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Wills and Inheritance Basics In South America are different to Western Countries

The basic order of wills and inheritance in Latin American Spanish Speaking Countries after someone dies is that of surviving spouse, children,  parents, grandparents, siblings, and then cousins. This also includes rights of spouses and children of the direct ascendant or descendant.

You are allowed to give a certain percentage of your estate in a will to whom ever you like, but for the most part you can not avoid giving these family members rights to a portion of your estate by just drafting a will.   There are certain exceptions such as in the case of murder of a family member by another, but they are rare exceptions. If you wish to transfer property to a specific family members, you will need to do it while you are still alive or through some intermediate structure such as a corporation. Even here, you must be careful as there are certain restrictions.

The right to testate ( make one´s will known ) and to whom the testator can leave their assets.

In Chile for example the granting of a will is very restricted and formal. There is no absolute freedom to dispose of ones assets as one wishes, because the law compels the testator to make some forced designations in favor of specific people. If the will does not comply with fulfilling these requirements under Chilean law, the will is considered void. Likewise, if no will exists, those forced heirs do not lose their right to inherit their mandatory portion of the estate.

Further, your will must meet Chilean laws regarding formalities for the creation of a will. It is considered a “formal” act, under Chilean law, and thus the creation of a will to be valid must meet very specific processes and procedures in relation to notaries, whom may qualify as a witness to the will, residency requirements, the language used, and the methods of declaration among other things.

In most cases, wills in Chile must follow formal declarations in front of a Public Notary, and must be drafted meeting very specific requirements to be valid, and the witnesses must meet very specific requirements regarding their residency ( municipal residency and national residency ). Also what natural language you use to declare your will is important. These become all the more complicated when foreigners are involved as the testator or as the witnesses.  You must make sure your friends or family members qualify to be a witnesses under Chilean law for the purposes of signing a will.

The mandatory heirs and payment of debts in Chile are proportioned along the following lines:

The first mandatory proportioning of the estate covers all debts related to alimony and child support that the deceased may have owed up to the time of their death. These must be deducted from the total assets of the estate before any distribution of other assets to other heirs. The remaining assets must be divided and apportioned to specific heirs according to the regulations established by Chilean Law.

Fifty percent of the assets must go to the rightful heirs also called “forced heirs” (spouse, direct descendants, or ascendants). Twenty five percent of the assets are called the “quarter of improvement” and it may be given to any of the forced heirs at the discretion of the tester. The last twenty-five percent is called “quarter of free disposition” and may be given to anyone the testator wishes.

People eligible as heirs and forced heirs in Chile:

The assets and debts of the deceased are passed on according to the following order of succession:

First Order heirs: The direct descendants and surviving spouse. In the case where these descendants are also deceased, the rightful heirs are their direct descendants. In other word the testators grandchildren.

Second Order heirs: If there are no direct descendants, the rightful heirs are the parents or the closest related ascendants and the surviving spouse. In the case where the father, mother and surviving spouse are deceased, the rightful heirs would be the testators living grandparent. In the case that they are not alive, then it becomes the testator´s living great grandparents.

Third Order heirs:
 If any of the above are deceased, the rightful heirs are the testator´s brothers and sisters, either from the same mother and father or as half-siblings. In the case where they are deceased, the rightful heirs would be the brother´s or sister´s children. In other words, the testator´s nieces and nephews.

Fourth Order heirs: If any of the above are deceased or do no exist, the rightful heirs would correspond to the closest blood relative descended from the same origin without being a direct ascendant or descendant of the testator. This would be uncles and aunts, and if they are deceased, the cousins.

This article is only intended to give you the most basic appreciation of the complex nature of estate planning.  We strongly urge you to seek the competent legal assistance of a qualified attorney in relation to the inheritance laws and wills in your own country. We also urge you to find an attorney able to deal with the unique issues that affect foreigners specifically in regards to estate planning in and effects it may have on your estate planning outside of Latin America.  With time and planning there are ways to ensure that much of your estate goes to the people you wish after you pass away. Again, time and careful planning are essential to protect your assets.

The idea of using foreign based Family Trusts in Latin America to protect family assets has been  seldom used in the past except by the more affluent international investor. However this is slowly changing as asset values build up and multiple divorce and business risks are required to be ring fenced.

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