Spanish Wills &Estate PlanningPosted by Anne Sun, October 15, 2017 13:01:49
owners of Spanish properties, the importance of making a Spanish Will is
general terms, a correctly executed Spanish Will ensures certainty, speed and
economy in the event of Spanish probate; and also provides the facility for tax
the consequences for the beneficiaries of a non-Spanish national who dies
leaving Spanish assets, but no Spanish Will, can be unexpectedly onerous. In
our Spanish probate practice, to date, there is not a single case where we have
not found a solution to complete Spanish probate- however unusual the
a few exceptional cases, whilst it has been possible to ‘unlock’ the Spanish
property by completing the Spanish probate case, the combination of the failure
of the deceased to make a Spanish Will and the consequential forced application
of Spanish legal and fiscal principles, has inevitably created situations of
significant complexity for those left behind. A couple of examples will
illustrate the point.
deceased English lady, estranged from her three adult children from her first
marriage, since her second marriage 25 years ago. She died totally intestate.
She had taken Spanish residency along with her second husband, in her final
years. She had verbally expressed her intention that her surviving husband (and
co-owner of the Spanish property) should receive her 50% interest in the
Spanish property in the event of her death.
the deceased was habitually resident in Spain at the time of her death, in the
absence of any legally binding direction for English succession law to apply
(by her not having made a Spanish Will), Spanish succession law had to be
succession law generally operates to protect the interests of descendants-
therefore in this case, necessitating the long- estranged deceased’s children’s
involvement in the Spanish probate process.
deceased’s children (after no contact in 25 years), had to be traced through
genealogy professionals. Rejecting the proposal simply to renounce their
entitlement, as had been hoped, the deceased’s husband is left with a
restricted interest in the Spanish property- now being a co-owner, along with
his deceased spouse’s children- whom he had never even previously met.
the deceased signed a simple Spanish Will containing an expression of her wish
for her husband to inherit- pursuant to English succession law, her husband
would have enjoyed a comfortable retirement; and he would have been able to
sell the Spanish property as he had planned with his late wife; enabling him to
return to live in England. He would have received the Spanish property sale
proceeds following his wife’s death.
he remains in Spain with all his wealth tied up in a Spanish property, which is
now co-owned along with individuals who are not known to him; and whose
willingness to co-operate is directly linked to ill-feeling over the demise of
their parents’ marriage 25 years ago.
fact, had it not been possible to find the solution we did, the situation would
have been significantly worse for all concerned, with the property totally
‘locked’ in legal terms; and selling or dealing with (mortgaging/ letting) the
property would have been totally impossible. Our solution of the case at least
provides a framework for the family to come together and settle terms between
them for the disposal of the property- which could then be effected without any
further legal complications.
English resident couple in a civil partnership with a property in Spain
had English Wills leaving their respective worldwide Estates to a common
partner then intended as part of their overall Estate planning, to sign a
Spanish Will leaving a life interest in their respective shares in the Spanish
property to the surviving civil partner, with the underlying legal title in the
Spanish property passing down to the common friend.
intended Estate planning strategy would have resulted in a zero Spanish
Succession Tax bill for the surviving partner; and his having a secure lifetime
interest, guaranteed for his remaining years- living unencumbered in the
the failure (by the partner who then died before signing his Spanish Will), to
act promptly in signing the Spanish Will as planned, meant that the surviving
partner was unable to claim the intended lifetime interest in the Spanish
furthermore, because of a quirk in the regional rules for calculation of
Spanish Succession Tax, this also led to a total Spanish Succession Tax bill of
more than 3 times the amount it would otherwise have been (from 20,000 Euros up
to more than 60,000 Euros).
again, the best possible solution in the circumstances was found for the case
to ‘unlock’ the Spanish property. But the failure of the deceased to have put
in place a Spanish Will with tax efficient Estate planning, unavoidably
frustrated his testamentary wishes; and also left an unnecessarily high level
of tax exposure.
