Many foreigners invest in real estate in Mexico to benefit from the high returns on investment that this market offers, to enjoy their leisure time here by owning vacation property, to retire, or a combination of all of the above. Ironically, few foreigners give any thought to what will occur to their property in the event of death. The purpose of this article is to provide some insights on how Mexican Law will deal with property owned by foreigners upon death and, hopefully, will provide foreigners with some suggestions on how to deal with this situation.

A foreigner with property in Mexico who dies will have their property distributed to their legal heirs, depending on whether they die without a Will (ab intestate), with a Mexican Will, or with a foreign Will.

If a foreigner with property in Mexico dies without a Will, the law provides that their property is divided proportionately between their legal spouse (and not common-law spouses) and their children. The process is complicated and requires the translation and certification of foreign documents such as marriage certificates, marriage contracts, birth certificates of the children and, if they are minors, the representation of those minors by an independent tutor in Mexico. The process can take more than a year to resolve and the property, in the interim, needs to be administered until they are transferred to the rightful heir. The cost can be considerable.

A foreign Will is legally valid in Mexico. However, it is inconvenient and it can be costly to have it recognized and acknowledged in this country. The process to have a foreign Will recognized in Mexico is as follows, the steps need to be done consecutively and in order: the Will needs to be probated in the jurisdiction or residence of the deceased; once probated, the Will must be legalized in Canada, or apostilled by the Secretary of State in the United States. Other countries have the same process but different government authorities will have the documents apostilled.  

Once this is accomplished, the certificate of death, the Will and the Probate decision must be sent to Mexico to be translated into Spanish by an official translator in the state and district where the property of the deceased is located. This technically constitutes a second Probation of the Will were a judge acknowledges the testator’s directions and, in some cases, will require the presence of the heirs or representatives in Mexico during the reading of the Will.   A judgment is then issued instructing notaries (for real estate) or financial institutions (for bank accounts) to transfer the property to the name and benefit of the heirs.  It can take six to nine months or more for this process to be completed and the costs are determined by a percentage of the value of the assets being transferred (one to three percent) plus expenses, if any.

With a Will made in Mexico, the process is simplified and the delays are shortened. If a foreigner owns property through a Bank Trust, the Trust Deed provides the names of the first and second beneficiaries of the Trust.  In that case, a certificate of death needs to be provided to the Bank Trustee who then is required to change the name of the Trust to the benefit of the named beneficiaries. Property held through a Bank Trust is not included or referred to in a Will made in Mexico. For other property, including real estate that is not held within a Bank Trust, a Will made in Mexico identifies the beneficiaries (general heirs that inherit all the property) and specific legatees (individuals that inherit an identified item or amount of money).  It also appoints an executor who will administer the property until it is transferred to the heirs and will assist the notary with this process.

A foreigner needs to go before a Notary in order to grant his/her Will made in México. Lawyers can act as legal counsel and advise foreigners on how to structure their Wills, transfer their property and consider certain fiscal consequences on the transfer of property. Most lawyers prepare the Will on behalf of their clients, in Spanish, explain the contents to their clients in their language of choice and then have a Notary register it to give it full legal effect. The Will needs to be signed in the presence of the Notary.

There are three steps to follow to Probate a Will made in Mexico. The first step is called Radicación where the Will is opened and the Notary reads it to all the beneficiaries in the presence of the Executor. The Executor of the Will is recognized and acknowledged and they must accept this position as administrator. Beneficiaries need to accept or refuse the inheritance of the estate. The second step is the publication or edictos. At this stage, the Notary will send an official document to two publications that are wildly circulated in the State where the Will is opened and also to the official newspaper of the State informing the general public of the existence of the Will, and to provide them with the right to claim an interest against the estate. If no-one files a claim within 40 working days, then the process will continue to the third and final stage. The final step is referred to as the escritura de adjudicación where the property is officially transferred to the name and benefit of the heirs.

If there is a claim against the estate, or if there are any minors involved, then the process is referred to the local courts who will decide on the claim or who will assist the minors for the transfer of the property.

Finally, property transferred on death is not subject to any capital gains in Mexico but, in some cities, will be subject to transfer duties if it is real estate.

