International Estate Planning in Paraguay: Protecting Your Assets and Heirs in 2026

You live in Paraguay, your income is 0%, your wealth grows every year thanks to massive tax savings. But one question often remains a blind spot for expatriate entrepreneurs: what happens when you die? Who inherits? Under what law? What taxes? Where? Can your patiently built wealth be reduced by 30-45% in French inheritance tax upon death, nullifying years of optimization?

International inheritance is the most complex and neglected subject in expatriate tax planning. The majority of expatriate entrepreneurs in Paraguay have no will, no estate planning, and no idea what law will apply upon their death. This guide details the rules applicable in 2026, the pitfalls, and strategies to protect your wealth and your heirs.

The legal framework: what law applies to your inheritance?

The basic principle: law of the last domicile

In private international law, inheritance is generally governed by the law of the deceased's last domicile. If you are a tax resident of Paraguay at the time of your death, Paraguayan law generally applies to your inheritance. But the reality is more nuanced.

The European Succession Regulation (650/2012)

If you are a citizen of an EU country (France, Belgium, Luxembourg), the European Regulation 650/2012 applies. This regulation provides for:

• Default rule: inheritance is governed by the law of the State in which the deceased had their habitual residence at the time of death. If you live in Paraguay: Paraguayan law applies.
• Choice of national law: you can choose, by will, that the law of your nationality applies to your entire inheritance. A French national can choose French law.
• Limitations: this regulation applies between EU countries. Paraguay is not an EU member — the recognition of the choice of law may be more complex in practice.

What Paraguayan law says

Paraguayan inheritance law (Código Civil, Book V) is relatively simple and favorable:

• Forced heirs: descendants (children) and the surviving spouse are entitled to a reserved portion (legítima) of 4/5ths of the estate (80%). The disposable portion is 1/5th (20%).
• Order of heirs: descendants → ascendants → spouse → collateral relatives
• Surviving spouse: entitled to a share in usufruct and full ownership depending on family configuration
• Inheritance tax: 0% in direct line (between parents and children). No inheritance tax on transfers to descendants and spouse.
• Collateral relatives: limited rights (1-3% depending on relationship)
• Wills: recognized (holographic will, notarial will, mystic will). The will must comply with the forms of Paraguayan law or the testator's national law.

What French law says (residual risk)

France has some of the heaviest inheritance rules in the world:

• Inheritance tax in direct line: progressive scale from 5 to 45% beyond the €100,000 allowance per parent per child
• Surviving spouse: exempt from inheritance tax (since 2007)
• Collateral relatives' allowance: very low (€15,932 between siblings, €7,967 nieces/nephews)
• Article 750 ter of the CGI: the French tax authorities can tax inheritances if the deceased OR the heir has been a French tax resident for at least 6 of the last 10 years

The trap of Article 750 ter of the CGI

This is the most critical point for French expatriates in Paraguay. Article 750 ter provides that France can impose inheritance tax if:

• The deceased had their tax domicile in France for at least 6 of the 10 years preceding death, OR
• The heir has their tax domicile in France on the day of death AND has had it for at least 6 of the 10 years preceding death, OR
• The transmitted assets are located in France (French real estate, French bank accounts, shares in French companies)

In concrete terms: if you have been in Paraguay for less than 5 years at the time of your death, your French resident heirs may potentially have to pay French inheritance tax on the entire worldwide estate. This is the "inheritance trap" of recent expatriation.

Inheritance tax: France vs. Paraguay comparison

Criterion	France	Paraguay
Direct line rights (parents → children)	5-45% progressive (€100,000 allowance/child)	0%
Surviving spouse rights	0% (exempt)	0%
Siblings' rights	35-45%	1-3%
Rights of non-related persons	60%	3-6%
Allowance per direct heir	€100,000 (renewable every 15 years)	N/A (no rights)
Reserved portion	50-75% depending on number of children	80% (legítima)
Disposable portion	25-50% depending on number of children	20%

Numerical example

Estate transmitted: €2,000,000, 2 children heirs:

Item	Applicable French Law	Applicable Paraguayan Law
Gross estate	€2,000,000	€2,000,000
Allowance (€100,000 × 2)	-€200,000	N/A
Taxable base	€1,800,000	€0
Inheritance tax (progressive scale)	~€530,000 (average rate ~29%)	€0
Net transmitted to children	~€1,470,000	€2,000,000

Difference: €530,000 in inheritance tax avoided thanks to Paraguayan law. For an estate of €5 million, the difference exceeds €1.5 million.

