SPANISH WILLS AND INHERITANCE TAX Free Guide Foreigners’ Spanish Wills and Inheritance Laws If a foreign whose only real estate assets are in Spain dies without having made a will, his/her estate will be adjudicated according to the Spanish laws of succession. How this happens? The Spanish Civil Code sets the rule of nationality for Law applicable to inheritance. Some legal orders, as the UK ones, establish that real estate assets owned by UK citizen abroad will be under the foreign country Inheritance Law at the death of that person. The Spanish Supreme Court, in 2002 in the case Francois Mary James W, established that if a foreign died leaving just real estate assets in Spain, Spanish Inheritance Law will apply. Therefore, if you are a UK national, who has just real estate assets in Spain ( owning some banks accounts or other type of assets in your country) and die without Will, your assets will be treated under the Spanish Inheritance Law. It is always necessary to grant a Will in Spain?
FAQ: Why do people grant wills in Spain then? The fact that they grant Spanish wills does not mean they are submitting to Spanish Inheritance Law. Foreign people grant wills in Spain as a way of having a will statement made in the country where their assets are so the execution of their will is easier for the Testator’s heirs. This can be prepared for the testator by a lawyer. Once the testator’s wishes have a legal form, he/she will have to testate before the Notary (who gives faith of the testator’s identity, the authenticity of his/her will, and his/her capacity to testate…). Make a different Will disposing of assets located in Spain
From a legal point of view, the Will in Spain is not necessary if you already have a Will in your country of origin. Just as a way to avoid complications, expenses and delays to your heirs, the Spanish will is very advisable. In this manner, if no will was ever drafted (in your country of origin or in Spain) the deceased’s estate in Spain will be divided as follows:
Spouse – The usufruct of 1/3 of the late spouse’s assets . Children – Will automatically receive 2/3 of the deceased parent’s estate in Spain. This legacy will be divided into equal shares among all the siblings. If any of the deceased’s children died before him/her, then inheritor’s share will be granted to the deceased’s
grandchildren. Should there not be grandchildren of the deceased son or daughter, his/her siblings’ inheritance will be incremented proportionally. They will share with spouse ownership rights on the 1/3 left, which usufruct, as said, is for the widow/er. Parents – Will be the heirs of the entire estate in Spain if there were no children or
If the estate is a house or piece of property, the children cannot dispose of it freely until the Surviving parent dies, because the surviving parent holds and usufruct over the property
grandchildren. Grandparents – Will inherit the deceased’s estate in Spain, if should he/she had been an orphan and had no children or grandchildren.
ADIVICE: Make a different Will disposing of assets located in Spain
Should the deceased leave no Will the heirs will have to formalise a “Certificate of Inheritance”, which is an affidavit that formally declares who the deceased’s relatives are, and who is entitled to inherit the estate under the rules of the Spanish Inheritance Law. If the heirs are distant relatives other than children, siblings, parents or grandparents the declaration of Heirs has to be issued by a Judge. These are expensive procedures. Making a Will in Spain FAQ – ADVICE: Is it Ok to grant the will by handwriting? Handwritten wills are not advisable as they must be certified as authentic by a Notary before they can be executed.
Again, Law governing your Will and Inheritance is that of your nationality. If you grant a will in Spain, this needs to be in accordance with the Inheritance Law of your country. Under Spanish Law, there are 2 most important kinds of Wills or Testamentos:
Testamento Abierto (Open Will): Once the testator sings his/her Will in presence of the Notary and the witnesses, the Notary keeps the hardcopy in the Notary’s files, gives you an FAQ – How can I know if my father, authorized copy and sends a notification to the who died two years ago, left a will in Central registry in Madrid, known as Registro Spain? Should someone in your Central de Ultima Voluntad. family die without, to your Testamento cerrado (Secret or Closed Will): Once the lawyer drafts the testator’s Will, it is taken in an envelope to the notary who seals the envelope and signs it along with the witnesses. The Notary then files it, just as it was an Open Will.
knowledge, leaving a will, you can check with the “Registro Central de Ultima Voluntad” – where you can find out if there is a will, if there is more than one, and which was the latest (valid) one and the name of the Notary and the Notary Office in Spain where it was signed
Testators can either specify particular properties o assets to be destined to certain individuals or just make general statements of who your heirs are. These statements will be valid if they are respectful with your country Law of Inheritance. If you just own real estate assets in Spain, Spanish Inheritance Law applies to your Will. Under Spanish Law, you can also designate one or more persons to deal with the inheritance: executor/s. It is also possible to appoint guardians when there are minor children, in case both parents have passed away.
AQ: How can I transfer my father´s property in Spain into my name? He died last year. If your father left a will in Spain, you will only have to finalise the estate probate before a Spanish Notary. This should be a quick process, unless there is a disagreement between the heirs. Then you can use the Inheritance Deeds registered in the land Registry as a title for property transmission. If your father left a will in his country of origin but not in Spain, this Will must be validated in Spain. In order to do that, the Notary Public who is to sign the Inheritance Deeds will require you to present some very specific paperwork in relation to the probate procedure in the country of origin. If your father died ab-intestato, that is, he left no Will in his country nor in Spain, rules of his nationality will deal with the inheritance. If he just left assets in Spain, the procedure will be followed under Spanish jurisdiction and legislation. The procedure will be more or less complex depending on if there is agreement among heirs.
The will is always revocable, meaning that you can always change it.
