If you do not make a Will dealing with your Spanish property, you risk the following:
- Someone other than your chosen beneficiaries could inherit your Spanish property.
- Your beneficiaries could end up with an unnecessarily lengthy and stressful legal process to claim their Spanish inheritance.
- Your beneficiaries could be burdened with very substantial legal fees in securing their Spanish inheritance.
- Your beneficiaries could be faced with high Succession Tax charges, which can significantly erode the value of their Spanish inheritance.
It is estimated that well over 50% of British owners of Spanish properties have either not made valid Spanish Wills; or have failed to update their Wills over time, such that their current Wills no longer reflect their actual wishes.
Although many do make Wills in Spain, for instance when they purchase properties, these Wills are often made as an afterthought, without particular regard to the pitfalls which are open to foreigners (particularly the British) with properties and other assets in Spain. Also, valuable opportunities legally and legitimately to reduce taxes are simply missed.
In our specialised legal practice in Spanish Wills and inheritance matters, we have observed particular problem areas, which typically arise and therefore require special consideration. These include:
- Confusion over inconsistencies in language.
- Accidental invalidation of Wills.
- Accidental adoption of Spanish Succession Law of forced heirship.
- Unnecessary exposure to high rates of taxation.
- Conflict of laws between England and Spain.
- Increased cost due to errors.
- As a result of the above, a slow and expensive Spanish probate process following a death.
In conclusion, it is essential when making Wills- particularly Wills covering assets in two (or possibly more) countries, that appropriate expert professional advice is obtained. This ensures that the documentation operates correctly, and as intended; in the context of the legal and fiscal systems of each country. It can be extremely dangerous and costly in the long run, to sign a Will, or to deal with estate planning in one country without also considering the position in any other country where you also have assets.
In the event of a death of a British owner of a Spanish property, the Spanish probate process is considerably different to, and more complicated than, the equivalent process in the UK. Specific issues include:
- Urgent action is needed, as there is a strict deadline for payment of any succession taxes 6 months from the date of death. If missed, interest and penalties are added to any tax debt.
- Although the % rate of Spanish Succession Tax can be lower than in the UK, the maximum nil rate band is just 16,000€.
- In contrast to the UK, Spanish Succession Tax can also be payable between spouses.
- All taxes due must be paid before any property can be sold. Also, it is usually not possible to use the property as security to borrow money to pay the tax.
- All beneficiaries and even named executors of the Spanish estate need fiscal registration numbers (NIE’s) in Spain (like National Insurance numbers) before probate can commence.
We must not overlook that there exist three distinct and consecutive processes in Spanish probate: the Notarial process; the fiscal process; and the registration process. Each process has its own set of rules and requirements, which have to be precisely adhered to, in order to avoid lengthy delays and escalating costs.
It should be pointed out that the Notarial and fiscal processes generally involve a good number of personal attendances before the Spanish Authorities. Hence, most Spanish probate cases proceed under a Power of Attorney, so that an appointed and trusted legal representative in Spain can attend to all these matters.
British owners of properties in Spain need specialist advice to avoid the many pitfalls and risks of unnecessary and high costs. At Legal 4 Spain (www.legal4spain.com) we specialise in Spanish inheritance matters; and we are therefore able to advise and assist you, to ensure that ‘living the dream’ does not turn into an expensive legal nightmare for your loved ones.
Managing Director, The Legal 4 Spain Group