As a foreigner residing in Portugal, it is advisable to look at succession implications, either if you already have a will or not, as the outcome may not be what you would expect.

What is the succession applicable law of an expat in Portugal?

Portugal (just like other European Union countries) has a general rule: should a person pass away while maintaining habitual residence in Portugal, succession of such a person shall be regulated by Portuguese law.

However, a person is allowed to choose differently: despite being a habitual resident in Portugal, someone who has a different nationality (other than Portuguese) may choose that the rules for regulating his/her succession shall be the ones of the nationality country. If such individual has more than one nationality, any of them is eligible for regulating such succession.

Does it matter if Portuguese succession law applies to my case?

It depends largely on the comparison with the legal succession of the legal framework of your nationality(ies). Portuguese succession law is strict and very protective of close family members: depending on whether this is compatible with your interests or that you desire more freedom and flexibility for your personal estate planning in case of death, the results are drastically different.

In fact, Portuguese succession framework, establishes that a part of the inheritance must be reserved to the forced legal heirs (so-called “reserved portion”), which are the spouse, descendants and the ascendants, mandatorily entitled to the reserved portion of the inheritance, according with the following scenarios:

1. Spouse as sole survivor: 1/2;
2. Spouse and children as survivors: 2/3;
3. Children as survivors: 1/2 or 2/3 (depending whether it is only one child or more);
4. Grandchildren as sole survivors: mandatorily entitled to the forced portion that would have belonged to their parent;
5. Spouse and parents as survivors: 2/3;
6. Parents as sole survivors: 1/2.

It is important to note that the reserved portion cannot be affected or reduced by any legal means. In fact, where forced heirship rights have not been complied with, a claim for reduction may be made by an heir (clawback mechanism) to consider any assets of the estate and even lifetime donations made by the deceased.

Common examples of advantage in choosing foreign national law for application to succession

As long as the expat succession national law provides more flexibility in terms of death disposition (which needs to be evaluated on a case-by-case approach), there may be some clear situations where it might make sense to opt-out of the Portuguese framework to have a valid death disposition.

These are not recommendations of death dispositions (the testator is sovereign in its choices), but common wishes of testators, that are restricted or forbidden by Portuguese law:

1. I want my spouse to receive entirely my assets and only after we both pass away shall the assets pass to the children;
2. I do not want my spouse to receive any assets from my inheritance (namely because the spouse already has significant own assets) and I want all of the assets to go to my children;
3. One of my children requires significantly more financial stability than the other and I think it is fair that he/she receives half of the inheritance;
4. I want to give more than half of my estate to a Charity, and the rest can go to my spouse and/or children.

It should be considered that where the foreign law will creates an obligation repugnant or pernicious to local public policy/moral order in Portugal, a Portuguese court (which will have jurisdiction upon the death of the testator that had its habitual residence in Portugal) in its discretion may choose to reject such disposition despite the will refers validly to substantive foreign law (that would allow such death disposition).

Portuguese court have already pronounced whether foreign wills, referring to foreign substantive law, that exclude direct descendants are accepted or not, usually considering in its decisions close connection / nexus between the specific situation of the testator (and family) and the Portuguese jurisdiction and community.

Conditions for choosing national law over Portuguese law as being applicable to the succession

In order for such a choice of nationality to be valid for the respective application of such succession law, some key requirements should be met:

1. Such choice should be expressly declared in the form of a death disposition, in principle a will;
2. Substantive validity of the will shall be governed by the chosen law of nationality, which will should consider the following aspects:
   1. the capacity of the person making the disposition;
   2. the particular causes which bar the person making the disposition from disposing in favor of certain persons;
   3. the admissibility of representation for the purposes of making a disposition of property upon death;
   4. the interpretation of the disposition;
   5. fraud, duress, mistake and any other questions relating to the consent or intention of the person making the disposition.
3. In terms of form, a disposition of property upon death made in writing shall be valid if its form complies with the law:
   1. of the State in which the disposition was made or the agreement as to succession concluded; or
   2. of a State whose nationality the testator or at least one of the persons whose succession is concerned by an agreement as to succession possessed, either at the time when the disposition was made, or the agreement concluded, or at the time of death; or
   3. of a State in which the testator or at least one of the persons whose succession is concerned by an agreement as to succession had his domicile, either at the time when the disposition was made, or the agreement concluded, or at the time of death; or
   4. of the State in which the testator or at least one of the persons whose succession is concerned by an agreement as to succession had his habitual residence, either at the time when the disposition was made, or the agreement concluded, or at the time of death; or
   5. in so far as immovable property is concerned, of the State in which that property is located.

As an expat about to reside or residing in Portugal, if I want to avoid Portuguese succession law application to my case, and apply my national law, what should I do?

Before or upon moving to Portugal, it is advisable to evaluate your family situation together with your intentions for your estate distribution upon death, and to perform a comparison between the potential applicable frameworks to succession. This will provide awareness and the necessary information to take the decisions that may suit best your interests, including the creation or amendment of a will which complies with the requirements and expressly attends to the choice of law of nationality.

Miguel is managing partner and head of tax and private clients at law firm Correia Afonso, Archer & Associados (Portugal). He has been advising domestic and international clients in estate and investment restructuring, property and securities sale and purchase advisory, together with tax and succession planning.
https://caa.pt/en/miguel-archer/