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Wills in Spain

When you are living in a country that’s different to the one you were born in, many variations in the law can pass you by. Succession law in Spain is one of those that can take foreigners living here by surprise. Recent EU legislation relating to wills means that it is even more important that residents are clear about what will happen to their property when they die.

What is the Spanish succession law?

In the UK and Ireland the succession law means that when you make a will you can leave your inheritance to whoever you wish. However, Spanish succession law is different. The children are the ‘legal beneficiaries’ in Spain and by law two-thirds of the total inheritance must go to them with only one-third being left to your discretion.

Until now, that didn’t really cause a problem for residents of other nationalities. British and Irish nationals could make a Spanish will that expressed their wishes without there being any need to specify further. However, in 2015 the law is set to change.

The EU succession regulation

This new law (EU No. 650/ 2012) applies to those who ‘habitually reside’ in a country different to that of their nationality. By ‘habitually reside’ it means having lived in the country for at least the previous two years.

The law says:

EU citizens habitually residing in Spain (Residents) will be subject to the Spanish succession law, despite their nationality, unless they specifically state in their will the wish for the succession law of their country of origin to apply”.

As different countries have different succession laws, the EU aims to regularise and clarify practice. The idea is that it is the country that you are residing in whose inheritance laws apply, unless you state otherwise. The good news is that British and Irish nationals in Spain have a choice and can invoke their own succession laws if they wish.

Who does this apply to?

If you are a resident living in Spain of British or Irish nationality then this applies to you. There is no need for a non-resident to change their will if they own Spanish property. In this case, the inheritance laws of their own country automatically apply.

What should you do?

We recommend that if you wish your possessions to be divided between inheritors according to your wishes, then you should make a new Spanish will. The new regulation will not apply until 17th August 2015 so there is plenty of time to do this.

The will should clearly state which succession law you wish to invoke and contain the necessary clause that an inheritance solicitor will be familiar with. In this way, the Spanish notary will have clear directions to follow and the intentions of your will should be followed.

If you have no will at all then Spanish law will also apply. So if making a will in Spain has been something you have been avoiding for a while, now is the time to think again.

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Inheritance Tax in Spain

The Inheritance and Donations Tax is calculated by each autonomous region and percentages can vary greatly.

Some regions offer significant bonuses for the most direct heirs (example, 99% in Madrid).

In general, the payment is calculated from 7% to 34% with an exempt minimum amount that varies according to the region.

How much is the inheritance tax?

Inheritances in Spain

Spanish laws regarding inheritance matters are different from those of other countries, mainly in the sense that other nations allow the deceased to freely dispose of his/her assets, while in Spain there is the figure of the “forced heirs,” which establishes that the deceased “cannot dispose of the inheritance freely,” but “must bequeath 2/3 of the inheritance for Mandated Heirs (who are mainly the descendants and spouses).”

Wills can be raised in Spain for foreign nationals, which utilise the laws of their home country ie: You can specify who your direct heir is.

In Spain, after death, it is imperative to locate the last will and testament made by the deceased, since this is the will that has validity. To find it you must verify the Register of Last Wills, where all wills are filed in Spanish territory.

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Donating property

As we move closer to the Brexit due date many British people are increasingly anxious about what to expect. However, the reality is that even at this late stage, we don’t really know what will happen once Britain leaves the EU. What we do know is that we can’t expect it to be as easy as it is now to live and work in or even visit another European country.

However, there are some ways that we can perhaps reduce the uncertainty. For example, when it comes to ensuring that those you love receive your property when you die. When it comes to inheritance we don’t know what to expect after Brexit. However, we do know what the situation is now if you choose to donate your property.

Why donate?

Making an active choice now to donate is a good alternative, in our view. Waiting to bequeathe your property when you die carries the uncertainty of post Brexit tax implications. It also means that your inheritors are required to pay tax and enter into legal procedures just at the time when they need it least.

If you donate your property you can make sure that the process is settled whilst you’re alive, preventing any misunderstandings and ensuring that arrangements are just what you had in mind. There are other advantages to donating too.

The donation process is swifter and easier than that of inheritance. This is because there are fewer formalities than the ones required with a death. You can make your wishes clear and make sure that they are acted upon, saving your inheritors from the disputes that sometimes arise during the inheritance process.

Donation tax allowances are likely to be more favourable now than after Brexit. Being part of the European Union has meant that there are advantageous terms which may well be lost from March 2019 onwards.

Although donation tax allowances vary between different regions in Spain, it is true that regional governments do tend to reduce the tax and keep it as low as possible, often not charging anything at all. In most cases there is no donation tax to pay and if you take this route you know that you do not leave a minefield for your family to find their way through when you die.

Act now

There are many aspects of Brexit that we will not be able to avoid. However, as inheritance process is something that we can, you would be wise to take the opportunity to do so.

Each individual case is different but we are happy to talk to you about what the implications might be post Brexit and how taking action now could keep it to a minimum.