10 Apr Chilean Attorneys Lawyers Succession Probate Estate International Inheritance
Succession in Chile
When a person dies leaving assets and property in Chile (i.e.: real property, vehicles, a savings account, works of art, etc.), its heirs must obtain the Inherent Possession of the Inheritance to legally dispose of the mentioned assets. This process should begin as soon as possible, in order to avoid misplacing these assets or losing their value.[contact-form-7 404 "Not Found"]
Legal Framework in Chile
If you are settling the estate of a deceased person who has not left a will, you probably have more than a few questions about how the estate will be distributed.
First, there are many kinds of assets a last will cannot include. For instance, life insurance proceeds, or bank accounts. Also, other assets held in joint tenancy, tenancy by the entirety, or community property with right of survivorship.
To find out who inherits these types of property, you’ll need to locate the documents in which the co-ownership or beneficiary designation was established.
To find out who inherits other assets – generally, solely owned property for which there are no formal beneficiaries, such as with a property – you will need to consult with a duly licensed lawyer.
Who is in charge of filing for Probate?
If a probate court proceeding is necessary, the court will choose someone he trusts to administer the probate. This can usually happen in the hands of a surviving spouse or a registered domestic partner; if in doubt, the first person will be named/selected. Adult children are usually next on the list to administer the probate, followed by other family members.
Who Gets What: The Basic Rules of Intestate Succession
Generally, only spouses, registered domestic partners, and blood relatives inherit under intestate succession laws will inherit a property in Chile; unmarried partners, friends, and charities get nothing unless they have a testament.
If the deceased person was married, the surviving spouse usually gets the largest share. If there are no children, the surviving spouse often receives all the property.
More distant relatives inherit only if there is no surviving spouse and if there are no children. In the rare event that no relatives appear before a court, the Government takes the assets.
Understanding Key Terms in Intestate Succession
To qualify as a surviving spouse, the survivor must have been legally married to the deceased person at the time of death.
- Legal separation or pending divorce: If the couple had separated before one spouse died, or if one person had begun divorce proceedings, a judge may have to rule on whether the surviving member of the couple is a surviving spouse.
- Same-sex marriage: There is considerable confusion over whether courts will recognize a same-sex partner as a surviving spouse. In Chile, they should not have a problem.
Children (Next of Kin)
The simple term “children” can mean different things to different people — and under different laws. Here are a few examples:
- Adopted Children: In the absence of a will or other estate plan, legally adopted children inherit from their adoptive parents just as biological children do.
- Stepchildren: This definition of children is not applicable for purposes of inheritance.
- Foster Children: Foster children do not normally inherit as “children” of the foster parents.
- Children born after the parent’s death: A child conceived before a parent’s death but born after the death (sometimes referred to as a “posthumous” child) inherits under intestate succession laws just as do children born during their parent’s life.
- Children born outside marriage: A child born to unmarried parents always inherits from his or her birth mother, unless an unrelated family adopts the child. If the parents were never married, usually the child must show some type of proof to inherit from the father.
Rights of a Deceased Heir’s Descendants
Intestacy laws often provide that if one of a group of heirs has died, his or her children inherit their parent’s shares. In other words, they take the place of the parent. Per this concept (called the “right of representation”), children (or, in some cases, grandchildren) stand in the place of their deceased parents when it comes to inheritance. Figuring out exactly who should inherit can be complicated depending on Chile’s law of the land.
Taking Care of Minor Children
Parents who have young children and who make a will typically name someone to serve as the personal guardian of their children.
But if a guardian is needed and there is no will, how does a judge know whom to appoint? In that situation, the court will appoint a guardian.
The judge will gather as much information as possible about the children, their family circumstances, and the deceased parents’ wishes and try to make a good decision. The primary rule is that the judge must always act in the best interest of the children.
Wills in Chile
In Chile, if a citizen issues a valid will in a foreign country, several officers are able to execute it. For example, a minister plenipotentiary, a chargé d´affaires -or a consulate member-, and two local witnesses.
An open will must always be rubricated by the head of legation, at the beginning and end of each page, or by the consul if there is no legation. If there be neither consulate, nor legation of his country, these formalities must be fulfilled by the minister or consul of a friendly nation.
The head of legation or the consul must forward a copy of the open will, or of the inscription on the wrapper of the sealed one, to the minister, after authenticating the signature of the head of legation or consul, must transmit it to the judge of the last domicile of the deceased, in order that the judge may cause it to be incorporated in the protocols of the notary public of the same domicile.
