In Mexico, there is no legal requirement to have a will which is why many Americans and Canadians waffle over creating one. However, just like it is north of the border, the main reason you should create a will is to protect a surviving spouse or heir. Mexican laws governing transfer of property is different than it is in the U.S. or Canada.
Although most states operate through the laws of succession, based upon the Civil Code of the Federal District (Mexico City), each state may have it’s own law of succession. Your Mexican attorney will know what law to follow when creating your will. Make sure you ask your attorney what the beneficiary law is in your state when the Fideicomiso is established so that you understand how the assets will be divided.
Properties Held in Trust (Fideicomiso)
In the Mexican constitution, Article 27, any property located within the “restricted zone”, the strip of land 50 miles wide along the coastlines and 100 miles wide along the borders, acquired by a foreign person, must be held in a Mexican bank trust (fideicomiso). Essentially, a fideicomiso is a contract with a Mexican bank for it to hold title on behalf of the foreign person. When a Fideicomiso is recorded, beneficiaries and substitute beneficiaries are (should be) designated within the trust contract and no will is required, nor is probate required for disposition of this property.
It is always a good idea to bring a trusted lawyer or Realtor during the creation of a trust to make sure beneficiaries are recorded as you are requesting. Although it doesn’t happen often, there are times when the bank leaves out a beneficiary request and the trust is recorded with no beneficiary. If this happens, it will cost money to create an amendment before your death, or, if you die without realizing no beneficiary was recorded, the property will go into probate and could be a costly and lengthy procedure for the intended benefactor.
While the property held in fideicomiso can be properly designated to the beneficiary, personal property such as automobiles, furniture, art work, and so forth are left unprotected if no Mexican Will is made. This is a very important reason for those living in the “restricted zone” to have a will, even if real properties are held in a Mexican bank trust.
Simple Deed Properties
If the property is located in the interior of the country, outside the “restricted zone”, more than likely the property is held outright in a deed fee simple.
In Mexico, there is no such thing as “Right of Survivorship” permitting the property to automatically transfer to the surviving spouse. If the property is intended to be left entirely to a surviving spouse, a will needs to be created. Without a will, what could happen, pursuant to the state’s civil code, is that the surviving spouse have to split the property equally with surviving children. This may not have been the creators intention.
Tips for Preparing a Mexican Will
In Mexico, each September is “Create a Will” month. Notaries will reduce their fee to record a will. Things you should consider before you go to the Notary:
- Consider hiring an international tax accountant to help you sort through international tax /estate laws in advance of creating your will. Make sure you discuss all of your properties and assets.
- If you have a U.S. or Canadian Will, Mexican Wills revoke any prior Wills, either explicitly or implicitly. If the Mexican Will does not mention the U.S. or Canadian Will, the Mexican Will revokes all prior Wills by operation of law. It is essential that revocation, or non-revocation, be specified in the Will. Coordinate the estate plan so that all Wills work to achieve your goals. A Mexican Will should cross-reference any US or Canadian Will, and vice versa.
- If your only Will is a Mexican one, and you own property in the US or Canada, consider including a residuary clause. While not applicable in Mexico, it may help avoid having US or Canadian asset distributed pursuant to intestate laws. In addition, taxes will be paid in the US from the residuary, unless specifically directed otherwise.
- Consider adding a “Simultaneous Death Clause” to your Will.
Costs for Preparing a Will
The cost for preparing a will is typically $500.00 U.S. or less. As we stated previously, the month of September is “Create a Will Month” and costs are reduced, but there will be recording costs.