People do find talking about inheritance difficult. It evokes all kinds of emotions and can be a subject we avoid until it is too late. You need to consider carefully whether you make a will in Spain and how you are going to distribute your property as there are a number of differences in the way that Spanish inheritance works.
In Spain, there is less flexibility about who you leave your property to. Spanish succession law requires that a proportion of the estate must be left to legal beneficiaries such as your spouse and children. Children must inherit two-thirds of their parents’ inheritance.
Other nationalities living in Spain can follow the succession law of their own country if they prefer. However, a new EU laws mean that this must be clearly stated in the will.
Spanish Inheritance tax varies enormously according to two factors:
- The relationship of the inheritor to the deceased
- The autonomous community in which a resident’s property is located
There are allowances for those inheriting and the threshold depends upon the relationship between the inheritor and the person bequeathing.
There are four groups of inheritors:
- Children and grandchildren under the age of 21
- Children and grandchildren over the age of 21, parents, grandparents and spouse
- Brothers, sisters, uncles, aunts, cousins, parents-in-law, daughter/ son-in-law
- Anyone else
Residents in some autonomous communities might find that an unmarried partner falls into category four, no matter how long they have been living together. Close relatives in category 1 and 2 have least tax to pay as the threshold is higher.
No immediate transfer
What many people are unaware of is that inheritance tax has to be paid at the same time as the property changes hands. Careful consideration should be given to the implications of this for those inheriting property in Spain.
When a spouse dies there is no immediate transfer of property or bank account. A proper, legal transfer has to take place, which in the case of property means a change of names on the Spanish Title Deed. A joint bank account will mean closure of the account with the remaining spouse needing to open a new account of his/ her own.
Making a will
We do recommend that people with a property in Spain make a Spanish will. It makes the process simpler when your relatives do come to inherit as there will be no need for an official translator, the Foreign Office or lawyers to be involved.
In the process of making a Spanish will you should have opportunity to think about the best ways of distributing your property to ensure that those you leave your belongings to do not have too much Spanish inheritance tax to pay. For example, sharing your property out between several people can mean there is less inheritance tax as they will each have their own threshold rather than just having one.
It might be a difficult subject, but having a property in another country with unfamiliar laws means making a will and thinking about inheritance are wise steps to take.