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.
European Certificate of Succession
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.