Mexican wave

Regulation of the profession

Are lawyers regulated?

Statutory regulation of lawyers in Mexico is de minimis. Other than a general law for professions that states the formal requirements for becoming a lawyer, there is no specific legislation governing the legal profession nor a mandatory regulator. Additionally, and unfortunately, there are no written codes of conduct or handbooks that are binding on lawyers under Mexican legislation. 

Are lawyers officers of the court?

Lawyers in Mexico are obliged to promote justice and uphold the law but they are not public servants, nor are they obliged to provide their services freely. Under domestic law, only lawyers that have become judges and court personnel are considered officers of the court.   

Are there differences such as barristers, solicitors, notary public? 

Under Mexican law there is only one category of lawyer: a professional who has been authorised to practise law and has a current license. The public notary and the public broker are also lawyers, who, upon meeting a series of bespoke requirements, are granted the power of “public faith” by the Mexican government and can therefore authenticate certain documents and legal situations. 

Are there specialised probate courts? 

No. In Mexico, judges of the family court in whose jurisdiction the deceased was last domiciled are generally competent to deal with the probate procedure. Absent this, and where the probate involves real estate, the competent judge will be the district judge of the jurisdiction where the real estate is located. If there is real estate located in several districts, the judge of any such jurisdiction will be competent. In the absence of domicile, or real estate, the judge of the place of death shall be the competent authority. 

Substantive national law 

Is Mexico one country, one law? Or are there regional differences?

The Mexican legal system belongs to the civil law tradition and follows a federal format. Federal laws are mandatory in the entire Mexican territory, while state and municipal laws are only binding in the state or municipality involved. Each state has its own civil code which rules in state matters.

Succession 

Is there liberty of testation or are there compulsory legacies? 

Liberty of testation in Mexico is the governing principle. A testator generally has absolute freedom to decide how and to whom their assets are transferred after their death. Notwithstanding this, there are some limited restrictions like the obligation to appoint or reserve assets for the payment of alimony to family creditors, where applicable.

Succession pacts – are they allowed?

Mexican law does not typically permit probate issues to be addressed in private contracts. Mexican law generally requires that any probate matters be addressed in formal wills under the formats expressly allowed by law. In certain situations, such as with banking and brokerage accounts, the law does allow for the designation of beneficiaries for those accounts through specific appointment of beneficiaries-at-death clauses. The law also allows for the use of trusts as vehicles for transferring assets at death outside a probate procedure. Individuals can mutually designate each other as heirs in their wills as long as they do not do so in the same act or document.

How do wills and requirements for will validity work?  

The testator must have legal capacity to grant a valid will. Individuals will be deemed to have this capacity unless otherwise specified by law. Wills must meet certain requirements including an express reference of the document being a will, clearly stating the object thereof and fulfilling the solemnity requisites. To be valid, a will must not have any anomalies. It must be made freely, and the corresponding object must be lawful and clearly identifiable. The will must also comply with solemn requirements that dictate that the will must be in writing, must be issued before a notary public, and must clearly reflect the signatures of the testator and the notary, as well as the place and date of its execution.

Are trusts recognised?

Trusts are specifically set forth and recognised by the Credit Instruments and Operations General Law. The law defines a trust as a contract by which assets (which can be movable or immovable), money, or rights can be transferred to a third party, who can be an individual or legal person who must manage those resources according to the rules of the trust instrument. Other bodies of law, such as tax statutes, also expressly recognise trusts and provide for specific tax and legal treatment. Notwithstanding this, the legislation is limited and many aspects of modern and sophisticated trusts are left to be dealt with by private contractual provisions.

Are charities often beneficiaries?

Charities can be beneficiaries of a private or public trust as well as heirs or legatees in a will. However, levels of charitable transfers remain very limited in Mexico when compared with Anglo-Saxon jurisdictions. 

Protection of adults 

Lasting/preventative powers of attorney 

Under Mexican law, all individuals of legal age a priori enjoy full legal capacity but an application can be made to appoint a legal guardian to those who lack capacity. The affected individual must first be analysed by specialists and the results given to a family court judge to evaluate the expert evidence and make the official declaration of legal incapacity. The legal guardian is then entrusted with administering the individual’s estate for their health and welfare. Separately, individuals with legal capacity may grant special or general powers of attorney for acts of ownership or administration to third parties to dispose or manage property on their behalf. Such powers can generally be revoked and be limited as to the scope of the type, timing and value of legal acts that they can be used for. 

International jurisdiction 

Is there a rule as to the unity of law for succession?

