Thailand’s Inheritance Laws: Creating a Will

Introduction

Having a well drafted last will and testament is an important step in ensuring your final wishes are honoured and your loved ones are provided for in the event of your passing. This is particularly important for individuals with assets in Thailand, especially when you are a shareholder in a company in Thailand. 

Thailand’s inheritance laws can be complex and may not reflect the wishes of the deceased, therefore it is important to make sure you have a valid will to ensure your assets are distributed as you deem fit.

Understanding Thailand’s Inheritance Laws

Thailand’s inheritance laws are outlined in the Civil and Commercial Code, which states the rules for the distribution of a deceased person’s assets. In the absence of a valid will, these “intestacy” rules dictate the order in which statutory heirs in Thailand are entitled to inherit the estate. The six classes of statutory heirs as per section 1629 of the Thai Civil and Commercial Code, in order of priority, are:

1. Descendants (children, grandchildren, etc.)
2. Parents
3. Full-blood siblings
4. Half-blood siblings
5. Grandparents
6. Uncles and aunts

Section 1630 of the Thailand Civil and Commercial Code addresses how inheritance is divided among heirs of different classes. Here’s a breakdown of the two key parts:

Primary Rule: The law prioritises heirs based on a hierarchy of classes (as defined in Section 1629 and above). When someone passes away, their estate goes first to the highest class of heirs (like children or spouse), as long as there are eligible heirs in that class. If there are no eligible heirs in that class, then the estate goes to the next class. Lower-class heirs only inherit if no heirs from higher classes are available. For example, if the deceased has children, grandchildren (a lower class) wouldn’t inherit anything unless the children are no longer living or represented.

Exception: The exception applies when there is both a surviving descendant (like a child or grandchild) and at least one surviving parent of the deceased. In this case, the parents have a special right to inherit alongside the descendants, and each parent would receive a share equal to that of a child.

The surviving spouse is also considered a statutory heir, with their entitlement dependent on the existence and class of other heirs. It’s important to note that the spouse may not be entitled to the entire estate, as the law mandates an equal division among the spouse and any surviving children.

Once the statutory heirs have been established, the distribution rules for the estate are as follows:

• If there are surviving children, the spouse receives 50% of the estate, with the remainder divided among the children.
• If there are no descendants but surviving parents, the spouse also receives 50%, with parents sharing the other half.
• In cases where only siblings or more distant relatives survive, the spouse may inherit a larger share.

Please note that if no statutory heirs in Thailand exist, the estate in its entirety passes to the state.

What are the Implications of the Laws for Intestacy in Thailand for Foreigners?

Failing to have a well drafted last will and testament could have a significant negative effect on the distribution of the deceased’s assets. If there is no valid will, the assets of the deceased maybe subject to the following issues:

1. Inheritance Rights: Foreigners can inherit property in Thailand under intestacy laws if they are statutory heirs. However, they face restrictions regarding land ownership:
   • Foreigners cannot directly own land inherited from a Thai spouse unless specific legal provisions are met. They must apply for permission from the Minister of Interior to register ownership.
2. Potential Conflicts: Foreigners may encounter complications if their family structure does not align with Thai inheritance laws. For instance, if a foreigner has children from multiple relationships or if their spouse is not legally recognized under Thai law, this can lead to disputes over inheritance rights.
3. Lack of Control: Without a will, foreigners lose control over how their assets are distributed. This means that relatives they may not wish to inherit could receive portions of their estate, while loved ones not recognized under Thai law (such as stepchildren or non-marital partners) may be excluded entirely.
4. Probate Process: The estate must go through probate in Thailand, which can be complex and time-consuming without clear documentation of the deceased’s wishes. This process requires proving heirship and can lead to delays in asset distribution

Drafting a Valid Last Will in Thailand

While a foreign will may be recognized in Thailand, there are specific requirements for a will to be considered valid under Thai law. The Civil and Commercial Code outlines several accepted forms of wills, including:

1. Registered Secret Will: The testator signs the will, seals it, and registers it with the local municipality (Amphoe) in the presence of at least two witnesses.
2. Registered Public Will: The testator declares their wishes to a government official (Kromakarn Amphoe), who then records the Thai will, which is signed by the testator and witnesses.
3. Unregistered Private Will: A written and witnessed Thai will, dated and signed by the testator in the presence of at least two witnesses.

Regardless of the form, it’s important to ensure the will meets the specific requirements outlined in the Civil and Commercial Code to avoid any legal complications.

Inheritance of Specific Assets

The inheritance of certain assets in Thailand can present unique challenges, and it’s essential to understand the applicable laws and regulations.

Condominiums

Inheriting a condominium unit does not automatically grant the foreign heir the right to register ownership. The heir must qualify for foreign ownership under the Condominium Act, and if they do not, they must dispose of the unit within one year.

Land

Foreigners are generally prohibited from owning land in Thailand, with limited exceptions. If a foreigner inherits land as a statutory heir, they must obtain permission from the Minister of Interior to retain ownership. Failing to do so within a reasonable timeframe (typically one year) may result in the land being sold by the Land Department.

