Thailand has been ranked very recently by BBC as one of the best seven countries in the world to retire. Many foreign retirees open bank accounts for their daily spending and buy condominiums for their living in Thailand. If you are among those retirees owning such assets in Thailand, it is advisable that you plan and manage your private wealth in advance so as to ensure that these assets pass to those persons at your own will in the event of your demise. A “last will” is one of the legal instruments under Thai laws that can help you to achieve this wealth management, as far as your assets in Thailand are concerned.
Statutory Distribution of Assets without Last Wills
In the absence of any last will, if a person unfortunately passes away, their estate will be statutorily distributed or passed on to those persons as specified in the Thai Civil and Commercial Code, which in principle can be summarized as follows:
- if that person has a registered spouse and has none of the heirs listed in 3 below, the estate will pass on to the spouse in its entirety;
- if that person has a registered spouse and has some of the heirs listed in 3 below, the amount and proportion of the estate to be passed on to the spouse and those heirs will vary, depending upon certain factors, e.g. which class of such heirs that person has at the time;
- if that person has no registered spouse, the estate will pass on to the following six classes of heirs in the following order of priority:
- brothers and sisters of full blood;
- brothers and sisters of half blood;
- grandfathers and grandmothers;
- uncles and aunts.
In so distributing, if there is any heir who is alive in any of the above classes, the heirs of all lower classes have no legal right at all to inherit any of the estate, except where that person has both living descendants and parents in which case the descendants and parents will be equally treated and allocated the estate as if they were in the same class.
Formalities of Last Wills in Thailand
To avoid such uncertainty and complication of estate distribution as prescribed by Thai laws above, it is necessary for you to prepare a “last will”. First and foremost, if you have assets both in Thailand and in other countries, it is recommended that you prepare separate last wills to apply in each country in which you own assets. This is because different jurisdictions typically require different formalities for each last will to be legally valid and binding on the estate located or registered in each relevant jurisdiction. For example, if you prepare a last will in accordance with Thai laws to cover all of your assets in all different countries, such last will may not be legally effective to cover those assets outside of Thailand. For a last will for the estate in Thailand to be valid and enforceable, it must conform to the following:
- to be be made in writing;
- to be dated at the time of preparing it;
- to be signed by you before two witnesses.
As a matter of practice, the last will should be clearly drafted and prepared by a professional lawyer. For instance, it should expressly list out all your assets (e.g. bank accounts, shares, bonds, vehicle and valuable personal items) and each name of your heirs being entitled to each of these assets.
Inheritance Tax Law in Thailand
In the past, there was no inheritance tax in Thailand. However, as from 1 February 2016, inheritance tax law in Thailand will take effect from the first time in the Thai history and will apply not only to Thai nationals but also to non-Thai nationals who are resident in Thailand according to the immigration laws and non-Thais who inherit assets located in Thailand. In principle, it operates in such a way that if any one of your non-Thai heirs inherits certain specified assets (e.g. condominiums, bank deposits, securities) from you worth above Baht 100 million, such heir will be required to pay inheritance tax above that threshold (i.e. above Baht 100 million) at the rate of 5%.
The above is written as a general guide only. It does not contain definitive legal advice and should not be regarded or relied upon as such. Up-to-date specific advice should be sought in relation to the above matter so that your wealthy will seamlessly pass on to your loved ones.
For more information, please do not hesitate to drop us a message to know how we can assist you with wealth management. SBC Interlaw is an international law firm with significant experience in serving foreigners living in Thailand on private wealth management and our teams of lawyers are committed to ensure the best quality customer services for you.