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The Law in Spain - Why it Pays to Make a Spanish Will

While you are enjoying your new home and new life in Spain, it is understandable that you might not want to think too long or too hard about the future, particularly about matters pertaining to your Will and inheritance. But the sooner you consider your options, the better you understand them, and the easier the procedure becomes.

Why it Pays to Make a Will in Spain | Inheritance Law Costa del Sol hero image

If you are a non-resident property owner in Spain and you pass away without making a Spanish Will, then your estate will be distributed according to typical Spanish laws on inheritance. These laws are fair and sensible, but it’s worth understanding the implications:

"the sooner you consider your options... the easier the procedure becomes."

A man who dies leaving three children and a spouse, who owns just the one property where the wife is in the title deeds as the half-owner, leaves 50 per cent of the property to her. The other half is divided equally between the three children. The title deed will then be amended accordingly to show the four names (the wife owning half, each child owning one-sixth). The widow can hold a usufruct of the children’s share until she dies, so they cannot force through a sale (well, they can, but the wife is entitled to live there until she passes away).

In this scenario, all parties must agree and sign the deeds if the house is to be sold. Because the husband didn’t make a Will, the nuanced hierarchies of the Spanish legal system come into play, and the procedure can be time-consuming, expensive, and divisive.

The benefits of making a Spanish Will

There are three chief reasons for making a Spanish Will:

Reason One It avoids time-consuming and expensive legal issues that your heirs will have to resolve. You can – and should – make a separate Will to dispose of any assets located outside of Spain. A British Will, for example, has no bearing on your Spanish estate.

"making a Spanish Will avoids time-consuming and expensive legal issues that your heirs will have to resolve."

Reason Two – Spaniards have to divide their assets equally among their heirs, and leave two-thirds of it all to their children. As a foreigner, you are exempt from this ruling and you can bequeath your assets to whoever you want. Your estate will, however, be subject to Spanish inheritance tax, which is high when left by non-residents to non-relatives. In addition, foreigners resident in Spain are subject to the same taxes on any of their worldwide estate, too. Therefore, making a Will allows you to navigate these various taxes at your discretion.

Reason Three – Your estate can become eligible to a 95 per cent reduction in inheritance tax. This reduction only applies to the first €120,000, but is not available to non-residents, so bear this in mind when drawing up a Will.

It is quite common to set up a family corporation, or trust, whereby your assets pass into the hands of a company where your heirs are all equal directors. This ensures very little tax is paid.

Setting tax values

The official value of your assets needs to be carefully and officially valued in order for the inheritance tax declaration to be accurately calculated. Your assets might include real estate, personal belongings, automobiles, stocks and shares, life insurance and assets held in bank accounts.

Inheritance laws in Spain

Four-year limit on inheritance tax

The statute of limitation on inheritance tax is four years, which means that the state cannot collect any tax on the assets you leave to your heirs more than four years after your death. If your Will is lost during this period but then found and presented to the authorities by the inheritors, then it is possible to re-register your assets free of inheritance tax.

Spanish law dictates that inheritance tax should be declared within six months of the date of death. This six month period is then added to the statute of limitations, so in effect the period stretches for four years and six months.

Minimising your inheritance tax liability

If you make a Spanish Will then you can drastically cut the amount of tax liabilities coming your heirs’ way. While there is no uniform policy for minimising the rate of tax due, there are options available to help bring it down, such as incorporating a Spanish company, incorporating an offshore company, or becoming a resident of Spain (you must have been a resident for at least three years, and your home be your official, main residence).

Fact checklist

  • Apply for a death certificate within 24 hours of death in order to make the inheritance process a lot easier
  • Inheritors should apply for (or already have) an NIE number, and will have to give power of attorney to the Spanish lawyer representing them in order to arrange it
  • Inform your intended inheritors of what you intend to bequeath them, where your title deeds are, the contact details of your lawyer and any other official piece of paperwork that they will need when you die – this will help speed up the process
  • Remember – the deceased’s bank account is frozen until the inheritance tax is paid and the Will’s conditions are satisfied
  • Once the inheritor registers the inheritance tax title deed at the Registrar Office, they will then have to pay the Plus Valia tax at the local town hall – the amount due depends upon the number of years that have passed since the last sale of the property
  • If your heirs do not process the change of ownership of the property to their names, then they cannot sell it or rent it out, so it is important for them to be aware of the legal procedures

By journalist, editor and former Costa del Sol resident, Ian Clover.

Please note: Every effort was made to check the accuracy of the information contained within our 'legal stuff' articles at the time of writing, but may well have been superseded over time. VIVA cannot accept responsibility for any errors or omissions, nor for the authenticity of any claims or statements made by third parties. We therefore strongly recommend that readers of these articles make their own thorough checks before entering into any kind of transaction. Prices were correct at the time of publication but may now vary due to circumstances beyond our control. The views and opinions of editorial contributors do not necessarily reflect those of VIVA .

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