For
owners of Spanish properties, the importance of making a Spanish Will is
paramount.

In
general terms, a correctly executed Spanish Will ensures certainty, speed and
economy in the event of Spanish probate; and also provides the facility for tax
efficiency.

Conversely,
the consequences for the beneficiaries of a non-Spanish national who dies
leaving Spanish assets, but no Spanish Will, can be unexpectedly onerous. In
our Spanish probate practice, to date, there is not a single case where we have
not found a solution to complete Spanish probate- however unusual the
circumstances.

In
a few exceptional cases, whilst it has been possible to ‘unlock’ the Spanish
property by completing the Spanish probate case, the combination of the failure
of the deceased to make a Spanish Will and the consequential forced application
of Spanish legal and fiscal principles, has inevitably created situations of
significant complexity for those left behind. A couple of examples will
illustrate the point.

Intestate
Spanish resident

A
deceased English lady, estranged from her three adult children from her first
marriage, since her second marriage 25 years ago. She died totally intestate.
She had taken Spanish residency along with her second husband, in her final
years. She had verbally expressed her intention that her surviving husband (and
co-owner of the Spanish property) should receive her 50% interest in the
Spanish property in the event of her death.

As
the deceased was habitually resident in Spain at the time of her death, in the
absence of any legally binding direction for English succession law to apply
(by her not having made a Spanish Will), Spanish succession law had to be
applied.

Spanish
succession law generally operates to protect the interests of descendants-
therefore in this case, necessitating the long- estranged deceased’s children’s
involvement in the Spanish probate process.

The
deceased’s children (after no contact in 25 years), had to be traced through
genealogy professionals. Rejecting the proposal simply to renounce their
entitlement, as had been hoped, the deceased’s husband is left with a
restricted interest in the Spanish property- now being a co-owner, along with
his deceased spouse’s children- whom he had never even previously met.

Had
the deceased signed a simple Spanish Will containing an expression of her wish
for her husband to inherit- pursuant to English succession law, her husband
would have enjoyed a comfortable retirement; and he would have been able to
sell the Spanish property as he had planned with his late wife; enabling him to
return to live in England. He would have received the Spanish property sale
proceeds following his wife’s death.

Instead,
he remains in Spain with all his wealth tied up in a Spanish property, which is
now co-owned along with individuals who are not known to him; and whose
willingness to co-operate is directly linked to ill-feeling over the demise of
their parents’ marriage 25 years ago.

In
fact, had it not been possible to find the solution we did, the situation would
have been significantly worse for all concerned, with the property totally
‘locked’ in legal terms; and selling or dealing with (mortgaging/ letting) the
property would have been totally impossible. Our solution of the case at least
provides a framework for the family to come together and settle terms between
them for the disposal of the property- which could then be effected without any
further legal complications.

An
English resident couple in a civil partnership with a property in Spain

Each
had English Wills leaving their respective worldwide Estates to a common
friend.

Each
partner then intended as part of their overall Estate planning, to sign a
Spanish Will leaving a life interest in their respective shares in the Spanish
property to the surviving civil partner, with the underlying legal title in the
Spanish property passing down to the common friend.

This
intended Estate planning strategy would have resulted in a zero Spanish
Succession Tax bill for the surviving partner; and his having a secure lifetime
interest, guaranteed for his remaining years- living unencumbered in the
Spanish property.

But
the failure (by the partner who then died before signing his Spanish Will), to
act promptly in signing the Spanish Will as planned, meant that the surviving
partner was unable to claim the intended lifetime interest in the Spanish
property.

And
furthermore, because of a quirk in the regional rules for calculation of
Spanish Succession Tax, this also led to a total Spanish Succession Tax bill of
more than 3 times the amount it would otherwise have been (from 20,000 Euros up
to more than 60,000 Euros).

So,
again, the best possible solution in the circumstances was found for the case
to ‘unlock’ the Spanish property. But the failure of the deceased to have put
in place a Spanish Will with tax efficient Estate planning, unavoidably
frustrated his testamentary wishes; and also left an unnecessarily high level
of tax exposure.

The
Legal 4 Spain team is always available to provide preliminary advice on a
no-obligation basis in relation to Inheritance and Estate Planning cases where
there are Spanish assets.