If you are a foreigner and own property in Mexico, your real estate is governed by Mexican law. We explain the will, the difference between testate and intestate succession, and how a bank trust makes inheritance easier.
If you are a foreigner and own a house, an apartment, or a plot of land in Mexico, an essential question is what will happen to that property when you pass away. The short answer: real estate located in Mexico is governed by Mexican law, regardless of your nationality or where you live. That is why it is advisable to plan the succession with Mexican instruments.
Why Mexican law applies to your property
Under the Federal Civil Code (Código Civil Federal), real estate is governed by the law of the place where it is located (a principle known as lex rei sitae). In other words, a will made in your country may not be enough on its own to transfer your house in Mexico: it will likely require recognition and translation procedures, which make the succession more expensive and slower. Having a will executed in Mexico for your Mexican property greatly simplifies the process.
The will: the best planning tool
The most advisable instrument is the open public will (testamento público abierto), executed before a notary public. It is simple, inexpensive, and provides certainty. In it you designate heirs and, where applicable, legatees, and you can appoint an executor (albacea) to administer the estate. Each year, generally in September (the "Month of the Will"), notaries offer discounts promoted by the authorities.
Testate vs. intestate succession
- Testate succession: a valid will exists. The testator's wishes are respected and the process is faster and cheaper.
- Intestate succession (by operation of law): there is no will. The law determines who inherits and in what order: first the descendants (children), the spouse, and the ascendants (parents); in their absence, collateral relatives. This route tends to be longer, more expensive, and more contentious, especially if there are heirs abroad.
The bank trust as a shortcut to inherit
If you bought your property in the restricted zone (coast or border) through a bank trust (fideicomiso), you have an important advantage for estate planning: you can designate a substitute beneficiary in the contract. Upon the death of the beneficiary, the property passes to the substitute according to the trust's rules, without the need for probate proceedings over that asset. That is why it is critical to check that your trust has the substitute beneficiary properly designated and to keep it up to date.
How an estate is settled
An estate in Mexico can follow two routes:
- Notarial (out-of-court) route: possible when there is a will, all heirs are of legal age, and they are in agreement. It is the fastest.
- Judicial route: necessary when there is no will, there are minors, or there is conflict among the heirs. It is processed before a family court judge.
In both cases there are four stages: recognition of heirs, appointment of the executor, inventory and appraisal of the assets, and adjudication (the deed that formally transfers the property to the heirs).
Are taxes paid on inheriting?
In Mexico there is no "inheritance tax" as in other countries. Under the Income Tax Law (Ley del Impuesto sobre la Renta), income from an inheritance or bequest is exempt from ISR (income tax) for the recipient, although there may be an obligation to report it for informational purposes when it exceeds certain amounts. When the heirs later sell the property, then ISR may indeed be triggered on the gain, and at the adjudication stage local duties and taxes are paid.
Common documents
- Death certificate (apostilled and translated if the death occurred abroad).
- The will or, in its absence, certificates proving the family relationship.
- The property deed and the identification of the heirs.
- The trust agreement, if applicable.
Common mistakes
- Relying solely on a foreign will for property located in Mexico.
- Not designating or not updating the substitute beneficiary of the trust after a divorce or new marriage.
- Leaving the property tax or the trust with debts, which stalls the adjudication.
- Postponing the will: dying without a will turns a simple procedure into a long lawsuit.
Heirs who live abroad
When the heirs reside outside Mexico, documents issued in another country (certificates, powers of attorney) generally must be apostilled and translated into Spanish by an authorized expert translator. An heir who cannot travel can grant a power of attorney before a notary or before the Mexican consul so that a representative can act on their behalf within the estate. Anticipating this from the will avoids costly delays.
Marital regime and co-ownership
Before inheriting, it is advisable to know how the property is registered: if it was bought under community property (sociedad conyugal), half already belongs to the surviving spouse and only the other half enters the estate. If there are co-owners, only the deceased's share is transferred. Clarifying ownership from the start prevents disputes among family members.
Frequently asked questions
Does a will from my country work for my house in Mexico?
It may work, but it will usually require recognition, an apostille, and translation, which lengthens and increases the cost of the process. A will executed in Mexico for your Mexican property is usually the fastest and safest option.
Can I leave my property to whomever I want?
In Mexico there is freedom of testation with certain limits, mainly the obligation to provide support for those who depend on you (minors, spouse, or ascendants in certain cases). Beyond that protection, you can designate the heirs you choose.
Conclusion
Estate planning is especially important for foreign owners, because it combines Mexican law with documents and heirs from another country. A Mexican will, a trust with a properly designated substitute beneficiary, and the advice of a notary and of an estates lawyer holding a cédula profesional (professional license) can save your family years of paperwork.
Notice: This content is general legal information and does not constitute legal advice, nor does it replace consulting a lawyer holding a cédula profesional. Every case is different and laws change; before making decisions, consult a lawyer who can review your particular situation.