What We Know About Intestacy in Your Estate Planning in Indonesia: Should You Fix It?

When we talk about estate planning, it’s not just about deciding who gets what when you’re no longer around. It’s about ensuring your loved ones are cared for and your wishes are respected. 

But what happens if you don’t leave a will? That’s where intestacy comes in. You and I both know that life can be unpredictable, and planning ahead is crucial. 

Let’s dive into what intestacy means in Indonesia, the legal framework surrounding it, and whether it’s something you should fix.

What Is Intestacy?

Intestacy happens when someone passes away without leaving a valid will. In this case, the distribution of their estate is governed by the law rather than their personal wishes. 

In Indonesia, this process is regulated by several legal frameworks, including the Civil Code, the 1974 Marriage Law, and the Islamic Compilation Law (for Muslims). Each of these laws has its own rules for determining who inherits what.

If you don’t have a will, your estate will be divided according to these laws. While this might seem straightforward, it can lead to complications, especially if your family situation is complex. 

Let’s break this down further.

The Legal Framework for Intestacy in Indonesia

1. The Civil Code. The Civil Code (Kitab Undang-Undang Hukum Perdata or KUHPer) is the primary legal foundation for inheritance law in Indonesia, especially for non-Muslims. It outlines how estates should be distributed when someone dies intestate. Under the Civil Code, heirs are divided into four groups: a. Group 1: Spouse and children, b. Group 2: Parents and siblings, c. Group 3: Grandparents, and d. Group 4: Extended family (uncles, aunts, cousins, etc.) The law prioritizes Group 1. If you have a spouse and children, they will inherit your estate equally. If there are no heirs in Group 1, the estate moves to Group 2, and so on. While this system may seem fair, it doesn’t account for unique family dynamics or specific wishes you might have.
2. The 1974 Marriage Law. The 1974 Marriage Law (Undang-Undang No. 1 Tahun 1974) also plays a role in inheritance matters. This law emphasizes the concept of joint property (harta bersama) in marriage. If you’re married, any assets acquired during the marriage are considered joint property, unless otherwise agreed upon in a prenuptial agreement. When one spouse passes away, half of the joint property automatically belongs to the surviving spouse. The remaining half is divided among the heirs according to the Civil Code or other applicable laws. This can create complications if there’s no clear agreement or understanding among family members.
3. The Islamic Compilation Law. For Muslims in Indonesia, inheritance is governed by the Islamic Compilation Law (Kompilasi Hukum Islam or KHI). This law is based on Islamic principles and differs significantly from the Civil Code.

Under the KHI, inheritance is distributed according to Faraid (Islamic inheritance rules). Male heirs typically receive a larger share than female heirs, based on the principle that men have greater financial responsibilities in Islamic tradition. For example, a son inherits twice as much as a daughter. However, the KHI also allows for Wasiat (Islamic wills), where you can allocate up to one-third of your estate to non-heirs or for charitable purposes.

If you’re a Muslim, it’s important to understand how the KHI applies to your estate. Without a will, your estate will be distributed strictly according to Faraid, which may not align with your personal wishes.

Why Intestacy Can Be Problematic

Now that we’ve covered the legal framework, let’s talk about why intestacy can be a problem. You might think, “If the law already decides who gets what, why should I bother with a will?” 

Here’s why:

1. Lack of Control. When you die intestate, you lose control over how your assets are distributed. The law takes over, and your personal wishes are irrelevant. This can be especially problematic if you want to leave something for a specific person, like a close friend or a stepchild, who isn’t considered an heir under the law.
2. Family Disputes. Intestacy can lead to conflicts among family members. Disagreements over who gets what are common, especially in blended families or situations where the law’s distribution doesn’t align with family expectations. These disputes can strain relationships and even lead to legal battles.
3. Complex Family Situations. If your family situation is complicated, say, you have children from multiple marriages or you’re in a long-term relationship without being legally married, intestacy laws might not reflect your reality. For example, under the Civil Code, children born out of wedlock have limited inheritance rights unless legally recognized.
4. Tax Implications. While Indonesia doesn’t have an inheritance tax, there are still costs associated with transferring property, such as land and building taxes. Proper estate planning can help minimize these costs and ensure a smoother process for your heirs.

Should You Fix It?

The short answer is yes. 

You and I both know that planning ahead is always better than leaving things to chance. Here’s how you can fix it:

1. Make a Will. Creating a will is the simplest way to ensure your wishes are respected. A will allows you to specify who gets what, name guardians for your children, and even set aside funds for specific purposes. For Muslims, a Wasiat can be used to allocate up to one-third of your estate outside of Faraid rules.
2. Consider a Prenuptial Agreement. If you’re married, a prenuptial agreement can help clarify the division of assets and avoid disputes later. This is especially important if you have significant assets or if you and your spouse have different citizenships, as Indonesian law has restrictions on foreign ownership of property.
3. Communicate with Your Family. Open communication is key. Talk to your family about your wishes and make sure they understand your plans. This can help prevent misunderstandings and conflicts after you’re gone.
4. Consult a Legal Expert. Estate planning can be complex, especially if you have a large or diverse estate. A legal expert, like Wijaya & Co., can help you navigate the laws and create a plan that works for you and your family.

Final Thoughts

Intestacy might seem like a safety net, but it’s far from perfect. It’s a one-size-fits-all solution that doesn’t account for your unique circumstances or wishes. By taking the time to plan your estate, you can ensure your loved ones are cared for and your legacy is preserved.

Life is unpredictable, you and I both know that . But with a little planning, you can take control of your future and avoid the pitfalls of intestacy.  So, should you fix it? Absolutely. Let’s make sure your estate planning reflects your values, protects your family, and gives you peace of mind.

My name is Asep Wijaya, writing for Wijaya & Co. We orchestrate to assist you navigate. Thank you for reading my posts.