Leveraging Legal Knowledge: How Inheritance Laws in Puerto Rico Can Impact Your IT Contracts

We’ve entered an analogue – digital age, where we seek to expand our supply chains abroad. As a business looking to expand into a Caribbean territory like Puerto Rico, you will want to educate yourself on the region you’re looking to reach as well as the local laws that may complicate doing so. In today’s complex and interconnected business world, having the right information can save you money and resources in the long run. On the other hand, not knowing the right information could cost you everything. This is true not only for the man who seeks to buy a car abroad but also for the businesses that look to hire contractors for their projects.

Today, we’ll be discussing one such challenge when expanding into Puerto Rico; the knowledge of local inheritance regulations. It may sound very niche, perhaps even silly to some of you, but this is a legal provision that every company should be aware of. Let’s start by understanding what inheritance laws are all about.

What Are Inheritance Laws?

When an individual dies intestate (without a will), Puerto Rican law provides for the distribution of their property, investments, bank accounts and other assets. Not having a clear succession strategy can leave your company with great difficulty when hiring an IT contractor from Puerto Rico. If, for example, the untimely death of your contractor leaves them without a succession strategy, your company may be left without the ability to pay their wages. This is particularly the case when projects are paid according to milestones (as opposed to an agreed upon salary). This spikes up your payroll security risk beyond necessary levels.

Let’s make this more tangible. Maria is a software engineer and a single person with no children. She has one brother and two sisters, each living in Puerto Rico. Maria passes away and her inheritance will now have to be divided among her siblings. Assuming each of them had a one-third stake in whatever assets the deceased left behind, distribution of her wealth may take months or years to resolve. Your company is now left with a huge security risk. We can avoid or minimize this risk by touching the following points.

How to Stay Compliant with Local Laws

Now that you understand there’s a risk, let’s discuss briefly how to stay compliant with local laws surrounding this issue. Whereas there are many measures you can implement to stay compliant, it’s important to note that your ultimate security depends on how legally-savvy your contractors are when dealing with labels. The challenge we face here is two-fold. First, the average worker’s knowledge of laws, and second, the average employer’s willingness to learn more about their contractors’ country of origin or residence (in this case, Puerto Rico).

However, assuming you have a completely compliant strategy in place for all your contractors (and that they possess the knowledge necessary to avoid mislabeling of their contracted work), Puerto Rican law requires any inheritance to be split among the children of the deceased without regard to the status of inheritance. Generally speaking, anything acquired after the requiem (including insurance policies derived from employment with your company while living) must be included in the inheritance calculation. Of course, a lawyer will make this much clearer. In reality, we should think clearly about labor laws in Puerto Rico.

Complications in Having Contractors in Puerto Rico

The best way to avoid legal issues when hiring individuals from Puerto Rico is by becoming intimately aware of Puerto Rican law. The more knowledge you have, the better; so the more accurate & up to date these sources of claim are, the better as well. Without the right sources of information, you’re likely to end up paying fines or, worse, facing even greater legal challenges. This shouldn’t scare you off from expanding into Puerto Rico by the way, as there are many benefits as well. Just a few of the benefits of life in Puerto Rico include the freezing of tariffs on over 6,000 goods, duty-free shopping, incentives for new businesses, direct shipment of U.S. consigned goods. Compared to other Caribbean regions, Puerto Rico is an excellent choice for international investors.