When the domicile of the testator in the country is unknown, the minister of foreign relations must forward the will to the judge of first instance of the capital for the incorporation of the protocol of said notary as the judge may determine.
In Chile, the will of a person who is outside of the respective country produces an effect within it only if made with the formalities prescribed by the law of the place in which he resides, or per those observed in the nation to which belongs, or per those which the national law prescribes.
The Chilean code provides in the matter of inheritances that foreigners are called to the legal successions in Chile, in the same manner, and according to the same rules as the citizens of those countries.
In the legal succession of a foreigner who dies within or without the territory of those republics, citizens must have as a hereditary or conjugal portion or as alimony the same rights which belong to them according to the Chilean law upon the legal succession of a Chilean.
Citizens interested in a succession of that kind may ask for the application of property belonging to the deceased, within the territory of the country, up to the amount that may belong to them in the succession of the foreigner.
The same rule is applied when the case may give to the succession of a citizen of those countries who leaves an estate in a foreign country.
If the deceased does not have a will, 100% of the inheritance is divided as provided by law, as follows:
- When the deceased is survived by a spouse and children, the general principle is that the spouse gets twice as much as the children, i.e., if there are 3 children, the spouse receives 40%, and each child gets 20% of the estate. However, there are 2 caveats:
- If one child and a spouse are involved, each gets half of the estate; and
- The minimum part of the inheritance a surviving spouse is entitled to is 25% of the estate, no matter how many children are involved. This rule would apply if there are more than 6 children and 1 surviving spouse.
- If there are children but no surviving spouse, then the inheritance is divided equally among the children.
- When the deceased is survived by a spouse and his/her parents (this also applies to grandparents and great grandparents, however unlikely this might sound), but no children, the spouse is entitled to 2/3 of the inheritance, and the parents receive 1/3.
- If only the spouse is alive, and no children or parents survive, he/she is entitled to 100% of the inheritance; the same is true when the deceased’s parents are alive, but there are no living children or spouse.
- If at the moment of the person’s death, there are no surviving spouses, children, or parents, then the estate passes to the siblings of the deceased. The inheritance is generally split in equal portions, unless the decedent had half-brothers or half-sisters, in which case they receive half of the inheritance that the full siblings receive.
- In the case that no spouse, children, parents, or siblings exist at the time the decedent passes away, then the inheritance can go to other relatives (uncles, cousins, up to the 6th collateral degree) of the decedent.
- In absence of all of the above, the Chilean state receives the entirety of the estate.
If the deceased has a will, then 50% of the inheritance is split up according to the rules set forth above—which cannot be changed by the will—and the remaining half is split into quarters
One quarter is called “de mejoras” and can be freely assigned to the person’s spouse, children or parents (any of them can receive the full quarter if the will stipulates it);
Another quarter is called “de libre disposición” and can be assigned to whoever is deemed fit, regardless of whether or not that person is a relative.
Issuing a will in Chile is a highly formal procedure that requires the presence of a Notary Public who reads the will out loud in the presence of the grantor. Wills issued abroad can be recognized as long as they have been issued in accordance with the laws of the place of issuance.
An inheritance may include several items.
The discomfort of family conflicts around inherited housing may end up causing the sale of the same. The rush to get rid of the property and solve the problems can turn the floor into a (cheap) object of desire for the potential buyer. Therefore, it is in this market where you can find big real estate sales.
They include all furniture, curtains, drapes, carpets, linen, china, glassware, ornaments, domestic appliances and utensils, garden appliances, utensils and effects and other chattels of ordinary household use or decoration, liquors, wines, consumable stores and domestic animals owned by the intestate immediately before the intestate’s death.
Household chattels do not include items such as a motor vehicle, boat, aircraft, racing animal, an original painting or other original work of art, trophy, clothing, jewelry, or other chattels of a personal nature.
It is a contract through which a company assumes the risk and commits to paying an agreed-upon indemnification, in case of death which may affect the insured person. The “prima” is the price of the insurance the contractor pays. It protects your beloved ones, maintaining or improving the current level of life, before your absence. Therefore, the company guarantees the capital. The beneficiaries of the insurance receive it before the concurrency of losses of the contract. These could be natural death or accidental death. Life insurance does not pay the value-added tax (VAT).
In business, unexpected events can dramatically change the fortunes of a company. A wise business owner looks ahead and develops contingency plans to minimize the risks associated with unforeseen occurrences. Succession planning is one way to help you and your company prepare for sudden, major change.
