What’s the Plan Man?
We all have a “Plan” that distributes the property we own when we pass away. The difference is that some of us are familiar with our plan, others are not. Those with foresight have drafted estate planning documents, including a Will, that customize the plan to meet our needs and wishes. Those who have not bothered to see an attorney in this regard are provided a cookie cutter, one size fits all plan, by the individual states of the US and Mexico.
In this piece we will analyze the pros and cons of Wills and what you need to do if you own property in Mexico.
No Will? No Way!
A Will is a written document that is signed, witnessed, and which gives legal effect to the disposition of property upon death.
Wills are useful documents because:
- They establish how you want your property to be divided;
- If you have underage children, or are caring for an adult that has been declared incompetent, you can appoint a guardian;
- They lower probate costs by giving clear instructions as to the disposition of your assets;
- They can help avoid problems between family members; and,
- They are relatively inexpensive documents to prepare.
A very good reason to have a Will is to prevent the law and/or a judge from deciding matters that ultimately are private affairs. The law will impose a plan upon you, and your family, disposing of your property if you have not done so in a Will. This is as true in Mexico as it is in the US. Here are a some of examples of dispositions that could be forced on your family if you pass away without a Will:
In most jurisdictions in the US, if you pass away survived only by your spouse, and you do not have a Will, your spouse will be entitled to your entire estate. Conversely, in most states in Mexico, if you pass away without this document, survived only by your spouse, the decedent’s estate must be divided equally between the parents of the deceased and the surviving spouse!
Another example: in most Mexican states, if a person passes away without a Will, survived by a spouse and children, most laws require that the decedent’s estate be divided in equal portions between the children and the surviving spouse. However, if surviving spouse owns assets in his or her own right that are equal or exceed the portion of the children, the surviving spouse will inherit nothing. That’s right, the surviving spouse may get nada.
Obviously, the division of property becomes much more complicated if there are children from prior marriages, if the heirs do not agree to the disposition of property, etc. In short, if you do not plan ahead by drafting a Will, a difficult situation can become a nightmare.
I mentioned that the disposition of property upon death should be a private affair. Unfortunately, Wills in the US are subject to a court process known as probate. Probate stateside can be expensive and the proceedings are a matter of public record. Probate in the US can also be time consuming. Thus the true value of a Will, besides making sure that your wishes are taken into consideration, is to make the probate process in the US proceed more smoothly, saving time, money and hassles. Otherwise, if the estate has to be distributed by the courts, it may take as long as one year for assets to be distributed to your loved ones. More complex estates, involving real property and businesses, can be tied up in the courts for as long as two years. Additionally, assets are restricted in the court’s jurisdiction, not allowing the family access to checking accounts, to sell real property, or to liquidate assets. Attorney and court costs could deplete smaller estates.
In Mexico the probate process is generally carried out before an attorney, a Notario, and is always a private affair. However, in the event that the heirs are underage, or if there is a court challenge, the probate process must involve the courts. In this case, the Will would be made available only to the judge and the interested parties, not to the general public. Usually, the probate process in Mexico is quicker and much less expensive. Most estates are settled in 3 to 6 months.
The problems arise if you own property in Mexico and you do not have a Mexican Will. Ironically, in this situation it would be simpler if there was no US Will either. The reason for this is that if there were no foreign Will, Mexican property would simply be apportioned per Mexican state law (but you might have to share your home with your mother-in-law!). On the other hand, if there is a US Will, the process to get your Will accepted as valid in Mexico can be long and involve significant amount of attorney resources. That is, it can cost mucho dinero.
Is your US Will valid in Mexico? Yes. Mexican states accept foreign Wills as long as the country where the will was drafted would accept a Mexican Will as valid, and as long as the documents were drafted in accordance to the laws of the country in which the document was granted.
If you only had a US Will, the probate process in Mexico would be carried out per Mexican customs, but the US document would control.
Mirror, Mirror on the Wall… How Many Wills do I Need After All?
Do you, then, need more than one will? Technically speaking the answer is NO. The reason is that Wills in both countries usually contain language revoking previous Wills.
As a matter of practice however, it is often suggested by Mexican attorneys that two Wills be prepared, one from each country. These documents more often than not are identical in their distributive provisions. “I leave all my worldly goods to my wife Nancy”. Each document states that the US property will he handled in the US by a US executor and the Mexican property will be handled in Mexico by a Mexican executor. Furthermore, and this is what makes this strategy interesting, the most contemporary document, usually the Mexican Will, should not contain language revoking prior Wills.
Another possibility when owning Mexican property is to draft a Mexican Will that applies only and exclusively to property in Mexico, with no mention made of US property. Even so, provisions of the US and Mexican Wills would normally be coordinated to avoid any problems down the line. This document would not revoke prior Wills either.
Wills are a necessity in order to guarantee that your wishes will be respected. They are also relatively inexpensive to draft (approximately $700 USD in the US and $250 in Mexico). Having a properly drafted Will, or two, saves time, lowers expenses and helps avoid intra-family problems.
While a necessity, Wills often work best in conjunction with other estate planning tools such as trusts. Trusts, for example, do avoid probate. We will examine these in our next article.
Please note that our discussion here has been general in nature. Do not take any steps based on this article alone. Consult with an attorney before taking any action on Wills or estate planning.