Mexican law governs the succession of any person habitually resident in Mexico. The specific rules of succession are generally determined by state law, although the Federal Mexican Civil Code contains provisions that may apply in certain scenarios.

Does the same law apply to movable and immovable property?

Mexican law is equally applicable to both real estate and movable property located in its territory. If the deceased was domiciled in Mexico, then Mexican law may also be applied over assets of foreign situs as long as the foreign jurisdiction does not provide for mandatory rules that take priority.

Does foreign law apply as a consequence of the rules of conflict?

In the realm of wills and probate, foreign law will be only applied when Mexican laws specifically provide for such application (under conflict rules or remittance rules) or when there is an international treaty that governs a particular situation. 

Are foreign judgments/orders recognised?

Recognition of foreign judgments is not automatic. Foreign judgments or orders must comply with the conditions and formalities required under Mexican law and applicable international treaties, including a special review by a Mexican judge of the legality, definitiveness and origin of each judgment or order.  

Are foreign wills recognised?

Wills granted in a foreign country will be valid in Mexico provided they meet certain requirements. Such wills must comply with the applicable law of the jurisdiction where they were made, obtain the necessary official certifications and be submitted to a local family court for validation. The legal principle of locus regit actum (legal acts are governed by the law of the place where they were carried on) generally applies, although wills that contravene public policy provisions in Mexico will not be enforceable. 

Procedural law 

Is an executor/administrator required?

An executor is required for a probate procedure. They may be an appointed in the testator’s will, by the heirs, or by the judge. Mexican law also contemplates the figure of comptroller, who may be appointed in certain cases by the judge, heirs or legatees. The purpose of the comptroller is to supervise the executor and safeguard the rights of certain parties in the succession, frequently with adverse interests to the executor or other heirs. 

Is there an equivalent to a grant of probate/letters of administration?

Our domestic legislation expressly prescribes the powers and duties of the executor. The family court or notary public in charge of the probate procedure will issue a formal deed reflecting the appointment of the executor. The executor does not always have full power to carry out all kinds of legal acts; however, he has full authorisation for the payment of alimony, funeral and testamentary expenses, as well as for urgent expenses or any other action required to preserve and protect the assets in probate. 

Winding up procedure – is there any difference if there is no will?

There is a special procedure, generally referred to as ‘legitimate succession’, that takes place in the absence of an effective will. In this case, the hereditary assets are distributed in accordance with the provisions of the law, where the general principle is that the closest relatives exclude remoter ones. This procedure is also applicable in the following cases: 

• void will 
• partial will, or 
• expired will (applicable where the heir predeceased does not have the capacity to inherit, or renounces his inheritance rights). 

Formalities – is a notary public or a judge required?

Any probate procedure, including both a testamentary procedure or a legitimate succession, must be carried out judicially before a family court or extrajudicially through a notary. Typically, a notary public may only act when all the heirs are of legal age, are clearly identifiable, and there is no conflict amongst them. 

Taxation 

Death duties 

In general, the transfer of assets upon death of an individual is not subject to taxes in Mexico. There are currently no death duties that apply to transfers at death although there may be notary or judicial dues and charges. The executor will manage correspondence with the tax authority, and is responsible for the payment of taxes during the probate procedure up until the assets are legally transferred to the heirs or legatees. 

Exemption and nil-rate band

Inheritances will generally be exempt regardless of the relationship that exists between the deceased and the applicable heir or legatees. However, this is predicated on promptly filing a tax return disclosing the value of the asset received. Exceptionally, certain assets (stock of Mexican corporations and real estate located in Mexico) inherited by individuals who are not tax residents will incur income tax. The value added tax law provides that the transfer of property upon death is not an alienation of property for tax purposes regardless of the asset so transferred or the recipient. 

Rates

Where the tax exemption mentioned above does not apply, the applicable tax rate varies depending on whether the recipient is a tax resident of Mexico. Inheritances received by Mexican tax residents may incur ordinary tax rates of up to 35%. Inheritances received by foreign tax residents are taxed at 25%.

Deadlines for payment

During the probate procedure, and until the estate is distributed, the executor shall pay annually on behalf of all the heirs and legatees the applicable tax on the income derived from the estate and file the corresponding annual tax return. Heirs and legatees, once the assets in probate have been definitely adjudicated to them, may elect to consider the payments made by the executor as final or to incorporate them into their individual tax returns as additional income.  

What is one thing you would like to change in your jurisdiction? 

Clarification on the tax treatment of assets kept within the trust after the death of settlor and not entirely distributed or subject to distribution thresholds or to the discretionary powers of a third party would allow for more sophisticated estate planning structures.