Ways To Pass Mexican Property To Your Heirs
By Peter Thompson, Attorney-At-Law
Here are the most common ways to pass Mexican real property to the persons you select: Mexican Real Estate Trust, U.S. Will, Mexican Will, Direct Title and Mexican Power of Attorney. Please note the various advantages, disadvantages and relative costs of each. Also please note that I do not recommend Direct Title (unless the heir is a Mexican citizen) or Power of Attorney. MEXICAN TRUST ("FIDECOMISO"). The best (and most expensive) way to transmit Mexican property to a U.S. heir is the 50 year Renewable Mexican bank trust. In this way, the property will belong right now to your heir, and it cannot be taken away from that person after your death, regardless of any rights which might otherwise be given by Mexican law to others. The problem with using a trust to achieve this goal is that you must pay certain fees and taxes to set-up the trust, plus annual bank trust fees. U.S. WILL. No Probate Court in the U.S. has direct jurisdiction over real property in a foreign country, even if a U.S. Will provides for the inheritance of the Mexican property. It is possible to take either a U.S. Probate Order or U.S. Will involving Mexican property to a Mexican court for enforcement, but the procedure is complicated, time-consuming and costly. However, if a U.S. citizen who owns Mexican property dies with only a U.S. Will or no Will, we may be able to help by coordinating a probate action in Mexico. THE MEXICAN WILL (" TESTAMENTO"). The most common type of Mexican Will is the "Open, Public Will" made by a Mexican Notario Publico and placed permanently in the notario's protocol book. Three Mexican witnesses and 2 translators are required. The procedure takes about 1/2 day and is fairly inexpensive. Another way is the "Private Will" which is placed in a sealed envelope and registered at the Public Registry, but that is not as secure. As in The States, a Will in Mexico can always be revoked, so a spouse cannot be guaranteed that his or her wishes will be honored because the surviving partner can always change his or her Will. That is the reason an irrevocable trust is more secure. Finally, although a U.S. citizen can be the beneficiary of a Mexican Will, he or she cannot take title to any prohibited zone property under the Will. Therefore, the U.S. beneficiary must either make a trust for the property or request the executor to sell the property and distribute cash, if the Will gives the executor that ability. DIRECT TITLE TO A MEXICAN FRIEND. One common method of taking care of heirs is to make a present gift of the Mexican property to a trusted Mexican friend, with the understanding that your heirs are to have use of the property. The disadvantages of this method are that a) you must pay the transfer taxes and Mexican capital gains taxes now on the transfer, b) you cannot legally force your friend to honor your request if he or she doesn't want to (unless you retain a sufficient mortgage or lease in the property in favor of you or your heir) and c) the transaction could be classified as a presta-nombre subterfuge to avoid Article 27 of the Mexican Constitution, which might be punishable by prison or monetary fine. POWER OF ATTORNEY. I am sometimes asked if a Mexican Power of Attorney can be used to inherit property. There are 2 problems. First, a non-Mexican cannot be an attorney-in-fact (person who receives the Power) under a Mexican Power Of Attorney invovling direct title to land (only if it's a trust title). Second, even if you grant the Power of Attorney to a Mexican, that power will not still be valid after the death of the grantor unless the grantee has fully paid for the property.
