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Those who have permanent residency in Thailand should consider proper estate planning. Plan your last will and testament well. Take advice from our probate lawyer on how to complete the process and consider your assets at home. Each client has their own idea as to how to wish to wind up their estate. Each client always has their unique legal and financial standing.
When you become a permanent resident in Thailand then estate planning is important. You will need to identify your assets. This can be property or bank accounts or other possessions. How this is distributed you will need to decide or it will go with Thai law on interstate succession. This might not be the way you wanted your assets to go.
If you don’t have a last will and testament then the family members might end in a dispute. To lower conflicts between family members, it is best to ensure that you have completed your will. This is also with the living will in Thailand in Pattaya where it is popular. Likewise you should also look at the which countries the beneficiaries are located in. This is also important if there are minor children that need to be taken care of.
Estate planning can help PR holders in Thailand to minimize tax liabilities on their estate. Thailand imposes inheritance tax under certain conditions, and with strategic planning, PR holders can manage their estates to optimize tax outcomes for their beneficiaries.
The estate planning for locals and foreigners are not the same in most cases. This is because foreigners may have their house in the name of a company or may even have a usufruct, so see the article that we wrote called usufruct Thailand. Likewise there many be superficies in Thailand over land. These all need to be taken into account.
Foreigners, this also including holders of permanent residency. They are all subject to restrictions on land ownership in Thailand. So much like others they own buildings or condominiums outright, they cannot own land directly. In light of this even the PR holders still being subject to the limitations such as those of land ownership. You will also need to consider long-term leases, holding land through a Thai company, or utilizing usufruct rights. These also have time limitations.
Likewise you will also consider where there is joint ownership. There may be instances where the property is held jointly as a business. Who will take the position and interest in the business after death. Also who will take the place where there is a business doing daily trading. Will your current business partner be able to survive in the business with whoever takes over from you? These are questions that you will need to ask.
The next question is any nominee arrangements that you have in place. There are those who have nominee arrangements to hold land. This has always been legally contentious and Thai law prohibits using nominees to bypass foreign ownership restrictions. It is always best to speak to a Thai property lawyer and look at the use of superficies over the property if it is a house and not owning the land.
For PR holders, it is advisable to have a will that explicitly addresses their assets in Thailand. The will should be drafted in accordance with Thai law to ensure it is enforceable. In some cases, it may be beneficial to have separate wills for assets in Thailand and assets located in other countries to streamline the probate process.
Here we have another issue. How best to co-ordinate and taking into account the different legal frameworks and tax implications in each jurisdiction. Coordinating estate planning efforts across borders ensures that the PR holder’s entire estate is managed cohesively and according to their wishes.
With estate planning in Thailand. This would involve understanding the legal and tax implications of inheritance. Likewise you will note also on this website that Thailand has specific laws governing inheritance. Likewise also read the following pages. There is Drafting a Will as well as the article we wrote on Thai Will and Testament. Lastly also see the article which we wrote on the living will option.
Much like other countries Thailand also imposes an inheritance tax on the transfer of assets upon death. Likewise at writing the inheritance tax is levied at a rate of 5% on the value of assets pay tax on the excess over 100 million Baht. You will note that this is for direct heirs, such as children and parents, and at a rate of 10% for other beneficiaries. You can see the Inheritance Tax Act in Thailand under the Civil and Commercial Code page on this website. You can see Section 16 of the Act.
Unlike other jurisdictions, Thailand does not have forced heirship laws that mandate how an estate must be distributed among certain family members. These countries tend to be under the old Roman Dutch law system which they had their laws based from.
When you pass on your estate must go through the probate process. They will need to first validate your last will and testament. Likewise settling debts of the estate as well as distributing the assets to beneficiaries. Note that you must take into account the cost and timeline of the probate process. You can also see the probate process in Thailand for more information as to what is typically charged. Unlike other countries the attorney fees for winding up a estate are not set and this needs to be negotiated. This is also called the administration of estates in the West. Lastly note that there is Testate Probate (has a will) as well as Intestate Probate (no will).
The probate process in Thailand follows the following rules.
Validation of the Will: Firstly the courts in Thailand will need to validate the will. Once this has been done the will is confirmed to be the legally binding final wishes of the deceased.
Appointment of an Executor: Likewise should you have a will and have an executor, their name will appear on the will and the courts will confirm this. If however you did no have an executor then the courts will appoint the administrator of the estate.
Settlement of Debts and Taxes: The administrator or executor as appointed by you or the courts will be responsible for settling any of the outstanding debts and taxes owed by the deceased.
Distribution of Assets: Lastly once all the debts and taxes are settled. The remaining assets are distributed to the beneficiaries as specified in the will or according to Thai inheritance laws if there is no will.
You will need the following to start the winding up of the estate in Thailand. The documents will need to be provided to the court as the administrator or executor needs to complete the actual process. The administration of estates will need you to collect the following documents.
• A certified copy of the death certificate.
• The original will (if available).
• A list of the deceased’s assets and liabilities.
• A list of the beneficiaries and their contact information.
• Any other relevant documents that support the petition.