Understanding who will inherit your property in Mexico requires careful consideration and proper legal guidance. The process can vary significantly depending on whether you have a Mexican Will, a foreign Will, or no Will at all, and each scenario comes with its own set of challenges. To ensure that your wishes are honored and that your heirs face minimal complications, it’s crucial to have expert legal advice. Mexlaw is here to assist you in navigating these complexities, offering personalized support to safeguard your investments and secure your legacy. Reach out to Mexlaw today to learn how we can help you protect your property in Mexico.

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• The foreign will must be translated into Spanish by an official court-approved translator.
• It must be “Apostilled” in the country where it was prepared.
• Canadian wills are not required to be apostilled but will need to be translated into Spanish by a court-approved translator and submitted to the Mexican consulate in Canada and then presented to a Notario in Mexico.
• If a foreign will goes to probate before the Mexican courts, it may take years to process and complete the transfer of the title. Meanwhile, the probated property can not be sold, and it can be challenging to manage and keep up with financial expenses.

This process causes your family undue stress and expense, which can be avoided by having a Will drawn up in Mexico.

Why you need a will to protect your spouse. 

• Since Mexico does not have survivor rights, the surviving spouse might not automatically inherit the property.
• If the couple owned property 50/50, without a will, the government might decide how to disperse the deceased’s share of the property.
• The court may divide the deceased share equally amongst the surviving spouse and the children, and may even include ex-spouses.
• The will should be specific, stating that the surviving spouse inherits the other 50% of the property, and if the parent also passes away, the children will then become the beneficiaries.
• Even if the property is held by fideicomiso, It is important to have a Mexican will to protect your heirs and avoid any unnecessary red tape. The fideicomiso names the beneficiaries but does not protect other assets of the estate.

Note that if the will and the fideicomiso name different beneficiaries, the fideicomiso will prevail.

Considerations for your Mexican will 

• A Mexican will must be in Spanish, use a trusted attorney to prepare the will.
• Cross-reference your Canadian or American will with the Mexican will.
• If it is your wish to have your surviving spouse or designated benefactor to be the sole beneficiary of the property, be sure to state that in the will.
• Include a simultaneous death clause.
• Ensure individuals in a common-law union are recognized as the spouse.
• Appoint a guardian for underage children.
• Include a “No Contest Clause.”
• A residuary clause, if you have a foreign property and only a Mexican will.
• It is preferable to choose an executor/executrix who lives in Mexico
• If the testator did not designate an Executor, the heirs would elect an Executor by majority vote.
• The expenses made by the Executor in fulfilling his position, including the attorney and attorney fees he has occupied, will be paid from the estate.
• Consider a Medical Directive.
• The will must be signed in the presence of the Notary.

Steps of Probating a Will made in Mexico. 

• The first step is Radicación, where the Notary reads the will to the beneficiaries in the presence of the Executor. The Executor of the will is acknowledged and must accept the position as an administrator. Beneficiaries will accept or refuse the inheritance of the estate.
• The second step is publication or edictos. The Notary will submit an official announcement to two newspapers that are widely circulated in the State where the will is read, as well as the official publication of that State to inform the public of the will and provide them a chance to claim an interest against the estate.
• If no claims to the estate are made within 40 working days, the process will continue to the final step, referred to as the escritura de adjudicación where the property is officially transferred to the beneficiary.

Inherited property is not subject to any capital gains in Mexico, although it may be subject to a transfer tax.

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Foreigners can purchase property in Mexico however, there are restrictions regarding buying property within the restricted zone, which is any property within 50 kilometers from the coast or 100 kilometers from the border.

Foreigners may purchase property within restricted zones, provided it is held in a fideicomiso (bank trust), or the buyer can create a Mexican corporation. The trustee bank is a Mexican bank authorized by the federal government to act as trustee. Owning property through a fideicomiso provides the buyer with all the rights and privileges of property ownership, and although the bank holds the property, it is not considered a bank asset.

Before a foreigner can purchase property in Mexico, there are several steps to complete, information to verify, and the process may be intimidating and frustrating if you do not have the proper representation.

There are many reasons why it is crucial to consult a Mexican real estate lawyer before making an offer or signing any documents. We will address a few of the benefits of using a lawyer in this article.

The Notario and the Lawyer
Some buyers believe they do not need to hire a lawyer since the notario is required to register the title deed in the public registry. Unfortunately, there are still many issues that may arise regarding the title on your purchase.

