Changes in Inheritance Law Under the New Civil Code of Puerto Rico

By: Francisco de Jesús Ruiz, Esq. FPQP ^TM

On November 28, 2020, the new Civil Code of Puerto Rico will go into effect. As the primary source of private law in Puerto Rico, the Civil Code regulates the main topics that govern a person’s life and daily interactions with society.

At Popular One, our commitment is to keep you informed of any changes that could impact your financial goals. For your convenience, we summarized the most important changes in the New Civil Code that could potentially impact your estate plan.

Some of these changes include:

• Acceptance of an inheritance and the limits of the heir's responsibility
• Succession in intestate inheritance (which happens when a person dies without executing a will).
• Distribution of testate successions (when someone dies after executing a valid will)
• Wills and their formalities
• Donations
• Right of a surviving spouse to the family residence

Acceptance of inheritance and limit of heir's responsibility

Once the new Civil Code goes into effect, the heir's responsibility regarding the deceased's obligations or debts will be limited to the value of the assets or property inherited. This new provision protects the heir, as a general rule, from having to use their personal assets to cover the estate's debts when these exceed the assets.

New Intestate Succession Order

If the deceased did not establish his or her intent through a valid will, the Code provides a succession order. The new Code places the surviving spouse as first in line of succession, on equal footing with the descendants.

• If neither a descendant nor a spouse survives the deceased, the estate will go to the ascendants.
• In the absence of these, next in line are any preferential collateral relatives (siblings or nephews and nieces), and, in their absence, any ordinary collateral relatives. In the absence of any of the above, last in the succession line is the government of the Commonwealth of Puerto Rico.

Distribution of testate successions

In case there is a valid will, under the new rules, the testator may dispose of his or her inheritance in two halves:

1. One half of the estate reserved for the forced heirs
2. The other half, for free disposition.

This changes the portion reserved for forced heirs from two thirds to one half of the estate, since the betterment third portion that existed under the previous Code is eliminated. The half of the estate reserved to the forced heirs now includes any surviving descendants and the spouse, or if there aren’t any, the ascendants. Through the free disposition part of the inheritance, the testator may freely allocate up to half of his or her estate to any person. In the absence of any surviving children, spouse, or parents, 100% of the estate will be considered as free disposition and given to the person designated by the testator.

New provisions regarding wills

The only common wills that will be accepted are open and holographic (or handwritten) wills; closed wills were eliminated in the new Code. Wills executed under peril of death and in case of an epidemic will be accepted as special wills. The requirements to validate an open will, indeed form before a notary public were loosened, including no longer needing to have three witnesses when executing the deed of last will.

Donations

Regarding donations made by an individual to his/her heirs as an advance to their inheritance, under the new Code, only donations made during the last ten years before the person’s death, must be computed and considered as an advance of the heir’s inheritance.

The surviving spouse's right to the family residence

Regarding the right to the family residence, the new Civil Code grants the surviving spouse a preferential right to ownership of the property upon the estate's division and the community property. This right is subject to several conditions included in the law.

Contact your private banker to help you better understand how these changes can impact your family and financial situation. Our team of experts will help you ensure the protection of your loved ones.