Legal 4 Spain team is always available to provide preliminary advice on a
no-obligation basis in relation to Inheritance and Estate Planning cases where
there are Spanish assets.
Spanish Wills &Estate PlanningPosted by Andrew Fri, March 24, 2017 00:05:50
the outset of many estate planning cases which involve Spanish assets, advice
is required as to the options for ownership changes within the family.
typical scenario is: a married couple, who have owned their Spanish holiday
home for many years, but health/ mobility issues as they have got older, mean
that their use of the holiday home is on the decline. But meanwhile, their
children/ grandchildren are very happily ‘taking over the reins’!
terms of estate planning then, the Spanish property starts to become more of a
liability than an asset- particularly in terms of potential future inheritance
Spanish property is usually non-income producing (particularly in the light of
recently introduced increased bureaucratic requirements for short term lettings
in Spain). So, it seems logical that the ownership should be ‘passed down’
within the family, to reduce estate size/ future tax liability- but without any
loss of income (and still with the possibility of the continued occasional use
of the property by the transferor).
is logical in theory; but other than the obvious practical considerations (the
assumed continued solvency/ marital situation of the recipients; and assumed
continued harmony within the family), there are important additional
considerations which need to be borne in mind; including:
is a Spanish taxation liability for recipients of gifts of Spanish assets, the
calculation of which is broadly similar to Spanish Succession Tax, (but without
all the regional allowances and deductions). In other words, the Spanish
lifetime gift tax has a similar- or higher- impact on the recipient than if
they were to inherit the asset. (This is therefore entirely different in
concept to a Potentially Exempt Transfer under the UK IHT regime). There can,
of course, be situations in which the Spanish lifetime gift tax does not
counteract the fiscal wisdom of a lifetime transfer- for example, if in overall
(worldwide) estate planning terms, it is still advantageous to pass the Spanish
property down a generation (or two); or if a Spanish property can currently be
transferred at a low value- so a relatively low tax amount- when a future
increase in value is anticipated. It can be better in that case, for the next
generation to ‘enjoy’ the uplift in value, rather than storing up an ever
increasing Spanish Succession Tax liability in the original owner’s hands.
on the Potentially Exempt Transfer point- whilst a UK tax payer making a gift
of their Spanish property within the family could constitute a Potentially
Exempt Transfer- so over time, it comes out of the worldwide taxable estate for
UK IHT purposes- one would need carefully to consider the fiscal consequences
of the donor failing to survive the qualifying period to achieve the maximum UK
for UK nationals considering making a lifetime gift of a Spanish property
within the family, UK ‘gift with reservation’ considerations need to be addressed
and factored into the arrangements for any continued use of the Spanish
property by the donor. As would be the case with a UK asset which is gifted,
but then still used by the donor, the continued use of the asset needs to very
carefully documented/ financially accounted for, to avoid the gift failing for
UK IHT purposes; and the asset therefore not (fiscally) leaving the donor’s
change of property ownership in Spain can be effected by way of a sale between
family members rather than a gift- as often, the rate of tax on a sale is less
than the rate of tax on a lifetime gift. However, this type of transaction
would inevitably be very carefully scrutinized by the Spanish Tax Authority, to
ensure that the sale is not a sham, simply to reduce the taxation basis from
lifetime donation down to the sale taxation level. So, the property could not
be sold at an undervalue; and the Authorising Notary would actually need to see
evidence of funds passing between the the buyer and the seller. And of course,
the funds for the transaction cannot be provided by one family member to
another within Spain, otherwise that would be a taxable lifetime gift of the
money! So, any such transaction has to be extremely carefully orchestrated, to
be legally and fiscally compliant. And an assessment has to be made on a case
by case basis, as to whether or not this is advantageous when compared to a
lifetime donation transfer.
change of Spanish property ownership- even within the family- triggers other
costs and taxes, so these need to be factored into the equation. In addition to
the donation/ purchase tax, the additional expenses include Notary and Property
Registry costs; and Plus Valia tax (a local Town Hall tax payable on property
transfers, based on rateable value and length of transferor’s ownership. It can
also be necessary to update contracts for property services (water/
electricity, etc), and this can trigger a requirement for re-certification for
safety/ compliance purposes; and possible updating/ upgrading of supply
above is a non-exhaustive checklist of the issues. In the majority of the cases
we see, whilst a full analysis and discussion can be helpful, the conclusion is
that the costs and complexities of a lifetime transfer of a Spanish property
within the family outweigh the benefits. In this case, the focus returns to tax
efficient Spanish Wills and estate planning.