A notario in Mexico is an experienced lawyer who has been licensed by the Federal Government and the State. The notario is responsible for verifying the identity of the parties and the registration of the deed at the Public Registry Office. If the real estate transaction has not been recorded in the public registry by a notario, it is not valid.

It is true the notario publico is required to finalize every real estate transaction, but the notario does not represent you. They are an unbiased representative of the government. Although the notario registers the property and issues certificates of no encumbrances, if a discrepancy is found after the fact, the buyer will have no recourse against the government or the notario for any errors.

If you do not speak fluent Spanish we suggest you retain the services of an English-speaking internationally licensed lawyer who is governed by, and accountable to a professional order.
A lawyer will perform a complete title search on the property, researching the chain of ownership, confirming the seller is authorized to sell the property, and make sure no one else has a claim on the property.

Dealing with government agencies and utility providers can be difficult at the best of times nevermind under time constraints. The lawyer will deal with these agencies for you.

Your lawyer will deal with the following processes on your behalf:

• Prepare the contract and review the terms and conditions of the transaction.
• Submit the permit to the Mexican Ministry of Foreign Affairs.
  
• Provide a comprehensive title search on the property and reveal any liens.
  
• Collect all the non-debt certificates from government agencies.
  
• Arrange appointments with the bank to create the fideicomiso.
  
• Confirm that property taxes are paid to date.
  
• Obtain an active cadastral (property survey)
  
• Review your plans for the property and determine the best strategy for the purchase.
  
• Review options for creating a Mexican corporation for property ownership without a fideicomiso.
  
• Coordinate with the notary public, bank and verify the seller’s documentation.
  
• Provide accounting, tax reduction and capital gains advice.  
  
• Confirm the property may be titled and it is not Ejido land.

There is no need to buy title insurance; a competent lawyer will ensure you receive the title deed.

Do not expect your lawyer from back home to represent you during a real estate transaction in Mexico since only a licensed Mexican attorney can provide advice on Mexican law.
 
Pre-Construction Contracts
Many foreigner investors enjoy the perks and the discounted price of a pre-construction sale. In these cases, you are trusting the developer to use your funds and eventually deliver the property and the title deed.
This is risky if you do not have a solid contract reviewed by a lawyer. The lawyer will ensure your funds are protected if for any reason the project is not finished, the developer declares bankruptcy or you do not obtain a title deed. Your lawyer should conduct due diligence on the developer and determine their legal status, license, and ensure all building permits are in order, review the company’s history and previous projects, and finally confirm the title holder of the property.

There is no Title Deed on Ejido Land

Foreigners have heard stories about the Mexican Government repossessing property and question whether buying in Mexico is a safe investment. These incidents may be referring to foreigners who have purchased Ejido land ‘propiedad comunal.’

Foreigners have bought land from private citizens at a discounted price only to find out that they do not legally own the land. Ejido is property given to Mexican citizens for agricultural purposes, it is not private property and was not intended to be sold to foreigners.

A lawyer will establish whether or not the property you are interested in is Ejido land.  Purchasing Ejido property puts your investment in jeopardy since the communal commissary or the government may reclaim these properties at any time. This scenario took place in Puerto Vallarta where a developer sold condos on Ejido land.

Other examples of loss of property include foreigners unknowingly purchasing property which was encumbered or not legally owned by the seller. Similar situations took place in Tulum; properties were confiscated because they were not obtained through legal channels. It is critical to have a real estate lawyer representing you during a real estate transaction so you can be confident you will not lose your investment.

Guaranteed Title Deed

The notario does not provide a Guaranteed Title, choose a law firm that does.

One of the main issues foreigners have with purchasing property is obtaining the title deed for their property, they experience huge delays, misrepresentation, fraud and unforeseen claims on the property often prevent the buyer from receiving the title deed.

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Death is not a subject we enjoy discussing, however, you need to be prepared. Mexicans, as a culture, have a unique relationship with death. They celebrate and venerate their ancestors on los días de los muertos, which is celebrated from October 31 to November 2. As a prelude to the celebrations, every September in Mexico is considered Will month. Mexicans are encouraged to prepare a Will, and notaries and the government offer important rebates during this time.  Foreigners who own property or live in Mexico should take advantage of this opportunity as well.  If you have been putting off drafting your Will, you may be motivated by the fact that MexLaw is offering this service at a fraction of the cost during the months of September and October.

