Typically, Portuguese law will govern the inheritance process when an individual has established permanent residency in Portugal at the time of decease. Portuguese inheritance law is significantly influenced by the notion of "forced heirship," which requires that a portion of the estate be allocated to certain statutory heirs, predominantly descendants and spouses. Consequently, irrespective of the deceased’s expressed wishes in a will, specific heirs may possess a legal entitlement to a predetermined share of the estate.

However, under European Union Regulation n.º 650/2012, foreign nationals have the option to elect the law of their nationality to govern their succession affairs. For instance, a British national residing in Portugal may opt for UK law. This choice must be explicitly articulated in a legally valid will. In the absence of such a declaration, Portuguese law will apply by default, which could lead to outcomes inconsistent with the individual’s intentions. For individuals accustomed to the testamentary freedom prevalent in their home jurisdictions, this misalignment may yield unintended consequences.

The decision-making process extends beyond merely selecting a governing jurisdiction. Differences in tax implications, the recognition of wills across various jurisdictions, and potential conflicts with Portuguese public policy contribute to the complexity of the estate planning process. For example, British nationals may encounter challenges stemming from the distinctions between common law and Portuguese civil law.

In fact, the UK's probate process functions independently across England and Wales, Scotland, and Northern Ireland. Nevertheless, it is typically expected that a will drafted in Portugal is recognized during the probate process, provided it has been executed properly. Conversely, a will prepared in the UK that selects national law as applicable, rather than the jurisdiction of residence at the time of death, should be deemed valid as long as the requisite legal procedures are observed.

Expatriates holding assets in multiple jurisdictions must ensure their wills are harmonized to prevent legal conflicts or probate delays. Disparities between legal systems may pose challenges for heirs, even when intentions are firmly established. However, there is a fact that is also worth mentioning: the tax framework in Portugal for IHT is quite straightforward and, in general, exempts spouses and direct descendants from taxation. With the changes brought by the Autumn UK Budget, the impacts in the UK can be quite different, forcing one to be caution with this matter.

These considerations underscore the necessity of thorough estate planning. Regularly reviewing one’s will and comprehending the legal frameworks in both Portugal and their country of origin can effectively safeguard the estate and ensure that the deceased’s wishes are honoured.

Filipe Cerqueira Alves, Head of Legal at Forvis Mazars in Portugal (fcalves@mazars.pt)

Mário Patrício, Tax Senior Manager at Forvis Mazars in Portugal (mpatricio@mazars.pt)

Thank you to Chris Lawrence, Trusts and Estates Director at Forvis Mazars in the UK, for comments.