Inheritance tax and inheritance law in Argentina
Taxation Researcher | July 15, 2021
The Global Property Guide looks at inheritance from two angles: taxation, and what inheritance laws apply to foreigners leaving property in Argentina: what restrictions there are and whether making a will is advisable.
There are no inheritance or gift taxes in Argentina, except for an inheritance tax levied on properties located in the province of Buenos Aires.
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What inheritance laws apply in Argentina?
Argentine law governs inheritance of property in Argentina in most cases.
Pursuant to the Argentine National Constitution, international treaties preempt domestic law. Hence, the starting point of analysis for cross border inheritance law is international treaty application. However, only two treaties are relevant for such analysis (i.e., the Treaties on International Civil Law (Montevideo) of 1889 and 1940), and given their limited territorial application, their provisions are not discussed here. Although Argentina signed the 1989 Hague Convention on the Law Applicable to Succession of the Estates of Deceased Persons, this convention is not yet effective, and has had a low rate of acceptance. Argentina has not signed the 1961 Hague Convention on the Conflicts of Laws relating to the Form of Testamentary Dispositions.
If we then look into domestic law, the Argentine Civil Code provides that succession to the estate of a deceased person is governed by the law of the state of the decedent´s domicile at the time of death, regardless of the inheritors´ nationality. The Civil Code further provides that the same law governs the content and validity of wills.
Nonetheless, the Civil Code implies an important exception to the general rule that the law of the decedent´s domicile governs inheritance. Title to real property located in Argentina may only be passed according to Argentine law. Courts and commentators have disputed whether this provision applies only to conveyance of title between living persons or also to succession to a deceased person´s estate. A majority of court decisions have generally held that any transfer of title to real property located in Argentina, either between living persons or by inheritance (testate or intestate) is governed by Argentine law. For reasons explained below, this exception is especially relevant because of the statutory reserved portions provided by Argentine law.
Inheritance issues involving non-resident foreigners´ property are normally decided by the same court hearing inheritance issues concerning Argentine nationals and resident foreigners. Inheritance issues are dealt with by the provincial courts (i.e., not by the Federal judiciary). Under Argentina´s Federal constitutional scheme, each province has organized its own judiciary. For example, in the city of Buenos Aires inheritance issues are dealt with by civil courts hearing matters of civil law with economic content (as opposed to civil courts hearing family issues).
The length of inheritance proceedings varies according to the complexity of the case. A straightforward case (e.g., with few assets located in urban areas and no minors involved) can take approximately five to six months, from its commencement to the recording of the heirs´ title at the relevant registries.
Argentine law applies the principle of "forced heirs".
Although valid wills are enforceable in Argentina, the Civil Code applies the principle of "forced heirs" (herederos forzosos) to assure spouses, children and certain other persons a minimum share in the estate of which they cannot be deprived without cause. "Cause" for disinheritance is limited to those stated by the Civil Code (e.g., attempted murder of the testator) and must be specifically invoked in the will). Hence, a testator´s disposition of assets is subject to the statutory minimum afforded to forced heirs. With one exception, the persons entitled to a reserved portion are the same persons as the statutory heirs designated by the Argentine Civil Code to receive an inheritance when the decedent dies intestate.
The statutory heirs of an intestate are:
- Decedent survived only by children: The children take the entire estate. If any of the children has pre-deceased the decedent, the share of that child passes to his issue, who take per stirpes (i.e., they take by representation the share that their parent would have inherited if living).
- Decedent survived by ascendants (i.e., lineal relatives in the ascending line): The ascendants take only if the decedent is not survived by issue. In this case, each generation excludes the further one (e.g., if the decedent is survived by one or both of his parents, no share in the estate passes to the decedent´s grandparents).
- Decedent survived by a spouse and children: The spouse and children all take the estate per capita, except for the marital property corresponding to the decedent, which passes only to the children (please see below for the definition of marital and non-marital property under Argentine law).
- Decedent survived by a spouse and ascendants: The surviving spouse takes one half of the decedent´s non-marital property and one half of the decedent´s marital property. The remainder of the estate passes to the ascendants.
- Decedent survived by a spouse and no issue or ascendants: The spouse takes the entire estate.
- Decedent not survived by issue, ascendants or a spouse: The estate passes to relatives within the fourth degree of collaterality (i.e., (i) siblings of the decedent and their issue until grand-nephews/nieces, and (ii) cousins of the decedent). Between siblings of whole and half blood, the latter receive half of the share of the whole-blooded siblings.
If the decedent made a will, the Argentine Civil Code grants to the foregoing heirs, except for the collateral relatives, a statutory right to "reserved portions" of the estate. Thus, dispositions by a will to: (a) heirs in excess of their reserved portions (when they are entitled to such portions), or (b) other parties, cannot exceed the residue of the estate (i.e., the part of the estate in excess of the reserved portion). Furthermore, a testator cannot impose encumbrances or conditions on the reserved portions; any such encumbrance or condition will simply be ignored.
The reserved portions are as follows:
- Children: 4/5 of all assets existing at the time of the testator´s death and of those donated by the testator during his life. Grandchildren and other lineal descendants take the same proportion (within the limits of the share of their immediate ascendant). The individual reserved portion of each child is obtained by dividing the total reserved portion by the number of children.
- Ascendants: 2/3 of the assets of the estate and of those donated by the testator during his life.
- Spouse, when there are neither descendants nor ascendants of the testator: 1/2 of the assets of the estate and of those donated by the testator during his life.
If the decedent is survived by heirs entitled to take in the distribution but with different reserved portions, the highest reserved portion applies globally. For example, if the decedent is survived by his or her spouse and children, the global reserved portion shall be of 4/5. Within such global reserved portion, the spouse and the children shall take as in an intestate succession.