If you are part of the younger generation, think carefully before entering the family business. Ask yourself the following questions: Why am I joining the business? Is it to please my parents, or will it provide me with the career I want? Will I have the freedom to make a real contribution and reach my own potential? What can I bring to the business?
- Have a personal development plan.
- Find and use a suitable mentor or coach.
- Identify opportunities for skills development, e.g. turn-around situations, start-up situations, handling employee performance problems.
- Gain experience outside the business.
- Develop your profile independent of the owner’s, e.g. by joining industry associations and attending relevant seminars.
- Ensure regular communication with the owner.
Most airlines and credit card companies would like you to think that you cannot inherit airline miles.
But that’s not necessarily the case. While it is true that most airlines technically “own,” the frequent flyer miles from your loved one, there’s no reason for you not to be assertive to ask about transferring the miles to your account. After all, your loved one earned these assets by regularly using the airline’s services, or by outright purchasing those miles.
Before you make your first call, have copies of the death certificate, the deceased’s loyalty program account numbers, address and email details ready. Be sure you have your own account, into which the awards can be transferred.
The new owner must register the aircraft in the Dirección General de Aeronáutica Civil (Chile) (National Administration of Civil Aviation) and give a Bill of Sale and a certified copy of the Letters Testamentary or Letters of Administration to the DGAC.
The court appoints the administrator to manage an estate when there isn’t a will, is responsible for dividing the deceased’s personal belongings, including his/her jewelry.
According to Will
If the will left specific instructions for pieces of jewelry, the administrator must follow those instructions first. For example, a deceased grandmother left her wedding ring to her granddaughter in the will. The administrator is responsible for getting a signed release from the granddaughter. She states that she got the ring and fills the release with the probate court handling the grandmother’s estate. An administrator only divides jewelry not specifically left to a person in the will.
Dividing by Value
If the will left all the deceased’s personal possessions to siblings without giving instructions for specific items, the administrator must divide the jewelry among siblings equally.
The administrator should have all jewelry appraised by a professional jeweler or appraisal service. That value is used to give each sibling an amount of jewelry equal to their her share.
For example, if a mother left two rings and one necklace for her son and daughter. The appraiser determines the rings are worth $100 each and the necklace is worth $200. The administrator can give the rings to the daughter, and the necklace to the son.
This way, both children receive $200 worth of jewelry. An administrator, like an executor who doesn’t have jewelry division instructions, divides jewelry among the heirs by appraised value.
Dividing by Request
Dividing jewelry is often more difficult if the siblings want specific pieces for sentimental reasons. The executor should hire an appraiser since each beneficiary has a right to an equal share. In case of disagreement, the administrator has to make up the difference in value to that sibling.
Ultimately, the administrator distributes the estate and decides who gets what if the siblings can’t agree. He has the authority to divide the jewelry as he sees fit. But, each sibling should get their fair share.
An administrator may have to sell items when family members can’t reach an agreement. For example, after selling the item, the siblings divide the proceeds among themselves. An administrator shouldn’t remove jewelry from its location or allow any other parties to remove jewelry.
If an executor must move jewelry for safekeeping reasons, he should inform the family members in advance. The executor should check the deceased’s papers to confirm she didn’t leave specific instructions. She may have left a list regarding the division. If that list is not part the will, the executor may settle this matter.
Like every other valuable asset a collector owns, art, antiques, and collectibles. However, art and collectibles comprise a special asset class. There may be issues of title, valuation, provenance, and restoration that affect the collection.
Virtually every collector would like to maintain or increase the value of his or her collection. Most would agree that the collection needs protection from loss, damage, the claims of creditors, and unnecessary taxation. Beyond these basic priorities, collectors may utilize their art and collectibles to achieve a number of goals.
Important Aspects regarding Inheritance Tax and Law
INHERITANCE TAX (Impuesto a las Herencias, Asignaciones y Donaciones)
By law, Inheritance, gifts and donations taxes are payable by the heirs and beneficiaries. The tax rates vary according to the degree of relationship and the value of the inheritance.
Heirs and beneficiaries are classified into the following categories:
- First Category: spouse, direct descendants, direct ascendants, adoptive descendants, adoptive ascendants
- Second Category: siblings, nephews and nieces, aunts and uncles, first cousins
- Third Category: any other person
The tax base is the net value of each heir’s inheritance. Annual Taxable Units (ATU) are the basis for valuation. Taxable Units adjust every month according to the variation of the cost-of-living index.