Legal 4 Spain team is always available to provide preliminary advice on a no-
obligation in estate planning cases involving Spanish assets.
Spanish Wills &Estate PlanningPosted by Andrew Thu, February 02, 2017 15:27:03
September 15th, 2014
A new European law will come into
full effect on August 17th 2015, with the intention of simplifying inheritance
cases across Europe.
This new law will apply to owners of
The problem the new law addresses
There has been legal uncertainty
previously in the estates of many non-Spanish owners of Spanish properties, as
to whether Spanish succession law applies or the owner’s own national
The distinction is particularly
important for English owners of Spanish properties, where their own (i.e.
English) succession law effectively enables them freely to choose their heirs
(including as to Spanish assets), without limitation in the majority of cases.
Conversely, if an English owner of a
Spanish property were to choose (or be legally forced) to follow Spanish
succession law, then a strict division of the Spanish estate would be imposed
under Spanish law- with a minimum of two thirds passing to descendents; and
very limited discretion generally as to who receives the Spanish estate.
The solution provided by the new law
The new law gives people affected by
the problem, choice as to which succession law applies to their estate.
Well advised English owners of
Spanish properties will in any event, have already made separate Spanish Wills
in anticipation of the new law, clearly electing for their own national
succession law to apply. So they can be certain that their Spanish estate will
pass as they wish; and not pursuant to the strict Spanish legal requirements
(which in the vast majority of cases, are incompatible with English testators’
In any event, English (and indeed
other nationality) owners of Spanish properties are advised to take this
opportunity in anticipation of the new law, to review their Spanish Wills with
their legal advisers, to ensure that they have clearly and unambiguously chosen
for their own national succession law to apply to their Spanish assets (if that
is what they wish). Also, to ensure that their Spanish Wills are in all other
respects, fully up to date; legally compliant in Spain; and tax efficient.
In the event of a failure of by an
English owner of a Spanish property to leave a valid Spanish Will electing for
English succession law to apply to their Spanish estate, the position under the
new law will be determined by a new statutory ‘habitual residence’ test, such
• If the English owner of the
Spanish property is habitually resident in Spain at the time of death, then
Spanish succession law will apply to the Spanish estate.
• If the English owner of the Spanish property is habitually resident in
England at the time of death, then English succession law will apply to the
• If the English owner of the Spanish property is neither habitually resident
in Spain at the time of death nor in England, then it could be either English
law or the law of the actual country of habitual residence. This scenario would
need to be legally determined on the circumstances of the case.
In order to avoid uncertainty-
bearing in mind also that many people change residential status in the final
period of their lives, particularly due to healthcare considerations- it is
always best not to rely on the ‘default’ position under the new law. Instead,
it is always best practice for a Spanish property owner to sign a professionally
prepared, up to date Spanish Will with a clear statement of their wishes as to
the succession of their Spanish estate. This can also ensure that any up to
date tax saving opportunities are used to their full advantage.
This general commentary is not
intended to be exhaustive; and case-specific legal advice should always be
The Legal 4 Spain team provides a
full estate planning and Will writing service for properties and other assets
anywhere in Spain. We are always happy to provide a competitive cost estimate
in the first instance, on a no-obligation basis.
Spanish Wills &Estate PlanningPosted by Andrew Thu, February 02, 2017 15:13:23
It occurs to many
existing owners of Spanish properties that transferring their properties into
their children’s names could provide future inheritance tax savings.