Leases and Tenancies

Lease agreements in Thailand are considered personal contracts, and the death of the lessee (tenant) typically results in the termination of the lease. To ensure the successful transfer of lease rights to heirs, a specific succession clause in the lease agreement.

Company Shares

If you are a foreigner in Thailand and own a business, having a valid will is an important consideration. If a foreigner has a company in Thailand with their Thai spouse or partner without a valid will, should they die, their assets in Thailand may become subject to Thai laws. In such a case their share of the company could be transferred to their parents or children.

This is problematic because the statutory heirs may not have the knowledge or experience to manage the business effectively, potentially leading to mismanagement or operational disruptions. 

Additionally, if the deceased’s heirs are not aligned with the surviving spouse or partner’s interests, it can result in conflicts and disputes over control of the company. This situation may jeopardize the business’s continuity and financial stability, ultimately affecting employees and stakeholders.

The inheritance of controlling shares in a Thai company can be complex, as these shares do not automatically transfer to the heirs of a deceased shareholder. The company must formally register the new shareholder, and the heirs may need to navigate the company’s internal processes to assume control.

Estate Administration and Executor Appointment

When a person passes away in Thailand, their estate must be administered, and an executor must be appointed to oversee the distribution of assets. This process can be initiated either through the provisions of the deceased’s will or by the statutory heirs or the public prosecutor, if the will is absent or ineffective.

The executor is responsible for tasks such as preparing an estate inventory, managing the estate’s assets, and distributing the inheritance to the rightful heirs. The Civil and Commercial Code outlines the grounds for discharging an executor, including neglect of duties or other reasonable causes.

Does Thailand have Inheritance Tax?

Inheritance tax in Thailand was introduced in 2016, which applies to inherited assets exceeding 100 million THB in value. The tax rate is 5% for ascendants or descendants and 10% for non-ascendants or descendants. Spouses are exempt from the inheritance tax, and the value of liabilities can be offset against the taxable amount.

How does Thai Law Address the Inheritance of Property Owned Jointly by a Foreigner and a Thai National?

In Thailand, the inheritance of property owned jointly by a foreigner and a Thai national is subject to specific legal provisions that govern foreign ownership and inheritance rights. Here’s how Thai law handles such situations:

Tenancy and Lease Rights

In cases where property is held under lease agreements, the death of the lessee (the foreigner) typically terminates the lease unless specific succession rights are included in the lease agreement. Heirs may need to negotiate new terms with the landlord to continue occupying the property.

Statutory Heirs in Thailand

Under Thai law, if a foreigner dies without a will, their assets, including jointly owned property, will be distributed according to the intestacy in Thailand rules outlined in the Thai Civil and Commercial Code. The surviving spouse (if Thai) is considered a statutory heir and has rights to the deceased’s assets, including joint property.

Land Inheritance in Thailand

Foreigners are generally prohibited from owning land in Thailand. However, they can inherit land as statutory heirs under certain conditions:

A foreigner married to a Thai national can inherit land from their spouse but cannot register ownership with the Land Department. Instead, they must sell the inherited land within one year of acquisition If they fail to do so, the Director-General of the Land Department is authorized to sell the land on their behalf.

Condominium Ownership

Foreigners can inherit condominiums in Thailand, provided that their ownership does not exceed the 49% foreign ownership quota established by Thai law. This means that if a foreigner inherits a condo unit, they must ensure that the total foreign ownership in that condominium complex remains compliant with legal limits.

Does Thailand Recognise Foreign Wills?

Whether a foreign will is valid in Thailand depends on several factors, including the laws of the country where the will was made, the laws of Thailand, and the circumstances of the deceased person at the time of death.

Usually, a foreign will will be recognized and enforced in Thailand as long as it does not contradict Thai law. 

It is recommended that someone who lives in Thailand makes a separate will in Thailand to ensure that their assets in the country are distributed according to their wishes and following Thai law. This will also avoid potential issues arising between the foreign will and Thai law.

To ensure a foreign will is recognised in Thailand, the following must be completed:

• Translation: The will should be translated into Thai by a certified translator.
• Authentication: The foreign will may need to be authenticated by the relevant authorities in the country where it was made and the Thai authorities.
• Probate in Thailand proceedings: The foreign will need to be presented to the Thai courts and obtain a grant of probate, which confirms the will’s validity and authorises the executor to carry out its instructions.

Our Thoughts

Thai estate planning is highly important and drafting a comprehensive last will and testament is an important step in securing the future of your assets in Thailand. Many foreigners who have set up a company will have invested a lot of time, energy and resources into developing their business. 

Having proper Thai estate planning and a valid will can help to ensure that in the unfortunate event of one of the shareholders passing away, the interests within the company will be protected. In Thailand, the legal landscape surrounding inheritance can be confusing, it’s essential to understand how the law can affect shareholders and take proactive measures to safeguard your wishes.

Disclaimer

This information is provided for general educational purposes only and should not be construed as legal, tax, or financial advice.