The ATU for tax year 2015 is CLP539,460 (US$760). The ATU for tax year 2014 is CLP518,376 (US$730).
In general, a married couple works together to earn their money over the course of their lifetime together. Why should the surviving spouse lose any when they become widowed?
This question has several answers.
Answer # 1
A lawyer would reply that you are mostly (and not completely) incorrect if the couple is married under Chile’s communal goods [joint property] or “sociedad conyugal” status.
The law in Chile requires them to specify which of three options they prefer with respect to their property.
- Sociedad Conyugal (joint property)
- Separación de Bienes (what’s yours is yours and what’s mine is mine)
- Participación de los gananciales (something of a combination of both)
So, if in a “sociedad conyugal” one spouse passes away, the communal goods are split in half. Then, the other heirs inherit the rest of the estate.
Suppose a spouse passes away and has assets of a net worth of $100. The communal goods are split before the inheritance, and the spouse receives $50 on this account. The remaining $50 is split according to the rules set forth above.
So, if the couple has 3 children, out of $100, the spouse would receive $50 for the communal goods and $20 (twice the children’s share, which in this case is 40%) for the inheritance, while the children should receive $10 each. Therefore, in this case, the spouse would still own $70, which is not that awful.
Under any other system, the spouse would only receive $40 of the original $100.
Answer # 2
A frequent tax recommendation is to bequeath as much wealth to your children as possible. There would be double taxation if the same estate passes on to the spouse and then the children.
An estate tax is progressive, with a maximum rate of 25%. There is double taxation if the surviving spouse receives a significant amount of the estate when the spouse passes that on to the children. The government receives a substantial amount of the family’s estate.
Answer # 3
These legal provisions have a historical explanation. In Chile, the system called “mayorazgo.” There, the eldest male descendant inherited 100% of the estate, ran all of the family’s business, and provided for the family (including the widow). This, of course, caused the surviving spouse to become dependent upon the benevolence of their eldest son.
There are also more profound cultural reasons behind our current inheritance system. The message to Congress for the approval of the new Civil Code, back in 1855, spoke of “providing for those to whom you have given life or those who have given life to you.” This may respond to a very deep notion that wealth should remain within the family, despite the owner’s intentions.
The involved parties are best able to determine who in the family is deserves an inheritance.
What happens in Chile in the case of an older woman with no income of her own who becomes widowed? Can she keep the money that she and her husband earned and saved over the course of their marriage?
That would depend on the amount and type of heirs and whether or not her husband left a will. The case of the lady who was forced to sell her home is not uncommon.
Suppose the husband only left a house, no will, and there are 3 children. Each child would be entitled to 20% of the house, and the widow would get 40%. Chilean law states that any heir can request the partition of the estate. This means that the house would have to be sold. Then, each of the heirs receives the corresponding proceeds.
There is some recourse; the surviving spouse has a preference for the reception of the family home. Also, if the spouse’s quota is less than the value of the home, he/she can request a lifelong right to use.
Where does life insurance come into this equation? Is it part of the estate and, therefore, factored into the inheritance amount?
No, life insurance is not part of the estate, as the decedent never owned the indemnity. The insurance company pays the spouse or children upon his/her death. Life insurance payments are not subject to income tax either.
What are Chile’s laws about financial gifts during life?
Clawback laws exist in Chile when financial gifts infringe the minimum statutory portions of the inheritance. In other words, when the donor has given a larger part of his/her estate, i.e. larger than the family ¼ “de mejoras” and the free disposition ¼ “de libre disposición.”
For example, if a decedent gave 80% of his/her assets to one of 4 children (plus a surviving spouse), then the other heirs may request the annulment of these donations. Remember, the maximum amount a decedent can freely bequeath is up to 50% of the inheritance.
What happens to any assets the couple has in another country, where the inheritance laws are different? Can I protect those assets?
There are several factors to take into account:
- Where the decedent lived (i.e. with the intention to reside permanently) at the time of death.
- The nationality of the decedent. The relatives of Chilean nationals who pass away abroad have a legal right to it.
- If there is a valid will.
- When a foreigner does not pass in Chile, and without a will, the Chilean relatives would have the same rights.
- If there are any Chilean relatives.
- Where the assets are located.
The interaction between the laws of both countries is very important. The same situations can have very different effects depending on what other country is involved.
What law applies to a foreign married couple, with permanent residency in Chile, but without relatives in Chile?
In that case, Chilean law would control their estate. Of course, it is possible that their country of citizenship could claim control of the estate.