As a property owner in Mexico, if you die without a Will, the Mexican government will be responsible for liquidating your estate and distributing your assets. Foreigners living in Mexico are well advised to have a Mexican Will as there are no survivor rights in Mexico and property held in Trust may not be enough protection for you and your family. If you have a foreign Will, it must be processed in your country of origin, translated into Spanish, and verified by your local government before it is executory in Mexico, where it has to proceed before a judge and then a notary. It may take up to one year to resolve an estate with a foreign Will.  

Why you should contact MexLaw to have a Will prepared

• A foreign Will requires a professional translation and verification, and this may be an expensive process and time consuming for your heirs.
• A foreign Will could end up in probate before the Mexican courts and take years to process and complete transfer of title. Meanwhile, the probated property may not be sold.
• If there is no Will your surviving spouse might not inherit the estate. The court will distribute the property as they see fit and may include ex-spouses or in-laws.
• The idea of a Fideicomiso trust is to protect your heirs named as your substitute beneficiary. However, there are instances where the bank trustee failed to transfer the property.
• The Fideicomiso substitute beneficiary only includes the property and not possessions, bank accounts, insurance or business interests.
• Appoint a guardian for underage children.
• Ensure individuals in a common law union are recognized as the spouse.
• A Mexican Will guarantees you are in control of your estate, allowing you to establish how you want your property to be divided.
• Avoid complications and disputes amongst family members and avoid delay during transfer of assets.
• During September and October, have your Will prepared by MexLaw for only $250 USD. Regularly priced at $450.

MEXLAW is a trusted, international law firm with an English-speaking team of lawyers and tax accountants ready to advise you on Wills and estate planning in Mexico. Visit  mexlaw.ca/category/mexican-will/ to start the process.

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When a loved one dies while living in another country, it makes an emotional situation even more stressful. Documenting your wishes can save your friends or family a great deal of stress and aggravation.

Death is not a subject we enjoy discussing, but in the circle of life it is inevitable, you may as well be prepared. Here are some points to consider:

• Registering with Canadians Abroad (ROCA) at www.travel.gc.ca/traveling/registration. 
• Always update the emergency contact name and number or next of kin in your passport application form.
• Review your life insurance, review who you have listed as your benefactor and does the policy include funeral arrangements.
• Identify your funeral arrangements. State whether you wish to be buried in Mexico or back home? If your preference is cremation, what should be done with the ashes?
• Detail your funeral wishes in your Will. It should be noted that some funeral homes in Mexico provide pre-payment plans.
• Appoint a trustee in Mexico to deal with your estate through a power of attorney. Make sure your POA is drawn up by an attorney and notarized in Mexico.
• If you have a POA in Canada, it must be legalized by the Embassy of Mexico in Canada and professionally translated into Spanish in order to be legal in Mexico.
• File all documents including original birth and marriage certificates, life insurance, financial records, and Will together and advise your POA of its location.
• If the legal documents are from Canada, again they need to be translated into Spanish and legalized in the Mexican Embassy or Consulate in Canada.
• In order to collect the body of the deceased, the Mexican authorities require the deceased identification documents as well as the person representing the deceased. Be sure your family member or representative has proper identification.
• If you own property, a business or bank accounts in Mexico, it is important to have a Mexican Will. The Mexican government may decide how to deal with your estate if you do not have a Will. Your estate may not automatically be left to your spouse, especially if other family members claim your estate.  The Will is of particular importance if this is not your first marriage, for same sex marriage or you are in a common law relationship because the government may not consider them to be your legal next of kin.
• When opening a Mexican bank account, you will be asked to designate a benefactor, if your benefactor changes over the years be sure to update your information with the bank.

The funeral home in Mexico will provide the death certificate, but there is a fee for any extra copies. If the deceased will be returned to Canada, you will need to have the death certificate legalized and translated in Mexico before hand, always obtain extra copies of the death certificate. You will be required to deal with the funeral home in Mexico and Canada in order to return the deceased to Canada. The repatriation of the deceased will be arranged by a funeral director. It will also be necessary to engage the services of a Canadian funeral director to receive the deceased in Canada. These costs will vary depending on the airline, dates, weight and whether the remains are cremated or not.

For more information about power of attorney, estate planning and Mexican Wills send us an email contact@mexlaw.ca

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Is a Canadian or American Will valid in Mexico if it includes my Mexican real estate and valuables?

Although your foreign Will is valid in Mexico, the time and expense it takes to have it verified and processed will cause your family undue stress and expense.