Unfortunately, once the
Spanish property has been purchased and registered in the parents’ names, it is
often too late in economic terms, to achieve this.
For non- Spanish
nationals, the tax consequences of passing a Spanish property down to the
children need to be extremely carefully considered- both in Spain and also in
their own country.
In Spain, a lifetime
gift is subject to taxation at a level which is, in many cases, even higher
than the tax payable in the event of a parent’s death. As an alternative to a
gift, a sale/purchase between parents and children can result in a lower tax
liability; but the transaction has to be meticulously executed to avoid it
being treated by the Spanish Tax Authority as a gift in any event; and
therefore taxed at the higher rate.
There does exist in
certain circumstances, however, a further alternative option- the property
ownership structure can be collapsed, to reduce the number of co-owners in a
comparatively tax efficient manner. But this only enables transfers to other
co-owners. For example, a transfer can be made from one co-owning spouse to
another; or (if children are already registered co-owners of the property), in
favour of children.
So, for families to
avoid being ‘locked in’ to a Spanish property ownership structure which stores
up unnecessarily onerous tax liabilities in the long term, careful thought
needs to be given at the outset- when the property is first purchased- as to
the most efficient holding structure.
But (as an example of
the complexities which can arise) even for English buyers of Spanish
properties, it is not simply a case of ‘buying in the children’s name’. There
are also UK taxation ‘gift with reservation’ issues which need to be addressed.
If the parents pay for the Spanish property, then register it in the children’s
name but continue to use the property themselves, they then need to pay (and
carefully document) an appropriate rent or contribution towards outgoings.
Failing that, the gift of the money to buy the Spanish property could end up
not leaving the parents’ UK IHT estate.
In summary therefore,
when acting for clients on the acquisition of Spanish properties, it is
essential that the legal adviser provides full advice both under Spanish tax
law and also having regard to the buyer’s own national tax law, as to the most
efficient way to hold the Spanish property. This enables the buyer to secure
the best overall tax position; and to ‘keep their options open’ as regards future
tax and estate planning within the family.
Spanish Wills &Estate PlanningPosted by Andrew Thu, February 02, 2017 14:22:29
August 1st, 2013
There unfortunately continues to be
a lot of misinformation in circulation on this subject- particularly ‘opinions’
posted on the internet by those not in professional practice.
The starting point is that if you
own a Spanish property, you must have a Spanish Will.
Notwithstanding this; and quite
possibly because of incorrect advice, many British owners of Spanish properties
die each year, having made no Spanish Will. This can result in complex and
expensive Spanish probate cases.
However, the mission of our team is
to inform our contacts and clients during their lifetime as to the best
solution in each individual case.
In the vast majority of cases, as
indicated, the best solution is that during their lifetime, non- Spanish owners
of Spanish properties should ensure that they make separate up-to-date Spanish
Wills, to deal with their Spanish assets. The main benefits are:
• It avoids ambiguity as to which
national succession law is to be followed. In many cases, this can present
testators with greater choice in selecting beneficiaries.
• It avoids protracted and potentially highly costly Spanish probate procedures.
• It provides opportunities for efficient tax
• It enables clients to enjoy the protection and peace of mind of being able to
use Spain’s excellent compulsory national Wills Registry.
The quality of the professional
service in provision
of Spanish Wills is of
paramount importance. We have identified the main features of our Spanish Will
service which we consider to be of key importance to our clients:
• Our clients can be confident that
our documents have been produced with both Spanish and English legal input and
taxation analysis, which is absolutely essential when dealing with dual (or
multi) jurisdictional estates.
• Our clients can be confident in the professional qualification, regulation
and accountability of those responsible for advising and producing
• All our Spanish legal documentation includes at no extra charge, a
professional translation into ‘real’ English (we only work with sworn
translators, qualified and authorized by the Spanish Ministry of Foreign
Affairs). It is obviously fundamental that the translation is completely
accurate, to ensure that the testator fully understands what is being signed.
