit e.g. those deemed to be ineligible or unworthy,
the deceased’s last treating doctor, the priest of the community where he
attended, or a curator, tutor, or administrator of the deceased.
It is normal
practice in Portugal to make a Will
A will is likely to be made especially by a
person who wishes to nominate someone (e.g. a friend) who is not a legitimate
heir, and who would otherwise not be entitled to inherit. A person may also
justify in a will that, due to unworthy behavior, a particular beneficiary
should be excluded from their part of the reserved portion, although challenges
may subsequently be accepted by the court. There are two types of will in
Portugal:
A Public Testament, which may be made before a
public notary and is kept in a vault, and
A Closed Testament, which is made privately,
signed by the author and then subject to the notary’s review.
Usually a local will is not necessary for Portuguese citizens residing in
Portugal, since Portuguese law provides that inheritance issues are
governed by the deceased’s national law. A will made in the deceased’s country
should generally suffice; however when Portuguese courts have jurisdiction over
the inheritance, then problems may arise if the deceased’s will is not clear
(e.g. due to problems of interpretation, or if it has not been updated). In
such cases, the courts will strictly apply the law, even if that precludes the
constitution of certain people as heirs, which was the deceased’s initial
intention. It is advisable, therefore, to ensure that the will is drafted
clearly and precisely, and regularly updated to avoid raising doubts in the
judge’s mind.
Property may
be gifted by the owner before death.
Unrestricted donations of property by an owner
during his/her lifetime are legally permitted in Portugal, subject to the
payment of relevant taxes, and to the Portuguese owner taking into account and
respecting the reserved portion of his/her estate. The owner should calculate
how much of his/her estate can be disposed of, leaving sufficient to cover
expenses, and to leave the reserved portion to legitimate heirs. The Civil Code
calculates the value of an estate from the following data:
Donated/gifted asset value (Donated Value);
Existing assets at the time of death (Existing
Assets)
Expenses relating to administration of the
estate
Estate debts
The most straightforward method of calculating
the value of an estate is to subtract the Expenses from the Existing Assets and
then add the Donated Value. If the Donated Value is higher than the Existing
Assets, then the Donated Value may, subject to certain conditions, be
officially reduced, even in respect of gifts/donations made during the lifetime
of the deceased.
A property owner should also be aware that the
rights of use and habitation (i.e. permitting someone to live in his/her
property) are non-assignable; a family home is partially non-assignable, since
this may be subject to family/matrimonial legislation.
For a non Portuguese owner donating property to
legitimate heirs can be a good way to offset taxation as this is considered to
be an “anticipated inheritance” and is governed in the most part by the same
taxation regulations as inheritance tax. The main exception to this is with
Imposto de Selo being payable for any deed of gift of land or houses.
Ownership of
property must be registered
To determine the ownership of property
Portuguese law looks at the names in the respective official registries. The
named registered owner is assumed to be the real owner. One exception to this
rule is the concept of ownership by adverse possession, i.e., acquisition of
title through the elapsing of time. If someone, who is not the registered
property owner lives in a property for a minimum period of time (20 years) as
if they were the real owner and have paid the rates, then it may be assumed
under Portuguese law that he/she is the property owner. This assumption can be
challenged by the real owner, if evidence is presented to show the situation is
otherwise.
A guardian
must be appointed to act on behalf of minors
Property inherited by
minors or other persons not of legal age may be registered in the name of the
minor in the Public Registry; however minors do not have the power to
administer property until they reach legal age. A guardian may be appointed
from the immediate family provided he/she has capacity to perform the relevant
guardianship duties. If no one in the immediate family is available the court
can appoint an independent person to fulfill the task. |
