Testament & Inheritance
Besides the necessity of having a prenuptial agreement in place in case of a mixed-marriage, it is highly recommended to draw up a testament to properly arrange your last will and inheritance in the event of your death or of your Indonesian spouse.
Testament
A foreigner with spouse a/o children in Indonesia should have a testament (last will) for arranging his/her heritage.
In case the expat also has family a/o assets in the country of origin, like real estate and children from a former marriage, it is advisable to also have a last will in place in your native country.
Both wills should refer to each other and drawn up by a notary as a so-called ‘back-to-back’ testament.
This shall give you the most security to execute your last will and the best legal protection in case the testament is disputed.
The contents of the back-to-back testament should not contradict each other or be in conflict with the prevailing family, property and inheritance laws of each country.
It is vital to appoint a trustworthy and competent party to execute your last will. If you have doubts about that, you should appoint a reliable notary or lawyer who can manage and divide the assets according to your last wishes.
Often enough in Indonesia, the family in-laws will attempt to take possession of your estate even if they are not entitled to it.
Foreign individuals cannot own immovable property such as land or buildings, regardless if they are married or not.
Indonesian individuals married to a foreigner in community of property (so without a prenuptial agreement affirming the Indonesian spouse as the home owner) cannot have full ownership (Hak Milik) of the house.
In many situations, the foreigner who cannot own the house did finance the purchase of it.
In case of a divorce, you need mortgage protection or a loan agreement with your spouse to protect your investment; but in case of death, you and your spouse need a last will, leaving your inheritance to the rightful inheritors.
If married in (joint) community of property, the Indonesian law dictates that the house and land has to be sold within one year after the death of one of the spouses.
If not sold within one year, the property falls to the Indonesian State, provided it is no longer encumbered with a mortgage or loan, after which the estate will be divided by court decision.
Without a prenuptial agreement and a last will, the widow or widower will not receive their fair share.
If married with a prenuptial agreement, the Indonesian spouse can have full ownership of the property.
In case of a divorce, your prenup can contain a loan repayment agreement; in case of death, you both need to have a last will in which you can leave your assets to each other and to the children born out of this marriage if any.
In the event of your death, then your spouse can keep the house or sell it. And if your spouse dies, then by last will the house can be sold with you as the beneficiary of the proceeds.
Inheritance
Besides immovable property, other assets may be part of an inheritance, usually being bank savings, life insurance policy, equity investments, vehicles, jewelry a/o the household effects.
The division of these assets among the inheritors can be stated in the last wills of you and your spouse.
An alternative way to protect your immovable property investment and the rights of your inheritors in case of your death is by first establishing a foreign direct investment company (PT PMA) of which you are the shareholder, after which the PMA can purchase and hold the property.
Property owned by such a company is under Hak Guna Bangunan (HGB) title instead of Hak Milik, but the property is sell-able as well as mortgage-able.
Besides having separate bank accounts, when married it is important to have at least one joint bank account in both your names.
Without a joint bank account, it will prove difficult to get the balance released to you after the death of your spouse.
If one of the spouses dies and there are no children, the widow/widower is entitled to the estate of the deceased.
If there are children, then the estate of the testator is to be divided evenly between the surviving spouse and the children.
When a foreign spouse holds an ITAS or ITAP stay permit and obtains a letter from the sponsoring company, he/she is allowed to purchase and own a vehicle in their own name and leave the car to the rightful inheritor(s).
Summary
If you wish to arrange your inheritance via a testament / last will, please contact us beforehand so we can draft the contents in accordance with your last wishes and in compliance with the applicable laws.