N02E - Winding up an Estate

When a person dies, there is still much to do beyond the immediate organising of the burial process. There are certain time critical, legal requirements when winding up a deceased person's estate. This bulletin only considers the Portuguese legal requirements. Foreign wills need to be dealt with in the country where they were drawn up and notarised. It is unusual in Portuguese custom to appoint an executor or administrator for a will. However, if one is nominated that will be respected by the courts. If no one is nominated the court will appoint the "Head of the Family" (Cabeça de Casal) to administer the estate. The procedure for naming the hierarchical accession/succession of the Head of the Family is well defined in the Portuguese Civil Code. For a more detailed discussion on Portuguese wills and succession rights, please consult the companion bulletin on estate planning.

If you are named as the executor, you need to proceed as follows:

• Obviously, one of the first tasks is for you need to ensure that any surviving minor children and/or pets are taken care of
• Obtain and make copies of the will
• Notarise the Deed or entitlement of Heirs (Habilitação de Herdeiros)
• Trace all entitled beneficiaries and distribute a copy of the will to each named recipient
• Trace and value all assets
• Identify debts and liabilities of the estate
• Pay off any debts to avoid penalties
• Cancel any services, memberships or contracts that are no longer required
• Notify appropriate consulate to cancel passport
• Notify social security, pensions and Life Assurances and claim any outstanding monies due
• Return any Portuguese personal documents to the appropriate authority (e.g. Residence/Identity card
• Dispose (Sell) of any assets that fall to the estate
• Distribute the inheritances per the will
• Write thank you letters

Note:The preceding list is not necessarily contiguous or in chronological order. Many of the steps can be conducted in parallel. Pay particular attention to any deadlines for the 
submission of documents, however.

Care for surviving minors and pets
Ensure that any adolescent children or dependents are cared for. Remember, it can be therapeutically beneficial for minors and their pets to be kept together.

In the case of pets, if these cannot be absorbed into the family or with friends, they either need to be moved to a pet sanctuary or to be put down. Under no circumstances should they be abandoned to the streets.

Obtain Copies of the Will
If you are not sure whether a will exists in Portugal, first check with the deceased's lawyer, otherwise, you may be able to get the information from the "Central Registries " (Conservatória dos Registos Centrais) in Lisbon. In doing this, you will need to provide an original copy of the death certificate.

Deed or entitlement of Heirs (Habilitação de Herdeiros)
The first thing to do after getting a copy of the will is the "Habilitação de Herdeiros" which is a notarised deed listing who qualifies or is entitled as an heir of the deceased.

This document is drawn up by a notary and will be required by Finanças. Obtain several copies because they will be required by the bank and other government departments. In order to draw up the "Escritura de Habilitação de Herdeiros" the notary will require, namely:

1. The death certificate

2. The Portuguese will

3. Copies of relevant marriage certificate and birth certificates and birth certificates of the sons and daughters.

4. The consular certificate confirming that the Will is valid according to the law of the national country of the deceased.

The Escritura must be signed by the Head of the Family or by three witnesses.

After this, the heirs can ask for the "partilha" (allotment). This can be done out of court assuming there is mutual agreement between parties on the share distribution of the inheritance, otherwise it may have to go to court. A copy of the death certificate must be presented to the Finance Department by the “Cabeça de Casal” (Head of Family) within 90 days of death if there are any assets in Portugal and also a list of those assets.

Trace Missing Beneficiaries
It is the responsibility of the administrator to find and notify all persons nominated in a will. Generally, it is known where members of a family are residing but with today's penchant for migrating to better climes or areas of work, the exact address may not be known. Often, an old friend of the deceased may be nominated as a beneficiary who is not known to other family members. Despite this, all reasonable steps must be taken to find that person.

A thorough search of the deceased's personal papers, diaries, or even old birthday cards may turn up an address. Some known friends outside the family circle may also be able to help.

In countries where it is customary to register with the local authorities (Freguesia for example), such authorities will normally pass on a letter to the Person if they are registered there. Similarly, placing an advertisement in a local paper where the person is thought to live might give results.

