Estate Planning in Mexico

Estate Planning in Mexico

Wills and Estate Planning - Mexico

This article was prepared for general information only. It is not to be relied upon for legal advice or for decision making purposes. You are advised to consult a lawyer familiar with appropriate estate legislation.

This article was written by a Canadian Financial Planner with over 20 years specializing in non-residency. If you would like no-cost assistance or advice about Canadian Non-Residency, Click Here.

Q.    I have a Will in Canada and own properties in both countries. Do I need a Will in Mexico? Should I have more than one (1) Will?

If you have moved to Mexico and have not bothered to put a Will in place, not all is lost although you may not like the results.

The governments of Mexico and the Canadian provinces have legislation that will govern how your estate is handled. Unfortunately, these are cookie cutter, one-size-fits-all plans, that may not meet your needs or wishes. They certainly do not take advantage of the tax planning tools available to you and your heirs. Let’s analyze the pros and cons of Wills and what you need to do if you own assets in Mexico.

Why Have a Will?

A will that is properly signed and witnessed gives legal effect to the disposition of property upon death. In other words, it ensures that your wishes are carried out under the supervision of the courts.

Wills are useful because:

  • Wills spell out how you want your property to be divided.
  • If you have underage children, or are caring for an adult that has been declared  incompetent, you can use a Will to appoint a guardian.
  • Wills can lower Canadian probate costs by giving clear instructions as to the disposition of your assets.
  • Wills can help avoid problems and conflicts between family members.
  • When coordinated with your financial planner, a Will can result in significant tax savings on the final tax return of the deceased, as well as for the heirs of your estate.

Having a Will prevents the law and/or a judge from deciding matters that ultimately are private affairs. The law will impose a plan upon you and your family, disposing of your property for you, if you do not have a Will.  This is as true in Mexico as it is in Canada. Here are some of examples of dispositions that could be forced on your family if you pass away intestate (without a Will):

Intestacy Problems

What happens if you die in Mexico without a will? You may not like the results.

Dying without a Will is referred to as dying "Intestate", and the governments of Mexico and the Canadian provinces have legislation that will govern how your estate is handled under those circumstances. Unfortunately, these are cookie cutter, one size fits all plans, that may not meet your needs or wishes.

Problems arise if you own assets in Mexico and you do not have a Mexican Will and do not have one back home either. The reason for this is that if there were no foreign Will, Mexican property would simply be apportioned per Mexican state law (but your surviving spouse might have to share your home with your mother-in-law!). Read on.

Survived by Spouse Only
  • In most Canadian provinces, if you pass away without a Will and are survived only by your spouse, your spouse will be entitled to your entire estate. There may be some tax issues, but generally you can rest assured that your spouse will receive your estate.
  • In most states in Mexico, if you pass away without a Will, survived only by your spouse, the decedent’s estate must be divided equally between the parents of the deceased and the surviving spouse! Be careful because that would include anything you own, even in other countries.
Survived by Spouse and Children
  • If you are survived by your spouse and children, your spouse does NOT get your entire estate. In Ontario for example, the spouse is entitled to the first $200,000 of the estate. The remainder is divided equally between your spouse and your descendants (children and grandchildren) according to specific rules. Most Canadian provinces have some sort of the same sort of rules.
  • In most Mexican states, if a person passes away without a Will, survived by a spouse and children, most laws require that the decedent’s estate be divided in equal portions between the children and the surviving spouse. 
  • However, in most Mexican states, if the surviving spouse owns assets in his or her own name that are equal or exceed the portion of the children, the surviving spouse will inherit nothing. That’s right, the surviving spouse may get nada.

Obviously, the division of property becomes much more complicated if there are children from prior marriages, if the heirs do not agree to the disposition of property, etc.  In short, if you do not plan ahead by drafting a Will, a difficult situation can become a nightmare for the survivors.

Canadian Wills in Mexico?

Is my Canadian Will valid in Mexico?  In a word, “Yes”.  Mexican states accept foreign Wills as long as the country where the will was drafted would accept a Mexican Will as valid, and as long as the documents were drafted in accordance to the laws of the country in which the document was granted (i.e. Canada).

If you only had a Canadian Will, the probate process in Mexico would be carried out per Mexican customs, but the Canadian document would control. Remember however, that the process to get your Canadian Will accepted could take time and cost money. We have heard varying opinions concerning the need to translate your Canadian Will into Spanish and it is probably safe to assume that you would need to hire a certified translator to translate the Canadian will into Spanish. But the bottom line is that the process works fairly well although there is some additional expense.

How many Wills do you need?

Do you need more than one Will? Technically speaking the answer is NO. The reason is that Wills in both countries usually contain language revoking previous Wills, so you could move to Mexico and write a new Will. As a matter of practice however, it is often suggested that two Wills be prepared, one from each country, so that you have one in English for your Canadian assets, and one in Spanish for your Mexican assets.

We have heard reports of some Mexican lawyers with the opinion that only one Will is allowed.  That simply is not true, and if your lawyer tells you it is either a Canadian Will or a Mexican Will, not both, then start looking for better advice. We have also heard stories of Mexican wills magically appearing, purportedly after the fact. For that reason alone, it is sometimes prudent to consider having a Canadian will only and instructing your family and your executor of that fact.

When two Wills are written, these documents more often than not are identical in their distributive provisions. “I leave all my worldly goods to my wife, Barbara”, is not usually written. Each document states that the Canadian property will be handled in Canada by a Canadian executor and the Mexican property will be handled in Mexico by a Mexican executor. Furthermore, and this is what makes this strategy interesting, the most contemporary document, usually the Mexican Will should NOT contain language revoking prior Wills.

Another option when owning Mexican assets is to draft a Mexican Will that applies only and exclusively to property in Mexico, with no mention made of Canadian property.  Even so, provisions of the Canadian and Mexican Wills would normally be coordinated to avoid any problems down the line. You need to ensure that your Mexican will contains language so as to not revoke your prior (Canadian)Will either.

Codicil for Canadian Will

A word of caution: If you intend to have two Wills, a Canadian Will and a Mexican Will, you want to ensure that your Mexican Will does not accidentally override the Canadian Will. You should have a Codicil (one page amendment) prepared in Canada and attached to your Canadian Will. It will confirm that your Canadian Will governs your "general estate" and the Mexican Will is to govern your "Mexican estate". In effect you will have two separate but DISTINCT estates.

Summary

Wills are a necessity in order to guarantee that your wishes will be respected.  They are also relatively inexpensive and having a properly drafted Will (or two) saves time, lowers expenses and helps avoid intra-family problems for those in second marriages. If you need help with your Canadian Will, we can refer you to Canadian lawyers who are familiar with the need for international Wills and we can provide guidance in the financial planning aspects. Contact us for assistance.

Read About Probate in Mexico

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