| | |  Puerto Vallarta Real Estate | December 2008 
If You Own Property in Mexico, You Need Both a Mexican Will and Beneficiary Notice
 Peter R. J. Thompson - Baja Times
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In this lull between real estate booms (think positive!), if you already own Mexican property, it’s a good time to take a breather, sit back, and make sure all your Mexican legal documents are in order. Specifically, are your loved ones and other heirs protected in case something should happen to you?
You may not realize it, but even if you made a Will in the U.S., it does not necessarily protect your Mexican assets. Why? Because a probate court in the U.S. has no jurisdiction to affect or change the title to property located outside the U.S. borders. Even if you have made a Living Trust (which is intended to avoid probate)—that also has no effect on your Mexican property. Although it is theoretically possible to take either a U.S. probate court order or a U.S. Will into a Mexican court for enforcement, that procedure is incredibly complicated, time-consuming and expensive. That’s why it is much better to simply make a Mexican Will for your Mexican property.
The only 2 ways you can pass your Mexican property on to your chosen heirs when you die are 1) Mexican Will and 2) Designation of Substitute Beneficiary. Let’s talk about those 2 documents.
MEXICAN WILL. Anyone, whether or not they are a Mexican citizen, can make a legally binding Will in Mexico. It’s called a “Testamento”.
Although a Private Will (typed but not notarized) and a Holographic Will (handwritten) are legal ways to make a Testamento, they may be difficult to validate and enforce in court. For that reason, I always recommend that the Testamento be made and registered by a Mexican notario publico. Mexican courts presume that a notarial Testamento is valid without the need to call the witnesses to court to validate the Will. That’s the great advantage of a notarial Will over private and holographic wills. Of course, in an emergency, you may not have the time or chance to make a notarial will, so in that case a private or holographic Will would be better than nothing.
A Mexican Will should be strictly limited to the assets you own in Mexico. It can govern your bank trust rights in property, bank accounts and any other Mexican assets you may have.
To be valid, a Testamento made before a Mexican notario publico must use 2 bilingual translators (unless you are fluent in Spanish) and also 2 witnesses who must be Mexican citizens.
After making your Testamento, the notary will notify the State Notarial Archives of the fact that a Will has been made, and then issue you Certified Copy of the Will. The original Will and all supporting documents remain in the notary’s protocol book, so that other certified copies can be obtained if necessary.
DESIGNATION OF SUBSTITUTE BENEFICIARY. If you have a bank trust for Mexican property, you also have the right to designate who you want to inherit your trust rights. This is a completely separate procedure from the Testamento. You can designate just one person, or any number of people in whatever percentages you want. In bank trust parlance, these beneficiaries are called the “Substitute” beneficiaries.
There are 3 ways to designate your substitute beneficiaries, depending on where you are in the title process.
• If you are making a new 50 year bank trust for Mexican property, you need to make sure that the bank’s application for your trust permit includes the naming of your substitutes. The spelling of names and proper percentages have to be absolutely correct, because we cannot later correct errors in the trust permit. You also need to make sure that the bank’s instruction letter to the notario includes a request to include the substitutes in the new trust. Lastly, you need to make sure that the notario actually and correctly includes your designation of substitutes in the trust document.
• If you are buying property that already is in a bank trust and you have decided to take over that existing bank trust (called an “assignment of trust rights”), you can instruct the notario who is making your title to include the designation of substitutes in your title.
• Even after your title has been made, you can name substitutes through a Notarized and Apostilled Spanish language Notification to the Trustee Bank of Designation of Substitute Beneficiary(ies).
What happens when you die with a proper Designation of Substitute Beneficiary(ies)? In theory, your heir(s) need only present the trustee bank with an original death certificate, and the bank should (and usually does) issue to the “substitute(s)” a certificate of substitute beneficial trust rights, without the necessity of going through a probate proceeding. I say “in theory” because I have seen instances where the trustee bank either failed or refused to issue a certificate of substitute beneficial trust rights, and so the heirs had to go to a Mexican probate court for a judgment which ordered the bank to issue the certificate to the substitutes.
If Designations of Substitute Beneficiary(ies) were always recognized by the Mexican banks, there would be no need to also make a Mexican Will, but since that is not the case, I strongly recommend that everyone who owns bank trust property make both a Mexican Will and a Designation of Substitute Beneficiary(ies). That way, you are covered either way.
Finally, if you do make a Mexican Will and a Designation of Substitute Beneficiary(ies) for a particular property, it is crucial that both documents name the same heirs in the same percentages, with the spelling of names identical in both documents. Otherwise, the contradiction could lead to a probate contest and/or the bank refusing to give title to your chosen heirs.
I have assisted hundreds of clients over the past 29 years in making Mexican Wills and Designations of Substitute Beneficiary(ies), and I remain ready to assist you.
Mr. Thompson is a San Diego attorney who specializes in Mexican law and Mexican real estate. He has handled over 3,000 Mexican transactions over the past 29 years of practice. He can be contacted at (619) 962-7344. You are invited to visit his website at www.PeterRJThompson.com |
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