Failing any of these attempts, the administrator might consider using a commercial organisation to do the searching. These organisations exist in most western countries.

Costs incurred for adverts, correspondence and search agencies to locate a missing beneficiary can be deducted out of that beneficiaries share of the estate. All records of the effort to locate the person should be kept as proof of the attempt. If a beneficiary cannot be located, the items bequeathed to him or her must be held in trust by the administrator for a reasonable period pending the possible appearance of said person.

Tracing and Valuing Assets
It is necessary to know how much the estate is worth before it can be disbursed to the beneficiaries. This should be researched as thoroughly as possible. It is advisable to err on providing too much detail than too little.

The value of any asset is needed as at the date of death of the deceased, and this is known as the Probate Value.

Many common assets like bank or buildings society accounts and quoted shares are easy to value. Others such as land, business interests and antiques may be more difficult. It may be that professional valuations are required. This is particularly so if any inheritance tax is likely to be paid (by non-family members that may be nominated in the will). Note that insurance values are often higher (replacement cost) than the saleable value, so it is better not to use them as a source.

If the deceased had an interest in Trust(s) the professional advisors who administer the Trust(s) should be contacted to provide the value of the deceased's holding(s).

The municipal valuation should tentatively be used to value a property. If it is to be sold, the actual sale vale must be recorded in the estate’s assets. Vehicles can be valued using the Guia do Automóvel Booklet available at any news agent.

Many companies have life assurance policies covering their employees for a number of years salary in the event that they die whilst in employment. Check with the company if the deceased was employed at the time of death.

If there is no record of assets held by the deceased. Each individual organisation with which the deceased may have had assets should be contacted. Check through a deceased's bank statement for any regular deposits (annuities, dividends, etc.), employers and former employers (may be holding some pension rights or share entitlements still to be paid) and any correspondence that may be found in the deceased's possession could highlight a possible source of monies owed.

Identify debts and liabilities of the estate
As with assets the identification of any debts and liabilities of the deceased is important to ensure that all these are paid and no unexpected claims or penalties for late payment are made against the estate.

Any failure to pay a debt by a personal representative of a deceased with due diligence may cause the personal representatives to become personally liable for any loss suffered by a creditor or a beneficiary.

The deceased's papers should identify any debts or liabilities that exist at the date of death. Bank statements indicating regular payments will also help in trying to identify these. More regular liabilities such as public utilities, rent, council tax, and credit cards should be easy identifiable from the deceased's records. Keep an eye on incoming mail because some debts may still be in the pipeline.

As any recurring debts are paid off, they should be considered for cancellation. For example, membership fees, utility accounts, insurances, publication subscriptions and the like should be cancelled as soon as possible.

Early contact should also be made with the deceased's local "Finances Office" to ensure that any outstanding taxes have been paid. There may in fact be a refund of tax due to the estate.

Notify appropriate consulate to cancel passport
Generally, passports are deemed to be the property of the issuing State and as such a deceased's passport should be cancelled (and sometimes returned) via the consulate to avoid potential misuse if the holder dies. Check with the deceased's consulate or embassy on what steps to take. For example, it is advisable but not obligatory to do this for UK Nationals. However, if the body is to be repatriated, the passport must accompany the body together with the death certificate and other shipping documentation after which it will be returned to the authorities and cancelled.

Notify social security, Pensions and Life Assurances held and claim any outstanding monies due
Note that some pensions and annuities have a minimum term which could continue to be paid beyond the period of death. Similarly, some of these continue to pay a reduced amount to a surviving spouse.

Collect and collate deceased's other personal documentation.
These include amongst others; passport, driver's license, credit cards, membership cards, medical cards, social security card and residence card. Note that some of these documents remain the property of the issuer and must either be returned or destroyed.

Return any Portuguese Personal documents
The administrator is responsible for returning certain documents to the appropriate authorities. Namely:

The Social Security Card (or number) must be sent or delivered to the Social Security department (Segurança Social, Relações Internationais) together with a copy of the death certificate.