• We organise the whole Notarial process for our clients, providing our clients
also with full guidance notes as to the signature process, as well as helpline
advice, any time. So, the whole process is extremely straightforward and
stress-free for our clients.
• Our proven track record of working alongside our extensive network of
Notaries throughout Spain, ensures efficiency of process and confidence and
convenience for the client.
• As our priority is to work with Notaries with an in-house bilingual facility,
clients do not have to pay extra (as can otherwise commonly the case) for
interpretation services at the signature appointment.
• All documentation is discussed and agreed at the client’s pace, to ensure
that everything is carefully considered and thought through before
documentation is finalized and ready for signature.
• From our extensive and broad ranging experience of Spanish probate cases,
clients can be confident that all documentation is designed to ensure
efficiency and ease of Notarial/ Registry acceptance in the event of Spanish probate.
• As we offer a full range of Spanish estate planning tools (without being tied
or committed to any single product or process), clients can be confident of a
truly independent and unbiased approach to Spanish estate planning; to find the
best solution in each individual case.
Spanish Wills &Estate PlanningPosted by Andrew Thu, February 02, 2017 14:16:20
March 17th, 2013
The EU bailout conditions for Cyprus
have sent shockwaves throughout Europe and beyond. Indeed, anybody with bank
accounts in what are perceived to be the weaker European countries should
review carefully where their funds are held; and assess the risk of exposure to
bank insolvency and taxation.
We are certainly not subscribing to
the knee-jerk reaction of many-being immediately to transfer all funds out of
Spanish banks (save for the minimal amount to cover property outgoings and day
to day requirements). The official line remains that Spain does not require the
form of bailout which Cyprus has sought; and for which the draconian conditions
have been imposed.
Indeed, it would be reckless in the
extreme to recommend a run on the Spanish banks, as the consequences would be
disastrous. We would hope therefore, that an urgent assurance is given by the
Spanish Government as to Spain’s position; and also that a categorical
assurance is given that no such levy will in any circumstances be imposed on
Spanish bank accounts.
Failing the immediate provision of
those assurances, irrespective of calls for caution to avoid dramatic liquidity
problems for Spanish banks, it is worrying but perhaps inevitable, that a
significant outflow of funds from Spanish banks will now be seen.
Aside from this latest development,
many of our clients have also expressed concerns about what they are reading in
the Press about the security of their savings in some of the Spanish banks.
Also, although there is a capped
Spanish Government guarantee of funds deposited with Spanish banks, many are
expressing concerns as to:
· the limit of the Spanish
· the ability of the Spanish Government to honour the guarantee in the event of
the insolvency of a Spanish bank;
· how long it would take for the Spanish Government to honour the guarantee;
· the fact that many Spanish savings products are not covered by the Spanish
Obviously each individual’s
circumstances and banking arrangements are unique, so it is impossible to
provide ‘standard’ advice on the issue; and to attempt to do so could be
But we do encourage those with
savings in Spanish banks to take this opportunity review their arrangements;
and take such action (or take no action) as they conclude to be prudent in
their own circumstances.
In terms of cash holdings being
returned to other countries, if conversion to Sterling (or another currency) is
required, there can be significant variances in the rates given between banks
and the best specialist Foreign Exchange (FX) brokers. So, there can be a very
substantial hidden cost in this process or repatriation of funds for
individuals who do not give the matter careful thought and attention.
We are able to refer our clients to
a leading specialist FX broker, so that we can provide the required
certification to have an FX facility set up in a matter of minutes. This
ensures that the clients we introduce have a fast, secure and top quality FX
service; saving substantial sums on each and every FX transaction. The service
is available for all major currencies.
We will be happy to provide further
details on request
Spanish Wills &Estate PlanningPosted by Andrew Thu, February 02, 2017 14:11:06
March 11th, 2013
For English nationals with property
in Spain, in the majority of cases we deal with, the answer to this question
is: no. Most English nationals are not subject to the Spanish law of succession
(which would otherwise require parents to leave specified proportions of their
estates to their children).