If the net assets of the estate are sufficient to cover the reserved portion, the gifts made by the decedent during his lifetime shall be deemed made on account of the residue of the property (i.e., the assets of the estate outside the reserved portion), except when made to an heir entitled to a reserved portion, in which case said gifts shall be deemed to be an advancement of the heir´s share in the estate.
The testator is free to bequeath or devise to third persons or enhance the share of any statutory heirs, subject to the limits of the residue of the property.
Wills made in Argentina must be pursuant to the formalities of Argentine law.
Wills are unusual in Argentina, and are generally only made by wealthy individuals. Most people die intestate, in which case the rules on intestacy described above apply.
If made in Argentina, a will is only valid when made pursuant to the formalities provided by Argentine law. Thus, a will made by a foreigner in his country´s consulate in Argentina may not be considered valid by an Argentine court.
Under general principles contained in the Argentine Civil Code, a will made abroad is enforceable if it complies with the law of the place of its making. In addition, the Civil Code specifically provides that wills made by foreigners outside Argentina and of the country of their nationality are valid if the will complies with the formalities of the testator´s place of residence, the country of the testator´s nationality, or Argentina. Foreigners residing in Argentina may also make a valid will outside Argentina by signing it and having it attested at the relevant Argentine consulate. If valid according to the rules described in this paragraph and depending on its content and formalities of its making, some Argentine courts may require that the will made abroad be transcribed in a public deed (escritura pública) in Argentina at the start of the relevant probate proceedings.
As a result of the foregoing rules, there is no advantage for a foreigner who owns real property in Argentina to make a local will, other than to facilitate the court´s probate of the will. Testators should seek specific advice from Argentine legal counsel, as some forms of will (e.g., a nuncupative or mutual will), although valid pursuant to the rules mentioned in the prior paragraph, might prove difficult to enforce in Argentina.
The testator may appoint an executor of the will, but if there are heirs, the role of the executor will be limited to simply assuring that dispositions of the will are made as directed. The duties of an executor do not include defending the interests of the heirs.
An owner can transfer property as a gift at any time before death.
As an exception to this rule, a person cannot transfer as a gift property to his or her spouse during their marriage, or to his or her spouse´s children from a prior marriage, or to the persons from whom said children are legal heirs.
Even in cases outside this exception, if at the donor´s death a gift exceeds the residue of the estate (i.e., the part of the estate outside the reserved portion), the gift may be reduced. A legal action seeking reduction may be brought by the legal heirs of the donor existing at the time when the gift was made. If said heirs include descendants, descendants born after the gift was made are also entitled to obtain a reduction of the gift.
In case of gifts made by the donor during his lifetime to his legal heirs, they will be presumed an advance of the heirs´ share in the estate, unless the donor specifically states that the gift shall be deemed to have been made from the estate in excess of the reserved portion.
If a donor wants to avoid the risk of having the gift reduced after his death, he or she should, at a minimum, include in the instrument a statement to the effect that the gift is made from the estate in excess of the reserved portion. Even so, this will not prevent the reduction of the gift if it exceeds the residue of the estate exceeding the reserved portion.
A person planning to transfer real property located in Argentina as a gift should seek legal advice. Depending on the identity of the recipient, a gift may affect the marketability of the title conveyed.
Ownership of property is determined by Title Deeds.
In matters of real property ownership, Argentine law looks primarily to the title deeds and their recording with the relevant land registry.
Law governing marital rights.
The conflict of laws rules stated in the Argentine Civil Code provide that the marital property regime-in all that is not forbidden on matters of property by the law of the place where the assets are located-is governed by the law of the place of the first domicile of the couple after marriage. A subsequent change of domicile does not change the law applicable to the relationship between the spouses as to their assets, regardless of whether the assets were acquired before or after the change.
In the case of Argentine marital property rules, in general terms all assets acquired by the spouses after marriage are considered "marital property" (bienes gananciales), unless they were acquired as gifts. Each spouse is free to manage and dispose of the marital property acquired by him or her (in the case of the disposal of certain assets, such as real property, assent of the other spouse is required). Upon dissolution of the marriage, the marital property is divided and distributed by halves between the spouses. Other assets (i.e., those acquired before the marriage, or during the marriage as gifts) are considered "non-marital property" (bienes propios); they may be freely managed and disposed of by the individual spouse (except for real property where the spouses live, if they have minor or legally minor children), and remain with him or her after dissolution of the marriage.
Minors and others require a guardian.
Under Argentine law, unborn persons and minors cannot assume obligations and must be represented in court through their parents or through specially-appointed guardians. Persons declared mentally incompetent by an Argentine court or deaf-mute persons who cannot write will receive a court-appointed guardian. In some special cases (e.g., drug or alcohol addicts, people with minor mental deficiencies, spendrifts), a guardian may be appointed to represent a person only for disposition of assets, but not for their normal management.
In case of succession proceedings with heirs under legal age or incompetent, these heirs must be represented. In addition, a special public attorney for minors must be a party to the proceedings.
Argentine law compensates those who are deprived from a right to inherit by virtue of a foreign law.
The Argentine Civil Code provides that Argentine or foreign heirs residing in Argentina are entitled to take from assets of the estate located in Argentina a portion equal in value to the assets located abroad of which they were deprived by virtue of a foreign law or usage.
Thus, if a foreign citizen dies leaving assets in Argentina and in his home country, and a will disposes that person´s property in a manner depriving an heir who resides in Argentina of his statutory reserved portion by a cause not recognized by Argentine law, that heir may take property located in Argentina in an amount equal to his or her statutory reserved portion under Argentine law.