However, when establishing themselves in Portuguese territory, many of these foreign residents encounter a reality that they may not have previously considered: the application of Portuguese succession law to their assets.

According to Portuguese law, succession is governed by the law of the domicile of the deceased at the time of their death. In this context, "domicile" refers to the place where the person had their habitual residence. For most foreigners with legal residency in Portugal (residence permit), this means that if they die while residing in Portugal, all their assets will be governed by Portuguese law.

Portuguese succession law is characterized by the protection of the deceased's family, particularly the legitimate heirs, such as spouses, descendants, and ascendants. This system of "forced heirship" ensures that, at least, two-thirds of the estate must be allocated to these heirs, regardless of any testamentary provisions left by the deceased. In other words, it is not possible to leave the entirety of one’s assets to third parties, such as friends or charities, without considering the rights of the legitimate heirs.

For many foreigners, especially those from countries with more flexible succession laws or those based on the principle of freedom of disposition, the application of Portuguese succession law can come as an unwelcome surprise. These individuals may intend to distribute their assets differently, favoring certain people or institutions, something that is not freely permitted under the Portuguese regime. Additionally, further complexity arises when the estate involves assets located in multiple countries, increasing the challenges in managing and executing the succession.

Considering this scenario, it is crucial that foreign residents in Portugal take proactive and preventive measures to ensure that their succession wishes are respected. One viable solution is the choice of applicable law for the succession. Since the entry into force of the European Succession Regulation, citizens of EU Member States, including foreign residents in Portugal, have the option to choose the law of their nationality to govern their succession instead of the law of their last domicile.

For this choice to be valid, it must be clearly expressed through a will, executed in Portugal. This choice can have a significant impact, allowing, for example, a British citizen residing in Portugal to opt for the application of English law, which is based on the principle of testamentary freedom, instead of Portuguese law.

Written by Andreia Morgado Duarte, Senior Associate at CCA Law Firm - www.cca.law