The deceased's Residência Card must be sent or delivered to the AIMA office where it was issued together with a copy of the death certificate. 

Sale of property and realising assets
When selling assets the personal representative should obtain the best price possible. Care should be taken to ensure that the property actually belonged to the deceased.

There are statutory rules about selling or disposing of furniture, gas fires and electrical equipment. If the appropriate safety certificates are not attached, the personal representative should not sell these but seek professional disposal of them. It may be a criminal offence to pass them on.

Any houses or land should of course be professionally valued before to ensure the best price is obtained. When instructing an estate agent, solicitor or conveyancer to act in the sale of a property, quotations should be obtained.

Funeral Expenses
It is most important to obtain two receipts for expenses from the Funeral Director. Both must be signed by the person in the Funeral Agency receiving the payment. The original is required by "Finanças" and the duplicate must be taken to the notary used by the funeral agency for authentication. This duplicate is required for the Subsídio de Funeral.

Bank Accounts
If the deceased operated an individual bank account the bank will, in compliance with the law, freeze its operation as soon as it is aware of the death. However, in general, banks are not particularly zealous in taking such action. If the deceased had prepared signed cheques, these should be presented for cash payment by the next of kin immediately following death or prior to the bank learning of the death. The cash can then be paid into the next of kin's account.

If the bank account is in joint names, the deceased's share will be frozen because inheritance tax may be due on that amount.

Where it happens that a bank becomes aware of the death of one of its clients it will normally freeze the account and place it under a condition of "Contencioso" (under contention). The next of kin should produce the death certificate (certidão de óbito) and heirs deed of entitlement (Habilitação de Herdeiros) to the bank, following which the condition of Contencioso will be removed.

Stamp Duty (Imposto de Selo)
Following death it is necessary to submit a copy of the death certificate to the local tax office of the Ministério de Finanças nearest to where the deceased lived within 90 days of the death occurring to present the Relação de Bens (inventory of assets). The Relação de Bens should include all assets held in Portugal. Time extensions are obtainable provided application is made within the officially stated time periods noted above.

Stamp Duty (Imposto de Selo) is payable on a deceased person's estate by beneficiaries. Some family members are exempt. Property may not be processed in compliance with the Will until the Imposto de Selo is paid in full.

Immoveable property is assessed on the value registered in the tax department which will have been conducted by the Gabinete Predial, whereas loose assets are normally valued by the next of kin.

Insurance Matters
Policies vary in regard to provisions following death. No hard and fast rule governs insurance companies' responses in the case of payment against life policies in the event of death by suicide. However, the approach adopted by most companies is that suicide is not penalised providing that the policy was originally taken out by the policy holder in good faith and that it has been held for a minimum period of two years. Premiums must be returned if the suicide occurred within a two-year period. At least one major Portuguese company will honour the policy in the event of suicide if one year has elapsed since the policy was take out. If suicide is for rational reasons and the person is merely accelerating death from an incurable illness, an insurance company is most unlikely to wish to be seen as unjust and vicious.

Payment against a life insurance policy is normally made after probate but some insurance companies will pay out a limited sum on evidence of death. This can be particularly useful in meeting funeral expenses and costs incurred in winding up an estate. Depending on circumstances, it may, therefore, be well worth while for the next of kin to pursue pre-probate payment with the life insurance company immediately following death.

The information in this bulletin was obtained from:

• afpop archives 

• Dr. Eduardo Serra Jorge (Lawyer)

• Dignified Dying Seminars information

• Bombeiros in Portimão

• Servilusa Funeral Services

• British Consular Services

• Individual afpop members

Every care has been taken to verify the facts in this document. We therefore ask you to  communicate any errors that you may find with the data herein or suggestions for the inclusion of additional information, to the afpop office. We would appreciate any constructive feedback on members' own experiences with this subject matter.

Other related bulletins in this series cover:
Pre Death Planning 
Death and Burial I
Death and Burial II