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European Inheritance Law Changes- Avoiding Spanish Inheritance Problems

Spanish Succession TaxPosted by Andrew Thu, February 02, 2017 14:23:37

September 16th, 2013

New European rules will come into force on 17 August 2015, which affect the inheritance of Spanish assets of non-Spanish individuals who die after that date.

These changes will benefit the families of owners of Spanish properties who leave up to date, professionally prepared and correctly worded Spanish Wills.

However, those who leave no Spanish Will; or Spanish Wills which are out of date or do not take into account the new Regulations, could leave significant problems and unintended consequences for their families or chosen beneficiaries.

There are numerous benefits of the new Regulations for non-Spanish owners of Spanish properties (provided that their Last Wishes are validly expressed in the correct form of Spanish Will). These benefits include:

• Non-Spanish nationals with properties in Spain are officially entitled to exclude the restrictive Spanish ‘forced heirship’ succession law from applying to their families.
• Through Spanish Wills, significant opportunities are now allowed securely to mitigate Spanish Succession Tax.
• Flexibility as to succession route is permitted in carefully drafted Spanish Wills, to enable beneficiaries to elect the applicable succession route following a death. This means the route which best suits family circumstances and tax efficiency at the time, can be applied. This principle sits comfortably with English nationals, who are allowed under English law to make certain variations to deceased’s Wills, following their death.
• Confusion as to what constitutes ‘habitual residence’ (becoming the main criteria for choice of law in Spanish inheritance) can be avoided. Certainty and security in succession now prevails in Spanish estate planning.

Although these developments are extremely positive for Spanish property owners (and those considering investing in Spanish property); it must be emphasized that those who fail to obtain up to date professional Spanish estate planning advice could fail to secure the benefits of the new Regulations for their families or chosen beneficiaries.