Inheritance law in Thailand
According to Section 1629 of the Thai Civil and Commercial Code, there are six classes of legal heirs, and they are entitled to inherit your assets in the following order:
- children;
- parents;
- brothers and sisters of whole blood;
- brothers and sisters of the second degree of consanguinity;
- grandparents;
- uncles and aunts.
The surviving spouse is the legal heir, subject to the specific provisions of the Civil and Commercial Code section 1635. Legal foreign wills are acceptable in Thai courts, provided they are translated and authorized by the Ministry of Foreign Affairs. Still, the legal procedure for its enforcement can take a long time. Enforcement of a foreign will in Thailand is always subject to the judicial process.
General Provisions
The following can be inherited in Thailand:
- Land property (successors under Thai inheritance law or at will)
- Condominium (succession and foreign ownership)
- Company assets (inheritance of control and investments in the company)
- Leasehold (right to lease the lessee on the death of the lessee)
Transfer of land property
By Article 93 of the Land Code, A foreigner who claims to receive title to land by inheritance as a legal heir may obtain such identification with the permission of the Minister of the Interior. Note that Article 93 applies only to foreigners who are legal heirs of land under a contract of succession (Article 86) and does NOT apply to persons who are legal heirs of a Thai spouse. As Thailand does not currently have any international agreements governing land inheritance rights, no foreign spouse without having an inheritance contract will receive permission from the Minister of the Interior. Once they receive the inherited land, this category of foreign heirs will not be able to register legal ownership rights and must sell it within one year from the date of receipt.
Foreign heirs
Inheritance of an apartment by a foreign national
Owning condominium apartments in Thailand is possible for foreigners who exercise this right under Section 19 of the Condominiums Act of Thailand (foreign ownership). However, the fact that a foreign individual has been recognized as the owner of a condominium apartment in Thailand does not confer such a right to foreign heirs or assigns. Generally, the right of full and unconditional foreign ownership (freehold) ends at the time of death of the unfamiliar person who has obtained such a license under the Condominium Act.
Foreign full and unconditional title to a condominium (freehold) does not automatically pass to other foreigners by inheritance. The Condominium Act contains provisions on the legacy of ownership rights by foreign nationals in Section 19/5(1) and Section 19/7 of the Condominium Act. Only those foreign nationals who compliant with Section 19 of the Condominium Act (qualified under that section) are entitled to register ownership of the inherited apartment out of the 49% foreign quota of the condominium (as stated in Section 19/2 (bis) of the Condominium Act BE 2522).
Who are foreigners who may qualify as entitled to own an apartment in Thailand?
Foreigners can inherit the ownership of an apartment in Thailand through a will or inheritance by law. However, to officially register ownership of the apartment with the Land Department, the foreign successor to the apartment must provide evidence that they fall within the requirements of Section 19 of the Condominium Act. Under Article 19, only the following foreigners can apply for registration of condominium ownership:
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- foreigners with a residence permit in Thailand immigration laws;
- foreigners who are permitted to enter Thailand based on investment promotion legislation;
- legal entities as provided in sections 97 and 98 of the Land Code and registered as legal entities in Thai law;
- legal entities which are recognized as foreign and special certificates by investment promotion legislation;
- any other unfamiliar natural or legal person who is deemed by law to be a foreigner who has imported/transferred into Thai territory an amount equivalent to the value of the apartment purchased in foreign currency and converted it into Thai baht or withdrawn it from the bank account of a non-Thai national (in Thai Baht and a Thai bank), or removed the amount from a foreign currency account in a Thai bank.
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Qualified and Unqualified Foreign Heirs of Condominiums
Section 19/5 of the Condominium Act allows qualified foreign persons (that is, persons who meet the requirements of this section) to register title to the apartments of an inherited condominium as long as the foreign quota of registered apartments in that condominium does not exceed 49%. A foreign inheritor shall dispose of (sell, transfer) the apartment as provided for in Article 19/5, paragraph 1: When a foreign natural or legal person referred to in Section 19 (a qualifiedunfamiliarn natural or legal person) has inherited an apartment as a legal heir, or an heir under a will or in another manner (e.g., by gift) and when the inclusion of said apartment in the number of flats owned by natural or legal persons listed in Article 19 exceeds the ratio provided for in the Such foreigners who have inherited a condominium shall sell or transfer the apartment withinone1 year from the date of inheritance. 'A natural or legal person defined by law as a foreign person, in case he or she is not included in the list set forth in Article 19, when receiving the apartment by inheritance as a legal heir, or otherwise, shall notify the competent official in writing within sixty days of receiving the estate and shall dispose of the property within not more than one year from the date of receiving the inheritance. If such disposition of the property has not occurred within the said period, the provisions of the fourth paragraph of Article 19/5, as amended, shall apply.'