Inheritance Tax The rules and rates for Spanish Succession Tax vary according to the relationship between the deceased and beneficiary. The individual regions can also vary the Spanish Inheritance tax (SIHT) FAQ - When do I allowances and tax rates, but only if the heirs and the have to pay deceased person are habitually resident in a specific Inheritance Tax? region. Habitual residents mean they need to have lived in Spanish inheritance the country for five years. National rules however, will tax accrues six apply if the deceased and/or heirs do not live in Spain. months after death. Prior to the filing of the Inheritance Tax Statement and its payment, it is necessary to assess the value of estate to be inherited and tax rates/scales to be used. Spain has a set system for these calculations. Taxes scales vary in accordance to the estate’s value and the nature of the beneficiaries.
After this date penalties are incurred.
Real Estate: Property is valued at the greater value amongst the Market Price, The Valor Catastral, and the rated Value or at the value set by Hacienda for wealth tax purposes. Personal Effects: Furniture, clothing, personal possessions and other personal effects of the deceased or Ajuar, are valued at a 3% of the price of the property for Inheritance Tax purposes. Valuable work of art or antique pieces may be valued separately. Vehicles and Automobiles: Used cars must be valued in accordance with tables published annually by the Spain Tax Agency. Other items such as yachts or airplanes will be valued separately. Stocks and Shares: Financial assets such as stocks, bonds, mutual funds or other investment are valued at their market price on the day of the person’s death. Life Insurance: If received by the deceased children, the total amount is added to the estate after the subtracting the permitted reduction. If received by a surviving spouse, half of the amount is added to the estate, and the other half is taxed as capital gain in the yearly income tax. Bank Accounts: The balance on the date of death is added to the estate.
Assessing the estate Value and filing the Inheritance Tax To avoid penalties or additional payments it is recommended to hire a Tax professional to calculate the heirs Inheritance Tax.
In order to calculate the inheritance Tax it is necessary to figure out the total value of the inherited estate, subtract the debts owed by the deceased, and apply the deductions and scales allowed by the authorities in accordance to your relationship with the deceased person (Groups – see below). Finally in accordance with the inheritors’ residence status, use the corresponding Region or Nation Tax Scales Tables to reach the amount that must be paid to the Tax Authorities.
As mentioned, the allowances and the tax rates, deductions and exemptions vary depending on the Group the beneficiary falls into. In accordance with the succession laws groups classify heirs in accordance to their consanguinity and affinity line with the deceased. Group I: Children and adopted Children under21 years/old. Group II: Children and adopted Children of 21 years old or older, grandchildren, parents, grandparents, spouses, unmarried Surviving Spouse Estate: partners registered as a Pareja de Hecho (only in Assuming that most of a couple’s certain regions) Group III: Other relatives of 2nd and 3rd grade, in-law relatives. Stepchildren, cousins, nieces and nephews, aunts and uncles, siblings, and inlaws and their ascendants/descendants.
assets were acquired during their marriage implies that about half of their assets are not part of the deceased person’s estate. Half of the assets belong to the surviving spouse.
Group IV: Other further grade relatives. No reduction is applied to these cases. All others including unmarried partners, unless registered as Pareja de Hecho in certain Regions Deductions and Tax Exemptions The present law provides a total exemption from taxes only for portions under €15,956.87. It applies to each inheritor, not to the total estate. FAQ – But I guess I am exempt from This exemption applies to portions between parents, children, spouses and siblings. For uncles, cousins and nephews, this exemption is cut by half (€8,000). For more distant relatives, or those not related at all, there is no exemption.
IHT as I am the spouse of the deceased? Unlike in Britain, there is no exemption from inheritance tax between husband and wife. A tax form must be completed and the taxes paid. Depending of regions and under specific circumstances the tax will be almost zero though.
An inheritor under 21 years of age can have an exemption of up to €48,000. For each year younger than 21, the inheritor can deduct €4,000 more until he/she arrives at the maximum at age of 13. In Andalusia, Taxable estate value amount equals 0, if assets left by the deceased have a value inferior to €500.000 provided that: 1. Heirs are members of groups I and II (or equivalent) 2. Specific heir´s taxable amount is inferior to €125,000. 3. Preexistent wealth of the heir is lower than €402,678.11.
FAQ: How much my wife/husband / children will have to pay when I die related to IHT on my property in Spain? It depends on the region the house is located and on the value the house has at the moment of your death. The most important data to know are the reductions that are operated on the taxable amount in each region
This also applies if the deceased’s assets are worth more than €500.000 but specific divisions of the estate among the heirs are lower than 125.000 €. Taxable property estate value amount is reduced in a 99% (95% in other Regions) with a maximum of €122,606.47, if the property is the habitual dwelling of the heir(s) by the time of the person’s death, and all of them have held an official residence permit for at least 3 years. This reduction applies to the spouse or similar, children or adopted children, parents or grandparents and other relatives older than 65 years old who lived in the deceased property for at least two years before the person’s death. The inheritors must undertake not to sell the property for 10 years. If they do not undertake this, they will be subject to
tax. This reduction does not apply to any other estate such as cars, yacht, airplanes or share in companies. Non-Residents cannot take advantage of this benefit. There are also reductions for companies and cultural goods. For reductions in other regions of Spain, please contact your lawyer or tax adviser. Other tips on wills and inheritance tax A joint bank account will normally be frozen on the death of one of the account holders, although the bank will usually allow the direct debits for services to continue to be paid out of the account. For a car to be sold following the death of the owner it is necessary for it to be detailed in the inheritance declaration and tax to be paid.