Inheritance and Bali Property: What Happens When a Foreign Owner Dies?

Last updated: February 2026 · By Bali Property Rules Research Desk

Table of Contents

1. What Happens to Your Bali Property When You Die?
2. Which Inheritance Law Applies — Indonesian or Your Home Country?
3. Can Foreign Heirs Inherit Hak Pakai Property?
4. What Is the 1-Year Forced Divestment Rule for Heirs?
5. How Does Inheritance Work for Hak Sewa (Leasehold)?
6. What About PT PMA-Held Property?
7. Mixed Marriages: What Happens Without a Prenup?
8. How to Protect Your Property Through Estate Planning
9. Step-by-Step: What Heirs Should Do After a Foreign Owner Dies
10. Frequently Asked Questions
11. Sources

What Happens to Your Bali Property When You Die?

When a foreign property owner dies in Indonesia, their property does not automatically transfer to heirs. The outcome depends on three factors: the type of title held (Hak Pakai, Hak Sewa, or PT PMA), the immigration status of the heirs, and which inheritance law system applies to the deceased.

Unlike many Western countries where property passes to heirs through a will or intestacy laws with relative simplicity, Indonesia’s system requires active legal steps. Heirs must obtain documentation proving their inheritance rights, register the transfer at BPN (the National Land Agency), and — critically — demonstrate that they are eligible to hold the relevant title type. For Hak Pakai, this means having a valid Indonesian residence permit.

The legal framework governing foreign property inheritance sits at the intersection of several regulations: the Basic Agrarian Law No. 5/1960 (UUPA) establishes the land rights system, PP 103/2015 governs foreign residential ownership and divestment rules, and the Indonesian Civil Code (KUHPerdata) Book III provides the inheritance framework for non-Muslim foreigners.

Which Inheritance Law Applies — Indonesian or Your Home Country?

For property located in Indonesia, Indonesian law governs the property transfer — regardless of the deceased’s nationality. This is the principle of lex rei sitae (the law of the location of the property). Your home country’s inheritance law may determine who your heirs are, but Indonesian law determines whether those heirs can hold the specific property title.

Indonesia has three parallel inheritance law systems, and which one applies depends on the deceased’s background:

• Indonesian Civil Code (KUHPerdata) — Applies to foreigners and non-Muslim Indonesian citizens of Chinese, European, or other non-indigenous descent. Book III covers succession, forced heirship, and testamentary rules. Most foreign property owners in Bali fall under this system.
• Islamic Inheritance Law (Faraid) — Applies to Muslim Indonesians. Administered through the Religious Courts (Pengadilan Agama). Has specific fixed-share rules for heirs that differ significantly from the Civil Code.
• Adat (Customary) Law — Applies to indigenous Indonesian communities. Varies significantly by region and ethnic group. In Bali specifically, Balinese customary inheritance law traditionally favors male heirs, though recent court decisions have increasingly recognized daughters’ inheritance rights.

For most foreign property owners, the KUHPerdata applies. Under this system, a valid will (testament) is recognized if it meets Indonesian notarial requirements or has been legalized through the proper channels. If no will exists, intestacy rules under the KUHPerdata determine heir distribution — typically the surviving spouse and children in defined proportions.

Important: Even if your home country’s law identifies who inherits your assets, those heirs must still satisfy Indonesian eligibility requirements to hold the specific property title. A British heir named in a UK will cannot simply claim Hak Pakai in Bali without a valid KITAS or KITAP.

Can Foreign Heirs Inherit Hak Pakai Property?

Yes, but only if they hold a valid Indonesian residence permit (KITAS or KITAP) at the time of inheritance. Under PP 103/2015, Hak Pakai eligibility requires residency in Indonesia (updated most recently by PP 28/2025 — see our PP 28/2025 guide). A foreign heir without a residence permit cannot retain the Hak Pakai title and must divest within 1 year.

The inheritance scenarios for Hak Pakai property break down as follows:

• Indonesian citizen heir: The most straightforward outcome. An Indonesian heir can apply to convert the Hak Pakai to Hak Milik (freehold) at BPN, which is an upgrade in title strength. This conversion process typically takes 2-6 months and costs approximately IDR 2-5 million in administrative fees.
• Foreign heir with valid KITAS/KITAP: Can retain the Hak Pakai by registering the inheritance transfer at BPN. Must demonstrate eligibility (valid residence permit). The Hak Pakai continues under its existing term.
• Foreign heir without residence permit: Cannot hold Hak Pakai. The 1-year forced divestment rule applies — the heir must sell or transfer the property to an eligible party within 12 months. See our detailed guide: What Happens to Your Bali Property If Your Visa Expires?

What Is the 1-Year Forced Divestment Rule for Heirs?

Under Article 21(3) of the Basic Agrarian Law, foreign heirs who cannot hold Hak Pakai have exactly one year from the date of inheritance to divest the property. If they fail to act within this window, the government can force a sale through public auction.

Permen ATR/BPN No. 29/2016 sets out the procedural details. The one-year clock starts when the Land Office formally records the inheritance transfer. During this period, the heir has three options:

1. Sell the property to an Indonesian citizen or eligible foreigner with a valid KITAS/KITAP
2. Transfer the title to another party through a legal agreement (e.g., a nominee or Indonesian spouse)
3. Downgrade or convert the title if the heir qualifies for a different land right

What Happens If Heirs Miss the Deadline?

If the one-year period expires without action, Article 21(3) of the BAL authorizes the state to auction the property. The former heir receives the auction proceeds minus administrative costs, but they lose all control over pricing and timing.

How Does Inheritance Work for Hak Sewa (Leasehold)?

Leasehold (Hak Sewa) agreements are contractual — not land titles — so inheritance depends entirely on what the lease contract says, not on Indonesian land law.