The problem is getting these documents recognized, American documents need to be apostilled, and notarized in the U.S. and translated into Spanish by a court approved translator in Mexico. Canadian Wills do not need to be apostilled, but will need to be translated by a court approved translator and submitted to the Mexican consulate in Canada and then presented to a Notario in Mexico.

In a case where there is no Will, the property may not always be automatically left to the surviving spouse. Mexico does not have survivor rights, meaning the surviving spouse does not automatically inherit the property even if the couple owned it 50/50, without a Will, the government may decide the fate of the deceased share of the property.

If the couple has children, the court may divide the deceased spouse’s share equally amongst the surviving spouse and the children.

This may be a difficult situation in the future as the surviving spouse will require the children’s permission to sell or mortgage the property. The Will should read specifically that the surviving spouse inherits the other 50% of the property, in the event that parent also passes away the children will then become the beneficiaries.

Does the Fideicomiso Protect my Heirs?

The idea of a Fideicomiso trust is to protect your heirs by listing them in the contract as your Substitute Beneficiary, yet there have been instances where the bank trustee failed to issue a transfer of property to the benefactors, the heirs had to go to court to have the bank release the certificate.

Even if your property is held in trust, It is important to have a Mexican Will, to protect your heirs. And avoid any unnecessary red tape.

Last Will and Testament Considerations:

• Your Mexican Will must be in Spanish, use a trusted attorney to prepare the Will.

• Cross reference your Canadian or American Will with the Mexican Will.

• State specifically the surviving spouse or designated benefactor will be the sole beneficiary of the property if that is your wish.

• Include a simultaneous death clause.

• Include a “No Contest Clause.”

• Include a residuary clause, if you have foreign property and only a Mexican Will.

• Consider your executor/executrix, do they live in Mexico? understand Mexican estate laws, or speak Spanish? Preferably your executor is a professional with integrity; This will help expedite the transfer of property.

• Consider a Medical Directive in your estate planning.

• List a power of attorney should a medical situation arise.

Discuss your estate plan with a Mexican attorney, experienced in international tax and estate issues. A Mexican Will is an inexpensive way to have complete peace of mind.

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Assuming you have a Will prepared in Canada or the U.S., should you have a Will prepared in Mexico if you have property here? The short answer is an unqualified “Yes”. Here’s why.

Wills prepared outside of Mexico are valid in Mexico. It’s having them recognized that is a lengthy, complicated and expensive process. Getting a US or Canadian Will recognized in Mexico requires that it be translated into Spanish by an official court approved translator. It also requires that it be “Apostiled” in the country where it was prepared. This process can take several months and can cost several hundred dollars to complete. If certain issues arise, the Will may be required to be probated before the Mexican courts which adds years to the process of transfer of title. During this time property in Mexico may not be disposed of and management may be difficult.

Most foreigners who own property will do so through a Trust. If that is the case, beneficiaries are named in the Trust Deed, thereby eliminating the need of preparing a Will in Mexico for that property. However, it should be noted that only immediate family members (wife, children) can be beneficiaries of trust property. Furthermore, bank accounts and other property such as vehicles and jewelry are not included in the Trust Deed and therefore require a Will or the probate process to be transferred.

Having a Will prepared in Mexico is relatively easy and inexpensive and it is recommended to avoid delays and complications in the transfer of property. Here are some key points to remember:

• Make sure to cross-reference other Wills that you do not want revoked. Explicitly refer to them and declare that they remain valid. The reason is that Mexican Wills implicitly revoke previous Wills unless otherwise indicated;
• Mexican Wills must be in Spanish so unless your knowledge of that language is above average (considering the complexity of terms) make sure you have a trusted person help you understand and translate it for you before you sign. We recommend to our clients to have a lawyer draw up the terms of your Will in English and then translate it for the Notary;
• Although there are no estate taxes in Mexico, this may not be the case in Canada or the U.S. Consider using Trusts created for beneficiaries to avoid triggering taxation in your country of residence;
• Appoint at least one local Executor who is familiar with the laws and customs of Mexico. Preferably a professional with integrity. This will help expedite the transfer of property.
• Although Mexican Law allows for different types of Wills, prefer one prepared by a Notary Public as it is more readily recognized and requires fewer steps to have it officiated.

This article was published in the magazine Mexi-Go!

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