However, individual circumstances
have individual legal consequences. So, this is a matter which has to be
considered carefully in each client case in dealing with Spanish Wills and
estate planning- both from the Spanish and UK legal perspectives. This ensures
that correct legal advice is given; and appropriate and secure legal
documentation is signed.
To have clear, correct and
individual advice on this point, helps to avoid anxiety and uncertainty when it
comes to Spanish estate succession.
Spanish Wills &Estate PlanningPosted by Andrew Thu, February 02, 2017 14:08:34
February 22nd, 2013
Back in 2011, a widely
publicised BBC television programme, Panorama, highlighted concerns about the
levels of professionalism and regulation of will writing and probate services
under English law. Following that, a major regulatory review was undertaken in
the UK, which concluded with much stricter regulatory controls. So, effective
consumer protection in the UK for this area of legal services is now firmly
It is equally
important (if not, even more so) when choosing your Spanish legal adviser, that
you make the same enquiries of your Spanish legal adviser, as you would make of
professional advisers in your own country.
Due to the
professional background of our team (see “Our Team“), these are matters which have always been
extremely important to us.
Our professional body
in the UK is The Society of Will Writers and Estate Planning Practitioners
(www.willwriters.com). Also, the Spanish lawyers handling our Spanish legal
cases are fully qualified and highly experienced in Spanish legal matters. They
are accountable to; regulated by; and professionally insured through their own
professional body in Spain (the Colegio de Abogados).
In addition to this,
every single Spanish legal document we provide for execution in Spain is
specifically approved by an authorising Notary- and in the case of Wills, also
accepted by the Central Wills Registry in Madrid. As such, the level of
accountability and professional protection afforded to our clients is second to
It is essential if you
are not a Spanish national, but have assets in Spain, that the legal advice you
receive is from legal professionals, who are appropriately qualified and
experienced in Spain. But equally importantly, your Spanish legal professionals
must also have the necessary qualification and experience of such matters in
your country of origin. Otherwise, it is impossible for you to be confident
that your legal position and responsibilities in Spain are correctly
“dovetailed” with your legal position and responsibilities in your country of
origin. Getting it wrong by not having proper professional advice could end up
being very costly for you and your family.
Also, it is important
to note that before confirming instructions in any Spanish legal matter, you
must be certain that you are completely clear about all applicable charges and
costs and how they are calculated; and further, you should ensure that any
client monies will be securely held on your behalf, in a designated client
We are more than happy
to give our clients the comfort they need on all these matters, as we are
dedicated professionals, committed to 100% client security and satisfaction.
Spanish Wills &Estate PlanningPosted by Andrew Thu, February 02, 2017 14:02:14
Conduct Risks in Estate Planning Cases with Spanish Assets
November 29th, 2016
The existence of
Spanish assets in cases handled by UK practitioners can give rise to specific
considerations, which can be professionally risky to disregard. A few of the
key stages requiring particular care are as follows:
assessment and advice can be critically important at the point of Spanish
property acquisition. It has to be borne in mind, that in the event of
subsequent inheritance, there can be significant exposure to Spanish Succession
Tax- even potentially between spouses. Lifetime changes of ownership of Spanish
properties can be extremely costly to transact, so it is important to have
matters structured correctly- and tax efficiently- from the outset.
It is fundamentally
important that, prior to completing the purchase of a Spanish property, the
proposed ownership structure is very carefully thought through- and the future
succession route (and fiscal consequences) are factored into the purchase
process. Otherwise, unnecessary/ avoidable fiscal exposure can arise.
Owners of Spanish
properties (both those who are resident in Spain; and those who are not
resident in Spain) have a series of fiscal obligations in Spain, which must be
performed correctly and promptly, otherwise there can be significant
repercussions in terms of exposure to escalated costs/ Spanish fiscal
liability. It is important that estate planning advisers in cases where there
are Spanish assets are aware of these responsibilities, in order to provide
correct cross-border advice.
