If you own real estate or other assets in Spain, it is advisable to issue a Spanish will that regulates any future inheritance. This is to ease the administrative burden on the heirs in handling the Spanish inheritance, as well as to ensure that the distribution of the inheritance really takes place in accordance with the will of the testator.
Under Spanish law, all wills issued in accordance with the law of any jurisdiction are valid, enforceable and applicable to Spanish estates. In other words, a Swedish will drawn up in Sweden, in Swedish and in accordance with Swedish formal requirements, is fully valid also concerning the distribution of Spanish property. This raises the question, “why then do I need a Spanish will?”. In this article we explain the answer to that question, as well as the Spanish inheritance process in general.
Why do I need a Spanish will?
There are several important reasons why it is advisable to issue a Spanish will regarding assets in Spain, even if these are already covered by a universal will issued in the testator’s home country. The most important reason is that a Spanish will guarantees that the succession is carried out in accordance with the issued will, and that there are no misunderstandings about the will of the testator.
A Spanish will is signed before a Spanish notary, who then keeps the original document and ensures that it is registered in the central Registry of Wills in Madrid. When initiating an inheritance process it is a mandatory step to apply for a certificate from the central Registry of Wills, and if there exists a registered will then a copy of it is obtained. This guarantees that regardless of who handles the succession, in which part of the country the work is carried out, or how many years after the issuance of the will the succession is carried out, the will will always be brought forward and taken into account in the process. An equivalent to this system does not exist in all countries, and for example in Sweden, a valid will can be stored anywhere from law firms and specialized storage services to the drawer at the testator’s own home. The lack of a centralized system that guarantees that a will emerges during the inheritance process obviously implicates a degree of uncertainty, and the Spanish system therefore works as a security measure for the testator.
Furthermore, the issuing of a Spanish will serve as a guarantee that the will of the testator will not be misinterpreted when the succession is carried out. Since the will is issued with Spanish as its original language, with the help of a Spanish-speaking lawyer, and signed before a Spanish notary, this ensures that the document is written in a way that faithfully expresses the will of the testator, in light of the fact that it is to be read and interpreted by the Spanish authorities who enforce its decrees. As noted above, a foreign will is fully valid under Spanish law, but the problem often lies in the interpretation of its content. First, the original foreign document must be translated into Spanish by an authorized translator, who for obvious reasons does not have access to the testator to be able to ensure that the translation of the content of the original document constitutes a faithful interpretation of the will of the testator. Additionally, you have possible differences between the Spanish legal system and the foreign one, which means that even if the translation itself expresses the will of the testator, it may very well be that it had to have been drafted in a different manner to get the same outcome in practice within the scope of the Spanish legal system. Wills can be drafted in many different ways, and something that is implied or self-evident in one country might have had to be written in plain text in Spain. Legal investigations about foreign law can at best result in very long processing times for the inheritance, and at worst be both costly and incorrect depending on the responsible administrator’s knowledge of the foreign legal system. The risk of this happening increases the more complicated the testator’s family relationships are.
Another important aspect to keep in mind is the choice of law that will govern the inheritance itself, which you have the option of including in your will. The succession according to law can differ greatly between countries, and there may be different mandatory rules that stipulate that certain parts of the inheritance needs to be distributed between different family members (usually children and spouses) or it may leave it to the testator to freely distribute all their assets as they wish. Many people begin their life in Spain by acquiring a holiday home to stay in sporadically, but it is not unusual to gradually make the move more or less permanently later in life. For those who have not written a will before moving, it may then come as a surprise that the law that applies to the inheritance as a whole according to the European Succession Regulation is the law of the deceased’s country of residence, and not the law of the country of citizenship. The inheritance after a Swedish citizen who after retiring moved down to Spain and has not issued a will, would therefore be distributed in its entirety, both in Spain as well as in Sweden and any other countries, according to Spanish inheritance law. This, in turn, can lead to the inheritance being distributed in a way that was not foreseen by the deceased or their family members. Through a Spanish will, however, testator can choose to apply the law of their country of citizenship, a provision that continues to apply even if they were to change their citizenship in the future.
It’s important to note is that a will constitutes the testator’s “last will”, and this literally means that only the last issued will is valid, thereby revoking all previously existing wills. The issuance of a Spanish will when testator already has a foreign will is usually done by limiting the Spanish will to only apply to the property located in Spain, and thus function as a complement to the already existing will by only overwriting its effect regarding the assets located within Spanish territory. However, care must be taken in the case of issuing a new will in the home country, as updating it with a broad application would similarly entail a revocation of the Spanish one. In such cases, it is important to include a notice in the foreign will that Spanish property is regulated in a separate will.
How is a Spanish succession carried out?
If a person who has passed away held assets in Spain (this can be anything from real estate to movable property such as cars and boats, or bank accounts and securities, etc.) a Spanish deed of inheritance must be issued in order to distribute the assets. Unlike in for example Sweden, the estate is not a legal entity in Spain, and thus any properties and other assets cannot be sold before they have been registered in the name of the heirs.
For a foreign citizen with assets in Spain, there are two scenarios, depending on whether they were domiciled in Spain or not. If the person resided in Spain, a death certificate is issued in Spain, but if the person resided outside of Spain, the death certificate must be issued in the person’s country of residence and then legalized and translated into Spanish. Normally, the succession is handled by a lawyer, who obtains power of attorney from the respective heirs to be able to gather information and distribute the assets of the estate between the heirs. Documentation is obtained about any real estate, bank accounts and other assets at the date of death, including the above-mentioned certificate from the Spanish Registry of Wills, and when everything is compiled, a deed of inheritance is signed before a Spanish notary. If the estate contains properties, these can then be inscribed in the names of the heirs by submitting the notarized deed to the Land Registry.
How does inheritance tax work in Spain?
Even if, as previously mentioned, one can choose the applicable law for the inheritance through a will, this of course only applies to the rules for the distribution of the assets themselves, and does not affect tax regulations and other national laws. It is therefore important to bear in mind that in Spain, unlike for example in Sweden, there exists an inheritance and gift tax. The law regarding this tax and its rates differ between the autonomous regions of Spain. In Andalusia, where Marbella and the Costa del Sol are located, a progressive tax table is applied with increasing percentages based on the size of the estate. However, there is a significant exemption amount that is tax-free in the case of inheritance between close relatives (spouses, children and grandchildren as well as parents and grandparents), which is applied in its entirety for each heir. As the tax rates are continuously updated, it is always advisable to hire a lawyer who specializes in these types of matters.
An inheritance tax declaration must always be filled in and presented to the tax office in Madrid in every inheritance process in Spain. This also applies in cases where a relative in accordance with the previous paragraph inherits an amount that does not exceed the exempted amount, and the inheritance itself therefore is tax-free.
We at Franke & De la Fuente have many years of experience with drawing up wills, giving tax advice and handling inheritance cases with international connections. Do not hesitate to contact us for an initial free consultation!
