Let’s talk about something that might not be the most exciting part of your Portuguese adventure, but it’s definitely worth getting right: estate planning. Whether you’ve got a lovely villa in the Algarve or a bank account in Porto, having a clear plan for your assets can save your loved ones a lot of headaches down the road.
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Do You Need a Portuguese Will?
While there’s no legal requirement to have a Portuguese will, here’s the deal: if you own property or have significant assets in Portugal, having one can make life (or rather, what comes after) much simpler for your family.
Already have a will back home in the US, UK, or elsewhere? Here’s what you should know:
- It’s generally best to have two wills: one Portuguese will for your Portuguese assets and your existing will for everything else
- Your Portuguese will should clearly state which law applies
- Make sure your wills don’t contradict each other
- Explicitly mention in your Portuguese will that you have a foreign will for non-Portuguese assets
For those with a mortgage in Portugal, it’s worth noting that it’s common practice to have a life insurance policy that will pay off the mortgage if you pass away. This can provide significant peace of mind for your loved ones.
Making Your Portuguese Will: The Basics
Think of your Portuguese will like a well-organized recipe – you want it to be clear, legally sound, and properly registered.
While you can make a will without a lawyer, most expats choose to work with one. Why? Because Portuguese inheritance law can be tricky, especially for expats used to different rules. Plus, everything needs to be registered with a notary to be legal anyway.
What About Your any Foreign Wills?
For expats, it’s important to understand how foreign wills work in Portugal. While your foreign will might be applicable under Portuguese law, including any terms regarding your Portuguese assets, relying solely on a foreign will can create significant challenges.
Here’s why: foreign wills must typically be translated and may need to be notarized or apostilled before they’re accepted in Portugal.
This creates additional bureaucracy and costs for your surviving heirs. If your heirs need to go through the Portuguese courts, delays can arise as the courts interpret international law. For family members based outside of Portugal, dealing with Portuguese inheritance procedures, language barriers, and legal complexities can be overwhelming, especially during an already difficult time.
That said, there are instances where you may want your foreign will to be used in Portugal. What’s important is that you set this up so as not to create any problems for surviving heirs.
Understanding Portuguese Inheritance Laws
Portugal’s inheritance system is generally quite favorable, especially for direct heirs. There’s no inheritance tax for spouses and children, with only a small stamp duty (less than 1%) applied when registering inherited assets. For other heirs, such as siblings or friends, there’s a 10% stamp duty. Importantly, there’s no limit on the size of an estate that can be inherited.
But Portuguese inheritance law has some rules that might surprise you:
- You can’t freely distribute all your assets if you have a spouse and kids
- Two-thirds must go to them (mandatory heirship rules)
- You can only choose what happens with the remaining third
- No spouse or kids? Then you’ve got free rein
Special Situations Worth Noting
- Not Married But Living Together?
- Register your de facto union at the local junta de freguesia
- This protects inheritance and pension rights
- Same-sex marriages have equal rights under Portuguese law
- Property Arrangements
- Want your spouse to live in your home for life, but leave it to your kids?
- You can do this through a “usufruct right”
- This lets your spouse stay there while ownership transfers to your children
- Trusts and Charitable Giving
- Charitable donations are limited to one-third of your estate
- Trusts exist but aren’t common in Portugal
- Special needs trusts don’t exist like in the US, but there are alternatives
- For Parents
- You can include guardianship arrangements in your will
- But remember: Portuguese authorities will still assess what’s best for the child
- Have a backup plan just in case
Pro Tips for Making Things Easier
The following tips will make your
- Appoint a Portuguese resident as your executor
- Keep all property documents and financial records in order
- Considering getting Portuguese tax numbers (NIFs) for your heirs in advance (or at least telling them how easy it is to get these through Portugalist).
Getting Started
Consider talking to a lawyer who specializes in cross-border estate planning. They can help you navigate both systems and ensure everything’s properly set up for peace of mind. Remember, while setting up proper estate planning might take some time and effort now, it’s one of the most thoughtful things you can do for your loved ones.
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