In many cases, a
Spanish property owner remains responsible for fiscal compliance obligations in
Spain until the end of the calendar year following the year of sale of a
Spanish property. It cannot therefore be assumed that the completion of a
purchase or a sale of a Spanish property concludes matters for the professional
particularly in their retirement- dream of a move to a warmer climate and the
more relaxed- and economical- lifestyle Spain seemingly offers. However, making
a full time move to Spain; and becoming an official Spanish resident, can cause
specific complications in the fiscal affairs and liabilities of non-Spanish
nationals. Also, for their families in the event of inheritance.
Any Estate Planning
advisers involved in the context of their clients considering moving to Spain,
need to ensure that the clients have a full understanding of the fiscal
consequences for them and their family of taking Spanish residency- both in
Spain and in their home jurisdiction. In many cases, the fiscal consequences
(and some of them being fairly oblique to the uninitiated), are so far reaching
that it is better to remain UK resident whilst enjoying lengthy stays in Spain-
to the extent legally permitted, without triggering Spanish residency.
Spanish Wills and
Many UK Estate
Planning professionals seemingly continue to be unaware of the risks of
endeavouring to deal with Spanish assets in English Wills- rather than
following the correct convention of advising that separate Spanish Wills should
be made in respect of Spanish assets.
It continues to
surprise us in taking on Spanish probate cases, how many UK practitioners
endeavour to ‘muddle through’- seeking to deal with Spanish assets in English
Wills. This gives rise (in the event of probate) to additional procedural hurdles
in the Spanish process. Furthermore, it is typical in these cases, that Spanish
assets are implicitly (or even explicitly) placed in Trust structures, which
are incompatible with Spanish law.
In any event, the
risks of delays, complications and additional costs in the legal probate
process in Spain where there is no Spanish Will have been widely covered in
articles in the professional Press over the years. But there are also
situations in which the absence of a separate Spanish Will can have the effect
of an increased Spanish Succession Tax liability. Hence, UK professionals need
to be completely clear and accurate in their advice as to Will structuring, to
avoid the risk of exposing their clients to unnecessary/ avoidable fiscal
exposure and costs.
post-death variations to Wills are not permitted under Spanish law. So, that
sometimes-useful fiscal device in the UK does not exist as a facility in
respect of Spanish assets. However, UK testators (for example) with Spanish
assets are entitled to include in their Spanish Wills (along with a properly
drafted choice of law clause), a certain amount of flexibility in the
succession route, enabling their beneficiaries to elect for the most tax
efficient succession route to be applied at the time.
So, this enables post-
death up to date fiscal advice to be obtained, in order to select the most
expedient succession route/ structure. But a Will writer who does not take into
account this highly valuable facility which is available to non-Spanish owners
of Spanish assets, can leave the testator’s beneficiaries exposed to a
significantly greater fiscal liability than might otherwise be the case, with
correct advice and a thorough approach to Spanish Will writing.
In the Spanish probate
process, it is essential that the practitioner engaged to deal with the Spanish
Estate is professionally regulated, PI covered; and specifically experienced in
the conduct of Spanish probate cases for the estates of non- Spanish
individuals. This type of case is significantly different to a ‘regular’
Spanish probate case; and if the case is not conducted absolutely correctly,
this can not only cause problems in the Spanish process, but can also impact
adversely on the home jurisdiction probate case.
The practitioner handling
the home jurisdiction probate case and the Spanish process need to liaise
closely- especially on fiscal issues. Particular regard must be had to: the
succession route of the Spanish assets (and evaluation of the fiscal
consequences of any discretion as to the succession route); how asset values
are assessed and declared; and the availability of any deductions/ credits
under dual jurisdiction taxation treaties.
A failure by a UK
practitioner (for example), to agree to the appointment of an appropriately
qualified and experienced practitioner in Spain; or to liaise closely with the
appointed Spanish practitioner to achieve the best result overall for the
estate, can leave the Estate/ beneficiaries financially disadvantaged.
