As foreign investment grows in Thailand, so does the number of foreign individuals who own assets in the form of shares, bank accounts, condominiums that permit foreign ownership, and other movable and immovable assets.
Understandably, people are often reluctant to consider their own mortality, however personal estate and succession planning are crucial in terms of leaving a legacy and taking care of loved ones in line with your wishes.
DFDL Thailand seeks to highlight the prevalent issues that should be considered by foreign nationals and investors that are holding assets in Thailand to help them determine whether to prepare a Thailand-specific Last Will and Testament.
We look at two specific scenarios that typically apply from the perspective of foreign investors:
Scenario 1: Intestate Succession under the Laws of the Kingdom of Thailand
When an individual passes away without leaving a Last Will and Testament, the individual is deemed to have died “intestate” and his/her assets and liabilities are distributed according to specific rules dictated by law. In Thailand, the doctrine of intestacy is enshrined within the Civil and Commercial Code (“CCC”). Intestacy may also apply to parts of the estate that have not been disposed of or are not affected by the will.
In an intestate scenario under the CCC, statutory heirs of the deceased are generally entitled to inherit in the following order:
The surviving spouse also has entitlements with respect to the deceased’s estate under specific rules, depending on the existence of the deceased’s statutory heirs. In a typical family scenario, the surviving spouse will receive half the assets and liabilities while the children of the estate will receive the remaining assets and liabilities, in equal proportions. In the event that no spouse or statutory heirs can be identified, then the estate’s assets and liabilities will devolve to the State.
This process of succession is not automatic. The spouse or children of a deceased person cannot just walk into a bank and demand access to the account of the deceased, or walk into a shareholders meeting in a company where the deceased held assets and demand payment of dividends. The process of recognizing the statutory heirs and their respective entitlements is known as “Probate”. Obtaining probate in Thailand involves recognizing an administrator for the estate (whether reaffirming the administrator identified in a Last Will and Testament or by court appointment). Alternatively, it is not uncommon for a lawyer to be appointed as the administrator of the estate in Thailand where an heir of the deceased resides overseas.
It is easy to see how intestacy rules under Thai law may not be in line with how an individual wishes for his or her assets and liabilities to be allocated. For example, a bank account in Thailand holding THB 30,000,000 could quite possibly end up being distributed exclusively to the least financially responsible member of a family, based purely on the statutory order of the beneficiaries.
Scenario 2: Enforcing a Foreign Made Last Will and Testament
Another common scenario occurs where a foreign national, having assets and liabilities in Thailand, makes a Last Will and Testament in his or her home country. In such a scenario, the executor of the deceased’s estate, duly appointed either by the court or through the Last Will and Testament of the deceased, will attempt to enforce the foreign made Last Will and Testament in Thailand for the benefit of the named heirs of the estate.
Foreign-made Last Wills and Testaments are enforceable in Thailand, however the process of recognizing the executor’s rights can be cumbersome. In the event a foreign resident of Thailand has disposed of his global assets pursuant to an official (and recognized) Last Will and Testament in a foreign country, such document, along with a court order issued in the foreign country appointing the executor and a death certificate, must be certified and submitted to the court in Thailand. These requirements can add significant complexity, cost and delay to the ultimate distribution of assets.
Why Create A Specific Last Will and Testament for Thailand?
There are several potential benefits of preparing a Last Will and Testament specific to an individual’s Thai assets:
A Last Will and Testament in Thailand is required to be made in writing and in a specific format as outlined in the CCC. The Last Will and Testament must be signed and dated by the testator (the individual executing the document) before at least two witnesses (who are also required to sign their names as witnesses to the signing).
Other aspects to consider in relation to assets within Thailand come under the Inheritance Act B.E. 2558. Provisions under the Act require that all bequests whose aggregate value exceeds THB 100 million are subject to tax of 5% for children and parents, or 10% for other legatees.
DFDL and Succession and Estate Planning
We trust that the scenarios presented above assist in highlighting the need for specific Last Will and Testament in relation to assets and liabilities located within the Kingdom of Thailand.
DFDL can help individuals, foreign and domestic, to better plan succession and inheritance locally, regionally and globally by:
Thailand Tax Director & Head of Regional Compliance & Investigations
Regional Legal Adviser
The information provided here is for information purposes only and is not intended to constitute legal advice. Legal advice should be obtained from qualified legal counsel for all specific situations.