New EU legislation affecting your Spanish will

Inheritance Wed, 2 Oct 2013
New EU legislation affecting your Spanish will

You may already have heard about the changes to inheritance legislation and Spanish wills in Spain. There are important changes taking place that may affect you if you are an EU citizen and a resident here.

New EU inheritance legislation

The Regulation (EU) No. 650/2012 states:

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.

This means that if you have a Spanish will it must specifically state that you wish your own country’s inheritance law to apply. If this clause isn’t included then the distribution of your inheritance will automatically revert to Spanish law. If you have no will at all, then Spanish law will also apply.  This does make a difference.

Spanish national inheritance law

According to the Spanish national inheritance law a certain percentage of inheritance must be left to legal beneficiaries such as your spouse and children. This is different to UK and Irish law which allows an individual to leave their inheritance to whoever they wish.

If you have a specific request for who you wish your inheritance to be left to then leaving your old Spanish will as it is or having no will at all may mean that your wishes cannot be followed.

Our advice

The new legislation doesn’t come into effect until 17th August 2015. However, we highly recommend that you do change your will if you are a resident in Spain but do not have Spanish nationality.

In order to adapt your documentation to ensure that you can leave your inheritance to those you choose, we have expert staff who can help you.

Comments

The Escatura of our property is in three names. That of my Husband, myself and my Father. We each have a Spanish will bequeathing the property to each other, we wish to ensure that this stays the same. However my Husband has two children from his first marriage and my Father has a Son and an adopted Step Daughter. Please advise how best to amend our Wills in view of the new change. At the same time we would be interested to know more about how we would be affected by Inheritance Tax. The property is mortgage free. Thank you.

Dear Gillian

You do not mention if you are a resident or a non-resident owner of a property in Spain. If you are a non-resident then there is no need to change your Spanish wills. Non-residents are allowed to follow the law of the country where they actually reside permanently. If you are a UK resident then you can follow British law of succession in your Spanish will without having to actually stipulate this. British law of succession allows free choice of inheritors. If you are a resident in Spain you will have to include a special clause in your will if you wish to be exempt from following Spanish law which applies 'forced heirs' and not free choice of heirs. Spanish succession law dictates that a large portion of the estate has to be left to the deceased's children. 

How does your answer in #2 relate to will interpretation in home country if the Spanish property is jointly owned and one of the owners dies? In Spain presumably inheritance tax would be payable by the surviving spouse. This situation would not apply to a UK property as the surviving spouse would automatically inherit ( if decreed in the will) the deceased's half. My wife and I non resident property owners in Spain.

Dear Malcolm

In Spain shared properties owned by married couples are not recognized as assets in common in the same way as in the U.K. Under Spanish law the couple literally purchase and own undividable halves of the property and when one dies the remaining spouse inherits the other half (depending on their nationality and contents of will).

Inheritance tax is charged according to half the value of the property and the residency or non-residency status (i.e. involves permanent home or holiday home) of the deceased and the inheritors. The way in which the property was purchased under Spanish law would have to be respected outside of Spain.

Dear Malcolm

please provide more information regarding the final sentnce of #4.

My mother has lived in Spain for 10 years but is now contemplating returning to the UK within a year and renting an apartment close to us (she is 86). However, she has bequeathed her apartment in Spain to me, which cost approx £120,000 initially but is now worth probain only £60,000 due to the resession/property slump there. I have been told that I would have to find approx £24,000 in inheritance tax and to pay it within 6 months or the property could be seized! Is this correct please? Also, my mother, has been putting some money aside for me in a Spanish bank account towards paying this tax but is it true that I wouldn't be allowed to use this to pay the tax of £24,000?

Any advice would be greatly appreciated.

Kind regards

Hazel Owen

Dear Hazel

Yes, you have to pay the tax within the first six months unless a special extension is granted increasing the time to a year. If the tax isn't paid then fines and late payment interest are added but it is unlikely that it would reach the stage thet the property was seized.
 
Unfortunately, on your mother's death the bank account would be blocked. The funds in the account would be part of the estate and you would have to pay the tax on the whole estate (property and bank funds) before you could access the bank account. I hope this information helps. 
 

If the home owner dies, never having been married and never had children, surely the sibling (sister or brother) would then become first in line...not third ( spouse first, children second, siblings third) therefore reducing the amount of payable inheritance tax? I don't understand how they can be third in line when the first and second have never existed. Home owner and sibling both residents in Spain. How does this make sense?

Dear Taylor

Thank you for your query.  If the home owner never had a spouse or children then they cannot be first in line and it would be the sibling, as the only relative, who would inherit. The only thing to be aware of is that if the home owner's parents are still alive then they might take precedence over the sibling. 

I have a quarter share in a property with my wife and her mother and father, do we need to put this property in our wills or does the property automatically go to the surging owners until there is only one owner left. Will there be any tax liability as the property is already owned and not being left to any of the owners. I hope this makes sense? I look forward to hearing from you

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