Succession strategy for expatriates in Paraguay

Step 1: Neutralize Article 750 ter of the CGI (6/10-year trap)

For France not to be able to tax your inheritance, you must ensure that:

• You have resided in Paraguay for more than 6 years at the time of death (deceased's condition not met after 6 years of expatriation for the 6/10-year rule — you have no longer been a French resident for 6 of the last 10 years)
• OR your heirs are not French tax residents (if they also live in Paraguay or another country, the heir's condition is not met)
• AND your estate does not include assets located in France (if you have sold your French real estate, closed your French accounts, liquidated your shares in French companies)

The optimal strategy combines all three: residence in Paraguay > 6 years + heirs outside France + assets outside France = no French inheritance tax applicable.

Step 2: Draft an appropriate will

Drafting an international will is absolutely essential. This will must:

• Choose the applicable law: you can opt for Paraguayan law (habitual residence) or the law of your nationality (French law). The choice of Paraguayan law is generally more favorable (0% inheritance tax).
• Respect the reserved portion: 80% under Paraguayan law (more restrictive than French law on the disposable portion). If you want more freedom of disposition, choosing French law in the will may be preferable (disposable portion 25-50%).
• Comply with local forms: notarial will in Paraguay (escritura pública), or holographic will (handwritten, dated, signed) recognized in both jurisdictions.
• Cover all types of assets: real estate, bank accounts, company shares, life insurance, cryptocurrencies, US LLCs, intellectual property rights.

Step 3: Structure your assets to optimize transmission

Several structuring levers:

• US LLC: the shares of your US LLC are movable assets. Their inheritance is governed by the law of your domicile (Paraguay = 0% if PY law applies), not by US law.
• International life insurance: some Luxembourgish or Irish life insurance policies allow capital to be transmitted outside the inheritance (beneficiary clause). A powerful tool for wealth transmission.
• Disinvestment: transmitting the bare ownership of certain assets during your lifetime (donation) while retaining the usufruct. Upon death, the usufruct joins the bare ownership without additional rights.
• Lifetime donations: each donation reduces the taxable estate upon death. In Paraguay, donations between parents and children are very lightly taxed.
• Trust or foundation: depending on your assets (> €5 million), an Anglo-Saxon trust or a foundation can separate the assets from your person, facilitating transmission.

Step 4: Strategically locate your assets

Where your assets are located determines which jurisdiction can tax them:

Type of asset	Tax location	French inheritance risk
Real estate in France (SCI or direct)	France	High: always taxable in France regardless of deceased's domicile
Bank accounts in France	France	High: movable assets located in France
Shares in French company (SAS, SARL, SCI)	France	High: shares in French companies = assets located in France
French life insurance	France	Moderate: specific regime (Article 990 I CGI), 20-31.25% levy
US LLC	USA / Paraguay	Low: movable assets, law of domicile applicable
Mercury Bank (US account)	USA	Low: accounts outside France
Paraguayan real estate	Paraguay	None: asset located in Paraguay, Paraguayan law applicable
Cryptocurrencies	Debated (location of wallet / platform)	Variable: depends on legal qualification
Luxembourg life insurance	Luxembourg	Low: beneficiary clause outside inheritance if well-structured

Strategy: to eliminate all risk of French inheritance tax, you must progressively delocalize your assets outside France: sell French real estate (or donate it to children), close French bank accounts, liquidate holdings in French companies, transfer life insurance policies to Luxembourgish or Irish contracts.