The above is a non-exhaustive
list of situations requiring particular care and attention.
The Legal 4 Spain team
is always available to provide preliminary advice on a no-obligation basis in
relation to Inheritance and Estate Planning cases where there are Spanish
Spanish Wills &Estate PlanningPosted by Andrew Thu, February 02, 2017 14:01:08
January 3rd, 2017
Spanish law provides
for ‘forced heirship’, which is completely different to English law, for
example, where there is freedom as to appointment of beneficiaries.
The issue of
cross-border inheritance- where a deceased person has assets in different
countries, in principle subject to different/ conflicting laws as to
succession- has traditionally been fairly complex and potentially confusing.
The EU Regulation
650/2012 (‘Brussels IV’) simplified matters where the deceased died after 17th
August 2015, owning properties in different EU member states.
Prior to Brussels IV,
the deceased’s nationality and location and type of assets were contributory
factors in determining the applicable law of succession relating to EU assets.
But for deaths after
17th August 2015, the default succession law relating to EU assets will be
determined by the deceased’s ‘habitual residence’ at the time of death.
Choice of Law
Brussels IV also
provided for certainty- that an election can be made in a Will as to which
succession law applies. This can override ‘habitual residence’ in applicable
cases, where that is advantageous.
This is particularly
important, for example, for a UK national who is resident in Spain. If no election
is made as to applicable succession law, then the ‘habitual residence’ test
would mean that Spanish succession law would apply to that individual’s estate.
However, by making a Will which includes a valid election of English succession
law, this overcomes the potential problem.
Brussels IV also
provided for European Certificates of Succession, to simplify probate in
cross-border estates. But this does not assist in the case of a UK national who
is habitually resident in the UK, as the UK’s opt-out from Brussels IV means
that the UK cannot issue a European Certificate of Succession.
For this reason, the
probate procedures for most UK nationals who own Spanish properties are not
changed by Brussels IV.
It has always been
recommended for a UK national (for example), with a property in Spain, to make
a separate Spanish Will to deal with the Spanish assets. This has always
assisted in avoiding unnecessary complications, costs and delays in the Spanish
probate process. Brussels IV has not changed this. Furthermore, it is necessary
in many cases, to ensure that a choice of law election is included in the Will,
to be certain that UK succession law will apply.
As noted above, for
the estates of deceased UK nationals with assets in the UK and Spain, there
remain two separate legal succession processes- one in the UK; and one in
Spain. But where the deceased leaves up to date and valid Wills in the UK and
Spain respectively, the legal processes can be conducted simultaneously, and
the situation need not be complex, lengthy, or costly.
Brussels IV has not
directly affected the pre-existing position regarding succession taxation.
There can be succession tax liability in each jurisdiction in which the
deceased owned assets (subject to double taxation treaties/ relief). However,
in making Wills and considering choice of applicable succession law, careful
consideration must be given to succession tax exposure; to ensure that legal
and legitimate opportunities to reduce succession taxation are not lost.
The precise effect of
Brexit on the application of Brussels IV to UK nationals will depend on the
negotiations and final agreements between the UK and the remaining EU member
states. But although Brussels IV is an EU Regulation, it does also apply to
third party countries. So in principle, a UK national’s election to apply UK
succession law to their Spanish assets should remain valid following Brexit.
Also, the risk under
English law that (for UK nationals with Spanish properties), Spanish succession
law should apply to their Spanish assets, is contradicted by Spanish law, which
provides for the application of the National Law of the deceased person- if so
elected in a Will.
So in any event, to be
certain, UK nationals with Spanish properties are very strongly advised to make
a separate Spanish Will dealing with their Spanish assets; and making a clear
election for their succession law of choice to apply to their Spanish assets.
The Legal 4 Spain team
is always available to provide preliminary advice on a no- obligation basis, in
relation to Wills of Spanish assets and Spanish estate planning generally.