Inheritance tax and inheritance law in Barbados
Taxation Researcher | March 05, 2020
The Global Property Guide looks at inheritance from two angles: taxation, and what inheritance laws apply to foreigners leaving property in Barbados: what restrictions there are and whether making a will is advisable.
There is no inheritance or gifts tax in Barbados. However, transfers of properties may be subject to property transfer tax.
Property Transfer Tax
The property transfer tax is payable by individuals imposed on transfers of lands and buildings, or interests in such property including leases. The tax rate is 7.5%.
If the property transferred is land and buildings or houses, the first BBD125,000 (US$62,500) is not taxable. If the property transferred is just land (without a building or house), the tax is imposed on the property value without any exemption amount.
Thanks to Z.Vanessa Kodilinye
What inheritance laws apply in Barbados?
The Inheritance laws of Barbados apply to foreigners.
Barbados´ inheritance laws are governed primarily by the Succession Act, Cap. 249 of the Laws of Barbados, which is modelled on the Irish Succession Act, 1965.
There are no restrictions on foreigners owning and/or inheriting real property in Barbados. With regard to estates consisting of real property located in Barbados, the laws of Barbados are equally applicable to both nationals and foreigners. Potential conflicts with the foreign laws of the deceased´s nationality are thereby avoided.
Jurisdiction to adjudicate on succession issues lies in the Supreme Court of Barbados.
In the case of intestacy, the administration and distribution of real property is governed by lex situs, i.e. the law of Barbados.
- If an intestate person leaves a spouse, but no children or next of kin, the spouse is entitled to take the whole of the estate.
- If the surviving spouse has no children, but next-of-kin are left, the spouse is entitled to take two-thirds of the estate and the remainder is distributed in equal shares among the next-of-kin.
- If a spouse and one child are left, the spouse takes two-thirds and the child one-third.
- If a spouse and more than one child is left, the spouse is entitled to one-third and the remaining two-thirds are distributed equally among the children.
- If a child pre-deceases the intestate person, then the share of the deceased child passes directly to the children of the deceased child.
It is advisable for persons with assets in Barbados to make a will.
A will ensures that the testator´s property passes to the persons whom he/she intended to benefit, and is revocable at any time. The necessary formalities for a valid will made in Barbados are that (i) the testator must have testamentary capacity, (ii) it must be made in writing, (ii) it must be signed by the testator, and (iii) it must be attested by at least two witnesses in the presence of each other and the testator. A will does not have to be made in Barbados if it complies with:
- The form of an International Will
- The internal law of the place where it was made, or the place of nationality or habitual residence of the testator at the time of death, or when the will was made.
A will which is proved in another jurisdiction, and letters of administration obtained in another jurisdiction, can be resealed in Barbados under the Probates and Letters of Administration (Resealing) Act. Such act of resealing has the same effect as if probate of the will or letters of administration were originally granted by the High Court of Barbados.
A testator has complete freedom of testamentary disposition.
There are no "forced heirship" or "reserved portion" laws in Barbados. An owner is free to dispose of property to anyone, before or after death, subject to the following conditions:
- Any clause in a will of a person dying in Barbados which attempts to disinherit minor children (or children under disability) or a spouse who was judicially separated less than 3 years before the death of the testator, is void.
- The court has discretion to provide for the maintenance of children of the deceased, including the award of lump sum payments. If there is no minor child (or child under disability) the Succession Act gives a surviving spouse a legal right to one half of the deceased´s estate, or one quarter if there is such a child
- If the will contains a gift of property to the surviving spouse, that spouse must, within 6 months of the grant of probate, elect to take the property given in the will, or to take his/her legal right under the Succession Act, unless the will states that he/she shall take both.
- If a man and a woman have been cohabiting for a period of 5 years immediately before the death of either, succession rights are the same as for a married couple.
Prima facie ownership of real property is evidenced by the title deeds.
If legal ownership of property, as evidenced by the title deeds, is in the sole name of the testator, but the ownership is challenged by an interested party, such as a spouse, this dispute should be litigated in Family Law Act proceedings prior to the death of the testator.
A court of law can determine if there is equitable ownership in real property, notwithstanding the status of the legal title; for example, if another party has acquired a beneficial interest in the property by virtue of his/her financial contribution to its purchase or improvement.
If real property is owned by a person as a joint tenant with another party, such as a spouse, the property automatically passes under the law of survivorship to the surviving party upon death of the testator, unless there was a prior severance of the joint tenancy.
In both testacy and intestacy, if a husband and wife have been living apart continuously for a period of 5 years immediately preceding the death of either, the survivor is precluded from taking any share in the estate of the deceased as a legal right, or on intestacy. In the case of testacy, this does not preclude the surviving spouse from receiving a specific gift in the will.
Minors cannot legally hold any estate in Barbados.
If it is intended to devolve property to minors, then provision should be made in the will for the property to be held in trust for the minors until they reach the age of majority.