Ineligible foreign heirs of condominiums
In case of unqualified foreign heirs of apartments, a possible solution to formalizing the property received by inheritance may be to transfer to qualified, that is, to meet the requirements of Article 19. For example, it is possible to register the inherited apartment as purchasable at a price equal to at least the state-estimated value and pay from this estimated base of taxes and fees on the transfer of ownership. In addition, a FET form, which will be issued by a Thai bank when the foreign currency amount (equivalent to the apartment's appraised value) is transferred to its account, and the currency is converted into Thai baht, will need to be drawn up and provided. Thus, the willingness to pay taxes and fees on the transfer of ownership and FET certificate gives grounds for ownership registration under Section 19/5 of the Condominium Act. Generally speaking, in terms of inheritance matters, the Condominium Act of Thailand is not foreigner-friendly.
In most cases, foreign heirs who have received apartments under a will or as legal heirs must dispose of that inheritance within one year. Suppose the heir fails to dispose of the flat within the specified period. In that case, the Director General of the Lands Department is authorized to sell the flat on behalf of the heir, withholding 5% of the sale price charges before any deductions and taxes.
Inheritance of flats owned under leasehold
The legislation of the succession of leasehold rights under the Civil and Commercial Code restricts the inheritance of condominiums owned on leasehold rights. The Condominium Act does not govern it.
Inheritance of company assets
If a foreign director in a Thai limited liability company is limited in several shares (and hence assets), control in the company will not automatically pass to heirs. Officially, in an ordinary company, a general meeting of shareholders must be called, and a shareholder resolution must be given to appointing a new director. The shares (and most importantly, the position of managing director of the company) of the deceased must be transferred to the Department of Commerce, but without calming authorized director who can sign on behalf of the company. It may be advisable to have more than one director in the company and an authorized signatory on behalf of the company.
Civil and Commercial Code
Section 1155: 'Directors may fill any vacancy available on the board otherwise than by rotation, but any appointed person shall retain his office during that time only if the vacating director is entitled to retain it.' Section 1132: 'In case of death or bankruptcy of any shareholder, another person shall be entitled to his share. The company shall register such other person as a shareholder.' Until 2006, when new regulations were issued for the Land Department Offices (together with the Ministry of Home Affairs), it was common for foreigners to use Thai companies to acquire land or condominiums from the Thai quota.
As long as a company had a majority of shares owned by Thai shareholders (and the number of Thai shareholders was greater than foreign shareholders) - such a company was treated like any other Thai company. However, the government has now imposed certain restrictions to combat the illegal use of Thai companies and nominee shareholders by foreigners. Under the new rules, officials from the Department of Land and Business Development are now required to follow special procedures and make additional checks when confronted with a Thai company with foreign shareholders or a foreign director with the power to sign.
These procedures prevent foreigners' unauthorized use of Thai nominee shareholders and shell companies. Nominee shareholders cannot claim ownership of the company's assets, and foreign heirs cannot register requests. Still, successors in title to the principal can claim the transfer of shares and control in the company. Foreign heirs, as de facto owners by inheritance, have the right to claim the company's assets by the legal process but will have to sell the real estate related to the land under the Land Code Act withinone1 year from the date of acquisition by inheritance.
In addition, foreign heirs can claim the company's assets by the legal process but will have to sell the real estate related to the land under the Land Code Act withinone1 year from the date of acquisition by inheritance.
Succession on the death of the lessee
The lease agreement terminates on the lessee's death because the lease in Thailand is essentially a personal contractual right of the lessee (as confirmed by the Supreme Court) and not an asset or property of the lessee. If the lessee dies, the remaining term of the lease and the lease will not automatically pass to the lessee's heirs. Suppose succession is not included in the lease. In that case, the landowner/property owner may prohibit the lessee's heirs from using the property because the lease terminates and the lessee's heirs have no property rights.
The lease should have an inheritance clause in the succession agreement of the lessee's heirs. There is a dispute as to the legal status of the succession clause in the lease, which means whether it is simply a contractual promise by the owner party to the lease or a fundamental right to the lease, which will automatically be binding on third parties, should own the transfer of the leased property (such as on the death of the owner).
Under this interpretation of the Thai tenancy law, this clause will not be transferable under Civil Commercial Code section 569 as it is considered a legal contract. When an inheritance clause is included, the lessee's heirs have the right to enforce directly against the original lessor (section 374 of the Civil and Commercial Code). Still, they cannot successfully implement the clause against the successor of the property in a judicial proceeding. It may be advisable to include lessees in the lease, each of whom may independently continue the lease in the event of the death of one of the lessees.
It may be advisable to include lessees, each of whom may independently continue the lease in the event of the death of one of the lessees.