Inheritance and probate in Mexico: what happens to a foreign owner's home.

Which law decides who inherits a foreigner's Mexican property?

Rights over property are governed by the law of the place where it is, even when the owners are foreigners (Federal Civil Code article 13). Succession itself is a matter for each state's civil code; the federal code is the model most follow.

Under the federal code, a will made abroad takes effect in Mexico if it follows the law of the country where it was made (article 1593, written for the Federal District). Before the succession can go to a notary, a court must declare a will made abroad formally valid; only a will made before a Mexican consul is exempt, and foreign documents must be apostilled. That rule is in the National Code of Civil and Family Procedure (articles 805 and 1144), which comes into force state by state, by 1 April 2027 at the latest. Check the code of the state where the property is.

Is there forced heirship in Mexico?

No. The testator can dispose of all of their property, but must leave maintenance (alimentos) to minor or incapacitated children, a dependent spouse, and other dependants the code names; otherwise the will is cut back to provide it.

That makes Mexico one of the freest places to leave property to whoever you choose.

Is there inheritance tax in Mexico?

There is no federal inheritance tax, and inheritances received by a Mexican-resident individual are exempt from income tax (Income Tax Law article 93-XXII). For a non-resident heir, the law taxes free acquisitions of Mexican property at 25% of an appraisal (article 160), and its exception names gifts between spouses and from parents to children, not inheritance.

How notaries apply that to a non-resident's inheritance is something to confirm with the notary before the estate is settled; we have not found an official ruling. Local acquisition tax also applies. In Cancun (Benito Juarez) it is a municipal tax of 3% on an acquisition by succession, due within 15 days of the adjudication, on the highest of the price, the cadastral value, an appraisal and the last declared value. Yearly taxes as owner: Mexico property tax for foreigners.

What happens to a fideicomiso when the owner dies?

In the restricted zone (100 km from the borders, 50 km from the coasts) a foreigner holds property through a bank trust (fideicomiso) with a Foreign Ministry permit, for up to 50 years, renewable. The trust deed is where the beneficiaries' successors are dealt with.

Read the substitute-beneficiary clause in your trust deed with the bank. The bank reports a substitute beneficiary to the Foreign Ministry (form SRE-02-007), and a substitute must be alive, or conceived, when the settlor dies (General Law of Credit Instruments, article 394). In Cancun, a change of beneficiary for any reason is itself taxed by the 3% acquisition tax: the trust avoids court probate, not the tax. Everything on the trust: the fideicomiso explained.

Header photo: Lazjak, CC BY-SA 4.0, via Wikimedia Commons. All credits: image credits.