Life insurance: a key tool for international transmission

French life insurance for a non-resident

If you have a French life insurance policy before your departure:

• No obligation to close it (you can keep it as a non-resident)
• Upon death: specific levy under Article 990 I CGI (20% beyond €152,500 per beneficiary, 31.25% beyond €700,000)
• Caution: if premiums were paid after age 70, classic inheritance tax applies to the portion > €30,500 (Article 757 B)
• The contract remains an asset "located in France" → taxable in France

Luxembourgish or Irish life insurance

A powerful alternative solution for international transmission:

• Contract subscribed outside France (Luxembourg, Ireland)
• Beneficiary clause that allows capital to be transmitted directly to heirs
• No French levy if the deceased has not been a French resident for > 6 years AND the heirs are not French residents
• Fiscal neutrality of Luxembourg on redemptions and transmission
• Enhanced capital protection ("Luxembourg security triangle" or Irish Life)

For expatriates in Paraguay with assets > €500,000, a Luxembourgish life insurance policy is an almost indispensable tool for estate planning. A specialized international broker can guide you (see our international insurance broker article).

The case of French resident children

A common pitfall: you live in Paraguay but your adult children live in France. At the time of your death:

• Your French resident children are subject to Article 750 ter if they have been French tax residents for 6 of the last 10 years (almost certain for children who grew up in France)
• France can tax the share of inheritance that falls to them on the worldwide estate — even if the estate is located in Paraguay
• Rate: progressive scale 5-45% after a €100,000 allowance

Solutions

• Option 1: Your children also expatriate (to Paraguay or another country). After 4+ years outside France, they no longer meet the 6/10-year condition. Radical but effective.
• Option 2: Transmit during your lifetime through donations (€100,000 per parent per child every 15 years tax-free under French law). Gradually reduce the size of the taxable estate upon death.
• Option 3: Structure via international life insurance (beneficiary clause, neutrality of transmission outside France).
• Option 4: Locate assets in jurisdictions that are not "assets located in France" (US LLC, Mercury accounts, Paraguayan real estate). France can only tax worldwide assets if the 750 ter condition is met — but in practice, recovery outside France is complex for the administration.

The international will: best practices

Recognized forms of wills

• Holographic will: entirely handwritten, dated, and signed. Recognized in France and Paraguay. Simple but risk of contestation.
• Notarial will in Paraguay: before a Paraguayan notary (escribano), in Spanish. Maximum probative force in Paraguay.
• Notarial will in France: before a French notary, registered with the FCDDV (Central Register of Last Wills). Maximum probative force in France.
• International will (Washington Convention 1973): unified form recognized in signatory countries. France has ratified it, Paraguay has not — limited usefulness.

Practical recommendation

For a French expatriate in Paraguay: draft two complementary wills:

• A notarial will in Paraguay covering assets located in Paraguay and outside France
• A notarial will in France covering assets located in France (if you still have any)
• The two wills must be consistent and not contradict each other
• Explicitly mention the existence of the other will in each will
• Choose the applicable law (Paraguayan or French) according to your strategy

What the will must cover

• Distribution of assets among heirs (in compliance with the reserved portion)
• Appointment of an executor (albacea in Paraguay)
• Fate of the US LLC (who takes over management? dissolution or continuation?)
• Bank accounts (Mercury, Paraguayan, others) and access instructions
• Cryptocurrencies (private key instructions, wallet access — do NOT put keys in the public will, but in a separate sealed document)
• Life insurance policies (check consistency of beneficiary clause with will)
• Guardianship of minor children if applicable
• Personal wishes (funeral arrangements, potential repatriation)

Specific pitfalls to anticipate

The pitfall of not having a will

If you die without a will in Paraguay, Paraguayan law applies by default (intestate succession). Consequences: distribution according to the legal Paraguayan order (80% reserved portion, 20% disposable portion). If your wishes differ from the legal framework, a will is essential.