Most Hak Sewa lease agreements in Bali are governed by PP 44/1994 and general contract law under the Indonesian Civil Code (KUHPerdata). Unlike Hak Pakai, there is no land title registered in the foreigner’s name — only a contractual right to use the property.

Key Factors That Determine Leasehold Inheritance

• Transferability clause: Does the lease explicitly allow assignment to heirs? Many standard Bali leases do not include this clause
• Death termination clause: Some leases terminate automatically upon the lessee’s death, returning the property to the landowner
• Landowner consent: Even with a transferability clause, the landowner (Indonesian title holder) may need to consent to the new lessee
• Remaining term: Heirs inherit only the remaining lease period — not a fresh term

What About PT PMA-Held Property?

When property is held through a PT PMA (foreign-owned Indonesian company), heirs do not inherit the property directly — they inherit shares in the company that owns the property. This is a critical distinction that simplifies many inheritance complications.

Under Law No. 40/2007 on Limited Liability Companies, company shares are personal property that can be inherited, sold, or transferred according to the company’s articles of association.

Advantages of PT PMA for Inheritance

• No 1-year divestment rule: Since heirs inherit company shares (not land titles), the forced divestment timeline under Article 21(3) BAL does not apply
• No nationality restriction on share transfer: Foreign heirs can hold shares in a PT PMA without a KITAS or KITAP
• Continuity of operations: The company continues to exist regardless of shareholder death, preserving leases, contracts, and HGB titles
• Governed by company articles: Share transfer rules are defined in the PT PMA’s founding documents, providing predictability

Steps to Transfer PT PMA Shares After Death

1. Obtain a Certificate of Inheritance (Surat Keterangan Waris) or foreign probate decree with apostille
2. Hold an Extraordinary General Meeting of Shareholders (RUPS-LB) to approve the share transfer
3. Execute a Deed of Share Transfer before an Indonesian notary
4. Update the company’s shareholder register and articles of association
5. File amendments with the Ministry of Law and Human Rights (AHU Online)
6. Update the company’s investment license (OSS/BKPM) if required

Mixed Marriages: What Happens Without a Prenup?

In a mixed marriage (Indonesian citizen married to a foreigner) without a prenuptial agreement, all marital property becomes jointly owned — and joint ownership with a foreigner disqualifies the Indonesian spouse from holding Hak Milik or HGB titles.

This catches many mixed-marriage couples off guard. Under Law No. 1/1974 on Marriage (Article 35), all assets acquired during marriage are considered joint marital property (harta bersama) unless a prenuptial agreement states otherwise.

The Inheritance Problem in Mixed Marriages

When the Indonesian spouse dies, the inheritance creates a situation where the foreign surviving spouse gains a share of the property through marital property division. This foreign co-ownership triggers the same restriction as direct foreign ownership — the property must be divested within one year.

The Prenuptial Agreement Solution

A prenuptial agreement (perjanjian pranikah) that separates marital property prevents this problem entirely. With a valid prenup:

• The Indonesian spouse retains full individual ownership of Hak Milik or HGB titles
• Upon the Indonesian spouse’s death, the property passes to designated heirs under Indonesian inheritance law
• The foreign surviving spouse does not automatically gain co-ownership of the land
• The foreign spouse can still inherit other non-land assets as specified in the will

How to Protect Your Property Through Estate Planning

Five strategies protect foreign-owned Bali property from inheritance complications: creating an Indonesian will, using a PT PMA structure, establishing a prenuptial agreement, maintaining organized documentation, and appointing a local legal representative. Each addresses different ownership structures and family situations.

1. Create a Valid Indonesian Will (Wasiat)

A will registered with an Indonesian notary is the most direct way to control property distribution. The notary registers the will with the Central Wasiat Registry (Daftar Pusat Wasiat) at the Ministry of Law and Human Rights, making it discoverable and enforceable.

Key requirements for a valid Indonesian will:

• Must be made before an Indonesian notary (notaris)
• Must comply with KUHPerdata formality requirements
• Should specifically identify all Indonesian property assets
• Should name both primary and alternate beneficiaries
• Should appoint an executor (pelaksana wasiat) familiar with Indonesian procedures

2. Use a PT PMA Structure for Significant Investments

As discussed above, holding property through a PT PMA converts a land inheritance problem into a simpler corporate share transfer. This is especially valuable for foreign investors with multiple properties or high-value assets in Bali.

3. Establish a Prenuptial or Postnuptial Agreement

For mixed-marriage couples, a property separation agreement is essential. Without one, the Indonesian spouse’s Hak Milik or HGB titles become vulnerable upon either spouse’s death. Consult a notary experienced in mixed-marriage property issues.

4. Maintain Organized Documentation

Ensure your heirs can locate and understand all property-related documents. Keep certified copies of:

• Land certificates (Sertifikat Hak Pakai, HGB, or Hak Milik)
• Notarized lease agreements (for Hak Sewa properties)
• PT PMA articles of association and shareholder register
• IMB/PBG (building permits)
• Tax payment receipts (PBB/BPHTB)
• KITAS/KITAP documentation
• Indonesian will registration receipt

5. Appoint a Local Legal Representative

Designate a trusted Indonesian lawyer or notary who can act on your heirs’ behalf immediately after your death. This person should have power of attorney (surat kuasa) authority to manage urgent administrative matters during the probate process.

Step-by-Step: What Heirs Should Do After a Foreign Owner Dies

Heirs should secure property documents, contact the deceased’s Indonesian notary, and check for a registered will within the first two weeks. Delays can trigger the 1-year divestment clock and complicate an already difficult process.

Inheritance Outcomes by Ownership Type

The table below summarizes what heirs receive, whether the 1-year divestment rule applies, and the key risk for each ownership structure.

Frequently Asked Questions

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