What Happens to Your Property as a Foreigner? Understanding Inheritance Law in Bali

Owning property in Bali is a dream for many foreigners. With its stunning landscapes, rich culture, and growing investment potential, Bali has become a top destination not just for tourism, but for long-term residence and property ownership. However, legal concerns often arise when it comes to inheritance—especially when foreign nationals are involved.

If you’re a foreigner who owns or plans to own property in Bali, understanding the local inheritance laws is essential. Indonesian law does not function in the same way as Western legal systems, and failing to understand the nuances can lead to complications for your heirs. At The Bali Lawyer, we specialize in providing clear, professional legal assistance on inheritance and property matters for foreign individuals and families living in or investing in Bali.

Can Foreigners Legally Own Property in Bali?

Before diving into inheritance laws, it’s important to first address property ownership. Indonesian law does not permit foreign nationals to own freehold land titles (Hak Milik), which are the highest form of land ownership. However, foreigners can legally control property through alternative means:

Hak Pakai (Right to Use) – A title issued to foreigners that allows property use for residential purposes.
Long-term lease agreements – Often up to 25–30 years with renewal options.
Indonesian legal entities (PMA Companies) – Allows foreigners to invest and operate businesses, including holding property assets.

These structures are legal under Indonesian law, but each has specific requirements and limitations. The structure you choose will affect how the property is treated after death.

What Happens to a Foreign-Owned Property After Death?

The fate of your property in Bali upon your death depends largely on how you acquired it and the legal structure under which it is held. In general, inheritance laws in Indonesia recognize both Indonesian inheritance law and foreign inheritance law, depending on the nationality of the deceased and their heirs.

1. Property Under Hak Pakai Title

If a foreigner owns property under a Hak Pakai title, the law allows it to be transferred to the legal heir, as long as that heir also qualifies for Hak Pakai. If the heir is a foreigner, they must meet the same requirements and obtain approval from the Indonesian National Land Agency (BPN).

However, if the heir does not qualify—such as a minor or a non-resident foreigner—the property may have to be sold or relinquished.

2. Property Under Leasehold or Long-Term Rental

If you’ve acquired your property through a long-term lease, this contract can generally be passed on to your heirs as an asset. The lease agreement must clearly mention its assignability in the event of death. Leasehold agreements are typically more flexible than land titles and can provide a relatively simple way for your heirs to retain rights over the property.

3. Property Owned Through an Indonesian Company (PMA)

If your property is owned under a PMA company, your shares in that company may be passed on to your heirs according to your will or succession laws. This scenario usually involves a more complex legal process, especially if your heirs are not familiar with local corporate or investment laws.

Applicable Law: Indonesian vs Foreign Inheritance Law

Foreigners are often surprised to learn that Indonesian inheritance law may apply to them, even if they’ve created a will in their home country. The determination of which law applies can vary depending on whether the property is movable (e.g., bank accounts) or immovable (e.g., real estate).

Movable assets may be governed by the law of the deceased’s nationality.
Immovable assets (land/property) in Indonesia are generally governed by Indonesian law, regardless of the owner’s nationality.

Therefore, it’s crucial to draft a will that is recognized by Indonesian legal standards. An unrecognized or improperly filed will can result in significant legal challenges for your heirs.

Heir Recognition Under Indonesian Law

Indonesian inheritance law distinguishes between religious law systems (such as Islamic or Hindu inheritance law), adat (traditional) law, and civil law (applied to non-Indonesians and non-Muslims). For foreigners, civil inheritance law is generally applicable.

To ensure a smooth inheritance process:

Your heirs should be named clearly in a legally recognized will.
The will should be translated into Bahasa Indonesia and notarized by a local notary.
You may also need to register the will with the relevant district court in Indonesia to avoid any legal ambiguity.

The Importance of a Legally Recognized Will in Indonesia

One of the most important steps you can take is to create a will that complies with Indonesian law. A foreign will may not be sufficient to handle property transfers in Bali. For the best legal protection:

Draft a local will in Bahasa Indonesia that outlines your property and desired heirs.
Ensure it is notarized by an authorized notary in Indonesia.
Consider consulting with a legal expert to ensure your will does not conflict with national inheritance regulations.

Having a will in both your home country and in Indonesia is often the most secure approach.

Taxes and Fees for Inherited Property

Inheritance in Indonesia is not subject to inheritance tax, which is a significant advantage. However, there may be:

Notary fees
Legal service fees
Property transfer fees

These costs vary based on the value of the property and the complexity of the transfer process. It is advisable to factor in these fees when planning your estate or purchasing property.

Common Pitfalls in Property Inheritance for Foreigners

Many foreign property owners in Bali make these common mistakes:

No valid Indonesian will – Foreign wills are not always enforceable in Indonesia.
Improper legal structure – Holding property in a way that does not comply with local laws can make inheritance impossible.
Unqualified heirs – If heirs do not meet residency or nationality criteria, the property may have to be sold.
Failure to register documents – Wills and other legal documents must be registered and translated to be enforceable.

Avoiding these mistakes is key to ensuring your assets are protected for your family.

How We Can Help at The Bali Lawyer

At The Bali Lawyer, we provide professional legal services specifically tailored for foreigners who live, invest, or retire in Bali. We assist with:

Property title verification
Drafting and registering local wills
Structuring property ownership legally and securely
Inheritance law consultations and document preparation
Liaison with notaries, land offices, and government authorities

Whether you’re already a property owner in Bali or planning to purchase real estate, having a clear legal strategy is critical to safeguarding your investment for your loved ones.

Understanding inheritance law in Bali as a foreigner may seem complicated—but with the right guidance, you can ensure a seamless transfer of your property to your heirs. The key is to plan ahead, structure your ownership properly, and work with a qualified legal team.

Don’t wait until it’s too late to secure your family’s future and protect your Bali property.