Inherited structures, and what families discover too late.

Why a death exposes a structure

Probate is, in essence, a formal exercise in establishing what a person owned. Executors, administrators and the court have to identify assets, value them and pass them to the people entitled. That process does not accept a family's general understanding that father owned the villa in Phuket. It requires documents: a title deed, a share register, a company affidavit, accounts, evidence of what was paid and by whom.

When those documents are assembled, they say what they say. If the land is registered to a Thai company, the deceased did not own the land; at most they owned some shares and were owed some money. If the Thai shareholders hold a majority, the estate does not control the company. If there are loan agreements, the estate may be a creditor rather than an owner. Families frequently discover that the asset they have thought of as theirs for twenty years is, on the documents, largely someone else's.

The practical position of heirs

Heirs inherit what the deceased actually had, not what the family believed they had. In a company structure that usually means a minority shareholding, a loan account of uncertain recoverability, and no direct interest in the land. It may also mean inheriting exposure, because a foreign heir who steps into a foreign shareholder's position in an arrangement that does not reflect economic reality is in the same legal position their predecessor was.

There is a second and separate obstacle. Foreign heirs generally cannot inherit land in Thailand, and where land forms part of an estate the position is governed by the Land Code, which in practice requires disposal within a period set by the authorities rather than permitting the heir to hold it. Condominium units are different, and a foreign heir may in some circumstances hold a unit, subject to the building's foreign quota and to the statutory conditions. These are questions on which Thai counsel must advise on the specific facts.

The practical obstacles arrive first

Before any of the legal questions can be answered, families usually run into administration. Company actions require directors and shareholders to act. Where the deceased was the only active director, the company may be unable to do anything at all until the position is regularised. Where the Thai shareholders were introduced by an adviser fifteen years ago, they may have moved, may be uncontactable, or may have died themselves. Where a service provider held the records, they may want fees settled before releasing anything.

• The only person who knew how the arrangement worked is not available to explain it.
• Records are held by a service provider, an agent or a lawyer whose engagement was personal to the deceased.
• Directors or shareholders whose signatures are needed cannot be found or will not act.
• Outgoings, taxes and company fees continue to fall due while nobody has authority to pay them.
• Company filings fall overdue, which itself requires a filing to correct.
• The property stands empty, and its condition and value begin to suffer.

None of these is a legal question, and all of them consume time while the estate cannot act. Together they explain why an estate containing a Thai holding structure so often takes far longer to administer than the family expected.

An illustrative composite

The following is a composite drawn from situations advisers in this market see repeatedly, not an account of any individual client. A principal buys a villa in the mid-2000s through a Thai company arranged by the selling agent. He treats it as his own for eighteen years, pays every bill, and never mentions the structure to his children because there seemed to be nothing to mention. He dies. His executors ask for the title deed and receive a company affidavit instead. The Thai shareholders, contacted through an office that no longer exists, are two former employees of the original agent. The company has not filed accounts for three years. The family, wanting to sell, discovers that the buyers who are interested all instruct lawyers, and the lawyers all ask the same questions.

The quiet observation to draw from it is only this. Every option that would have been available to the principal in his lifetime, taken calmly over a year or two, was still available the week before he died. After his death, the family had fewer routes, less information, a weaker negotiating position and no ability to ask the one person who knew what had been agreed. Nothing dramatic happened. The options simply narrowed.

Loss of capacity raises the same issues

Incapacity produces the same practical problem without the finality. A principal who has had a stroke or developed dementia cannot sign, cannot instruct, and cannot explain. Powers of attorney granted under the law of another country may not be effective in Thailand, and a Thai company's requirements are its own. Families in this position should take Thai advice early, because the routes available while the principal retains capacity are considerably wider than those available afterwards.

This is also the strongest argument for a principal to deal with the question in their own lifetime. A structure examined and resolved while the person who created it can still explain it is a far more tractable problem than the same structure handed to executors with no explanation attached.

What a family should do first

Instruct qualified Thai counsel immediately, independently of any adviser who was involved in creating the structure, and give them everything: the documents that exist, the documents that are missing, what the family was told, and what they know about how the purchase was funded. Instruct advisers in the country administering the estate at the same time, since the two processes must be coordinated. Then assemble the file: title documents, company affidavit and shareholder list, share certificates, accounts and filings, loan agreements, bank records and correspondence. Where papers cannot be located, counsel can obtain official title searches and current company particulars, so an incomplete file is a reason to instruct sooner rather than a reason to wait.

What a family should not do is act informally before that advice arrives. Signing share transfers found among the deceased's papers, asking a former adviser to bring records into order, or attempting to move the property before the estate's position is understood can turn a difficult administration into a far more serious matter. The papers should be preserved exactly as they are and shown, complete, to the lawyer.

Asia Global Partners is a private office and not a law firm, and gives no legal advice. Where a family asks, the office convenes qualified Thai counsel and the accountants and valuers an estate requires, coordinates with the family's advisers at home, and remains a single accountable point of contact through what is usually a long process. For principals who would rather their family never faced this, a confidential structure review during their lifetime is the sensible step.

This article is general information about succession and Thai holding structures and is not legal advice; inheritance outcomes depend on the estate, the will and the applicable law. Asia Global Partners is a private office and not a law firm. Instruct independent qualified Thai counsel and your own estate advisers, and verify title and inheritance requirements with the Land Department.

This briefing is general information, not legal, tax or investment advice. Thai rules change frequently and individual cases differ. Verify current requirements with the relevant authorities, including the Immigration Bureau, the Board of Investment, the Land Department, the Department of Business Development and the Revenue Department, and take advice on your own facts before acting.