The pitfall of double inheritance taxation

In the absence of an inheritance convention between France and Paraguay, a theoretical risk of double taxation exists: France taxes assets located in France AND worldwide assets (if condition 750 ter is met), Paraguay taxes assets located in Paraguay (but at 0% for direct descendants). In practice, double taxation is rare because Paraguay does not tax inheritances for direct descendants. But for French assets: French taxation is certain.

The pitfall of a US LLC upon death

Your US LLC is a movable asset located in the USA. Upon the death of the sole member:

• The LLC does not automatically disappear (it continues according to the operating agreement)
• If you are the sole member: the LLC must be transferred to your heirs via the probate process (US probate if necessary, otherwise according to the law of domicile)
• Prepare an operating agreement that explicitly provides for the death of the member and the transfer to designated heirs
• Potential US estate tax if US assets > $60,000 for non-US residents (but an LLC as a pass-through entity may be treated differently — consult a US CPA)

The pitfall of cryptocurrencies

Cryptocurrencies pose a major inheritance challenge:

• If no one knows your private keys, your crypto is lost forever
• Structure emergency access: bank safe deposit box with instructions, trusted executor, solution like Casa or Unchained Capital with family multi-sig
• Do NOT put private keys in a public will (accessible to everyone)
• Use a sealed document entrusted to the notary or a digital vault (1Password Family, or a dedicated vault)

The estate planning timeline

Upon settling in Paraguay

• Draft a Paraguayan will (local notary/escribano)
• If assets in France: complementary French will (French notary, by power of attorney possible)
• Complete asset inventory (all assets, all jurisdictions)
• Update life insurance beneficiary clauses
• US LLC operating agreement with death clause
• Sealed document for cryptocurrency and digital account access

Annually

• Annual review of assets and will
• Update if there is a change in situation (birth, divorce, property acquisition, children's change of country)
• Check consistency of life insurance beneficiary clauses

After 6 years of expatriation

• Condition 750 ter neutralized (you have not been a French resident for 6 of the last 10 years)
• France can no longer tax your worldwide assets (except assets located in France and FR resident heirs)
• Potential acceleration of wealth management strategy (donations, restructurings)

The estate planning ecosystem

• Paraguayan notary (escribano): local will, gift deeds, PY wealth structuring
• French notary: will covering FR assets, coordination of inheritance declarations
• International mobility tax lawyer: anti-750 ter strategy, cross-border FR/PY structuring
• International inheritance law lawyer: if assets > €2M or complex situations (multi-country children, ex-spouse, multi-jurisdictional assets)
• International life insurance broker: Luxembourgish or Irish contracts for transmission
• US CPA: US estate tax and LLC treatment upon death
• Paraguayan tax residency — basis of the estate strategy

Conclusion

International succession is the subject that 95% of expatriates neglect — and which can cost 30-45% of the estate upon death. If you have optimized your current taxation to 0% in Paraguay but your heirs have to pay €530,000 in French inheritance tax on an estate of €2M, you have won the current tax battle but lost the estate war.

Paraguay offers an extremely favorable inheritance framework: 0% duties for direct descendants, no taxation on assets located in Paraguay, clear and simple inheritance law. But this framework only protects you if you activate it correctly: adapted will, assets located outside France, condition 750 ter neutralized (6+ years of expatriation), heirs outside France if possible, international life insurance policies.

For an estate of €2M passed on to 2 children, the difference between French and Paraguayan law is €530,000. For €5M: more than €1.5 million. These amounts fully justify an investment of €5,000-€15,000 in professional estate planning.

The key is to act now — not "when I'm old." Accidents happen, illnesses occur, the unpredictable strikes at any age. A will, asset structuring, and an estate strategy are not luxuries: they are obligations to your heirs.

Do you want to protect your assets and your heirs? Contact our team for a personalized estate analysis: drafting a Paraguayan will, anti-750 ter strategy, international asset structuring, coordination between French/Paraguayan notaries, connection with Luxembourg life insurance brokers. The transmission of your assets deserves the best strategy.