The timeline for probate will differ from estate to estate. Some estates are more complicated than others. Below is a very rough estimate as to the time taken to windup an estate in Thailand. Likewise speak to our family lawyer about this.
This will take as long as you can collect the documents and hand them in to court.
• Document Collection: So you will need the persons death certificate as well as the original will. You should also make an asset register of what they owned. Likewise the contact details of all their beneficiaries as well as a list of their liabilities.
• Filing the Petition: Once the documents are ready, the petition is filed with the Thai court. The filing date marks the official start of the probate process.
This is the estimated time but most people can complete this task much faster.
• Court Review: Once you have filed the petition is filed. The courts will now review the documents. They do this to ensure that its completed correctly and that it meets all the legal requirements. This court process may take 1-2 months.
• Hearing Date: Note that once the process is complete that the court will now schedule a hearing date. Depending on the courts this is usually within 3-4 months of filing the petition. Should you have a will then the courts will examine the will and then consider any objections or claims made by interested parties.
If there are no objections and the will is valid, the court will grant probate and confirm the appointment of the executor or administrator.
Asset Identification and Valuation: It is the responsibility of the executor or administrator to now process to identifying as well as valuing all assets of the estate. Depending on the size of the estate this can take many months. This will include any real estate, money in their bank accounts, investments as well as any personal property which are valuable items.
Debt Settlement: The executor or administrator will also settle any outstanding debts and obligations of the estate. This can also involve contacting any of the deceased creditors. Likewise also paying off loans such as a mortgage on the property. This can take a while and can take 3-6 months.
Tax Filing: Finally any taxes owed by the deceased. This can include income tax as well as the inheritance tax, must be filed and paid. The executor will then also need to obtain a tax clearance certificate from the Revenue Department. This will serve to confirm that all taxes have been settled.
Final Distribution: So now that all the debts and taxes are settled. This is when the remaining assets can be distributed to the beneficiaries. The distribution process may take 3-6 months, depending on the number of beneficiaries and the nature of the assets.
Closing the Estate: Once all assets have been distributed, and the estate is fully settled. Likewise at this point the executor will prepare a final accounting of the estate’s administration. This will then be submitted to the court. The court will then issue an order to close the estate.
The estimated cost of winding up and estate in Thailand will depend on the size as well as the complexity of the estate. Likewise if there is a last will then this should make it easier as well as the executor and beneficiaries have already been established. We have listed some of the costs to the administration of an estate in Thailand.
Filing Fee: The fee for filing a probate petition in Thailand with the Thai court is generally a nominal fee. This can range from 200 to 1,000 THB. Likewise this will depend on the court as well as to how complex this estate is.
Administration Fees: There many also be additional fees which may be charged by the court. This could be for administrative tasks. These include but not limited to the of processing documents as well as the issuing of notices as well as conducting hearings. These fees are usually minimal and are paid directly to the court.
Attorney Fees: Most expats will use a probate lawyer to deal with any of the complexities. This is especially true when it comes to the large expat community in Bangkok and Pattaya. The legal fees can vary based on the lawyer’s experience as well as the complexity of the estate.
Likewise if this is far away in a small town in Thailand. Unlike in the West with a Roman Dutch legal system these are normally fixed by the government. In Thailand however legal fees typically range from 5% to 10% of the estate’s value. Hourly rates for attorneys can vary but generally range from 5,000 to 15,000 THB per hour.
Executor Fees: Most expats will choose their own executor. Likewise should there be no estate and the courts have to appoint a professional executor. They could charge a fee for their services. This fee is often calculated as a percentage of the estate’s value, typically around 2-5%.
Real Estate Appraisal: There will always be property with expats. This will then require a professional appraisal in order to determine the market value. Likewise the appraisal fees vary based on the size and location of the property but generally range from 5,000 to 10,000 THB per property.
Valuation of Other Assets: Additionally the valuation of personal property as well as the investments, and other assets may also incur fees. Likewise the costs will depend on the type of assets and the expertise required for the valuation.
Public Notices: Finally in some cases, the court may require that public notices be published in local newspapers. This is to inform creditors and interested parties about the probate process. Likewise you will note that the cost of publishing these notices can range from 2,000 to 5,000 THB per notice.
Document Translation: Should the documents be translated or need a notary public for the translation into Thai. The professional cost might range from 500 to 1,500 THB per page.
Travel and Logistics: Lastly the executors may incur travel and logistics expenses if they need to attend court hearings or meet with beneficiaries and creditors. These costs can vary widely depending on the location and frequency of travel.
Inheritance Tax: Thailand imposes an inheritance tax on the value of inherited assets exceeding certain thresholds. You can see the Inheritance Tax Act on here. Ad stated above the tax rate is 5% for direct heirs (e.g., children, parents, spouses) and 10% for other heirs. The threshold for exemption is set at 100 million THB for each heir.
Tax Filing and Clearance: Executors may incur costs related to filing tax returns and obtaining tax clearance certificates from the Revenue Department. These costs may include professional fees for tax advisors or accountants.
This has been a brief overview of probate in Thailand and why it is important to have a valid will drafted in the country. Speak to us online or better yet send us an email to explain to us your current situation. Having a last will and testament drafted can also be done by us. So talk to us today.
