July 8th, 2014
Discovering that there are Spanish assets in a non-Spanish estate gives rise to a number of issues in preparing for the estate administration.
Some key points are:
Location of Death. If the death occurred outside Spain, then the death has to be proved to the Spanish Authorities as the first stage of the legal/ procedural work. This enables the compulsory search of the Spanish Central Wills Registry to be carried out, to establish with certainty, the presence or absence of a Spanish Will.
Will. A major factor in assessing the complexity of a Spanish probate case (and of course, actual beneficial entitlement) is determining whether: there is a valid Spanish Will; no Spanish Will but a foreign Will covering the Spanish assets; or no Will at all. The search of the Spanish Central Wills Registry confirms whether or not there is a valid Spanish Will; and also (if there is), the date and Notarial location of the last such Will. However, it should be noted that the Spanish Authorities will admit evidence of later revocation of such a registered Spanish Will by a subsequent non-Spanish Will. (Hence, drafting of English Wills where there is a pre-existing Spanish Will has to be undertaken with considerable care).
Location of Assets. Generally, it is unnecessary that the legal practitioner appointed to deal with the Spanish assets is in the actual locality of the Spanish assets. Administration of Spanish estates for non-Spanish individuals is a specialised area of legal practice. So, the key factor in appointing a legal practitioner is not their actual location, but that they have the necessary dual-jurisdictional qualification and experience in dealing with the succession of Spanish estates for non- Spanish individuals.
Asset Type. The exact legal procedures and necessary documentation in a Spanish probate case will be determined principally by the type of Spanish assets. In some cases, a simple monetary legacy left in a Spanish Will can involve the same amount of procedural documentation and legal/ Notarial work as the succession of a Spanish property.
Property ownership. The regime of property ownership in Spain for multiple owners is the equivalent of tenants in common in the UK. Spain also has a forced heirship law which may-or may not- apply in dealing with the Spanish assets of non- Spanish individuals, depending on the circumstances.
Power of Attorney. A Spanish representative is generally appointed under Power of Attorney, in order to minimise inconvenience for beneficiaries, as the Spanish inheritance process involves a significant amount of personal attendance. Estate administrators may also need to be represented in Spain (under Power of Attorney), in addition to beneficiaries. The form and wording of the estate legal documentation will determine this.
NIE Number. Having a Spanish fiscal number is obligatory for beneficiaries and sometimes for estate administrators also. Generally the NIE number can be obtained under Power of Attorney, without the need for the applicant to be personally present in Spain.
Apostille. Non-Spanish legal documents which are required to prove entitlement (Death Certificates; Grants of Probate, etc) may need to be Apostilled by the Foreign and Commonwealth Office, in order to be legally admissible in Spain. In some cases, they must also be translated and certified by an official translator. An advantage of the existence of a valid separate Spanish Will is that it reduces the complexity and extent of the documentation, which has to be produced to the Spanish Authorities in a Spanish probate case.
Taxation. The Spanish Succession Tax liability in a Spanish probate case must be very carefully assessed at the outset. The more remote the relationship between the deceased and the beneficiary, and the higher the value of the estate, the higher the tax rate. There are other major differences of approach between Spain and other countries- for example in Spain, there is no automatic inter-spouse exemption. Also for real estate interests, in addition to Spanish Succession Tax, there is also usually a local Town Hall (Plus Valia) tax liability payable on succession. Although post-death Will variations are not allowed in Spain, depending on the family circumstances and the estate documentation, it may be possible to achieve alternative succession routes in the succession process; thus potentially reducing the tax exposure. Any such strategy in the case handling must be determined right at the outset, agreed upon with the beneficiaries; and implemented during the course of the case handling. It cannot be addressed retrospectively.
Banks. Dealing with bank accounts in Spanish probate cases can often be the longest part of the process. Succession of bank accounts is not addressed at local bank branch level in Spain. The bank’s central legal department instead deals with succession matters. Direct contact with the bank’s central legal department is generally fairly difficult. For the Spanish banks, succession work is decidedly low priority. So, considerable patience is required on the part of the practitioner and beneficiaries!
Sale of Inherited Assets. In order for beneficiaries to be able to sell registered Spanish assets, the Spanish probate process must be completed first. For relatively minor estate assets such as vehicles, this can be inconvenient, as there can be a significant delay, before a sale can be completed.
Conclusion. As the exact procedures and documentation are always case-specific, an initial full analysis of a Spanish probate case is always essential. This ensures certainty from the outset as to the procedural steps which will be required; and the information and documentation which will need to be produced. Unless a Spanish probate case is carefully planned and programmed from the outset; and meticulously managed as matters proceed, there is a very significant risk of delays. Any such delays can be frustrating and time consuming for the practitioner; and costly for the beneficiaries- as Spanish tax liabilities can increase over time, with the imposition of interest and penalties.
The Legal 4 Spain team is always available to provide preliminary advice on a no-obligation basis in relation to probate cases, which include Spanish assets.