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Spanish Assets- Lifetime Estate Planning Update

Spanish Wills & Estate Planning, Uncategorised Posted on Fri, November 01, 2019 20:18:24

Introduction

British owners of Spanish properties await the Brexit conclusion, to know whether or not the Spanish Succession Tax (SST) reductions which are currently enjoyed by European citizens, are to be relinquished.

But irrespective of the final Brexit outcome, many British owners of Spanish properties are in any event, anticipated to be exposed to increasing Spanish Succession Tax (SST) impact in coming years.

SST exposure and the mitigation of tax liability generally, therefore need to be considered in all cases of Spanish Estate Planning and Will writing. It is also important that these aspects should not be overlooked in Spanish property purchase and probate cases, where there is flexibility/ discretion as to beneficial entitlement.

The Spanish Autonomous Regions and Tax Liability

Spain comprises 17 Autonomous Regions, which are currently able to set their own SST exemptions/ allowances.

In recent years, there has been a move in some of Spain’s Autonomous Regions towards reduced SST impact.

However, the imposition by respective Autonomous Regions of differing SST rules has given rise to discrimination between EU citizens- according to where in Spain the assets in question are situated.

As this situation is considered to be non-EU compliant, it is anticipated that sooner rather than later, the SST system will be required to be unified, and SST impact standardised across Spain. Low SST-impact areas like Andalusia and areas of the East Coast (the locations of a significant proportion of the British owned Spanish properties), could therefore see a substantial increase in SST exposure as a result of this process.

Implications for Spanish Estate Planning and Will Writing Cases

Unlike UK Inheritance Tax (which is assessed on the deceased’s Estate), SST is levied on the individual beneficiary. So, key considerations in seeking to mitigate SST exposure include the relationship between the testator and each beneficiary; and the number of beneficiaries.

Spouses and descendants face the lowest level of SST impact; and generally each individual beneficiary has allowances, and relatively low SST rates on the lowest value-related tranches. So, to have multiple immediate family members as beneficiaries, each with a relatively modest entitlement, is generally a positive way to reduce overall SST exposure.

It is also possible to split beneficial entitlement to (Real Estate) property titles between the ‘Usufructo’ (life interest) and ‘Nuda Propiedad’ (underlying legal title). This can reduce SST impact without adversely affecting (for example) a surviving spouse’s lifetime use and enjoyment of a Spanish property. So, a ‘Trust-like’ ownership structure can be established in this way, even though Spanish Law does not recognise Trust structures in principle.

It is accepted by the Spanish Authorities now, that alternative succession routes (at the discretion of a surviving spouse for example, following the death), can be included in Spanish Wills. So in this way, one can circumvent the fact that (unlike in the UK), post-death Will variations in Spain are in principle, not an option. This feature then enables up to date case-specific fiscal advice (multi-jurisdictional, if applicable), to be obtained following a death (and family circumstances then to be assessed), before a final decision is taken as to the actual succession route to be implemented.

Tax Planning in Spanish Property Purchases

The acquisition of a Spanish property is the ideal point at which to consider future ownership structure within a family, with a view to mitigating SST exposure.

Considering the age and life expectancy of each family member who might be a registered owner of the Spanish property is an important aspect. As is the consideration of whether multiple registered owners might be appropriate (to spread value; and therefore SST impact). The Usufructo/ Nuda Propiedad split mentioned above, can provide an opportunity to pass down capital value a generation or two, whilst retaining beneficial use and enjoyment. But British individuals need to give careful thought to UK tax law rules on lifetime gifting and UK IHT planning/ impact on the UK IHT Nil Rate Band. Also, any gifting of property or money needs to be carefully effected, so as not inadvertently to trigger Spanish lifetime gift tax liability.

Spanish Probate

As mentioned above, it is now possible within Spanish asset Wills, to include flexibility as to the succession route. But even in traditional format Spanish Wills, it is important to assess any alternative options as to succession route which exist by implication, based on the specific Will wording, on a case by case basis. This enables alternative succession routes (and possible SST savings), to be considered before the Inheritance Deed is signed; after which it is then too late.

Conclusion

The foregoing is non-exhaustive, general advice. The Legal 4 Spain team is always available to provide preliminary advice on a no-obligation basis in relation to Estate Planning and Inheritance cases where there are Spanish assets; also for Spanish property transactions generally.



Why Spanish property owners need Spanish wills

Spanish Wills & Estate Planning Posted on Sun, October 15, 2017 13:01:49

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.



Spanish Assets- Lifetime Estate Planning

Spanish Wills & Estate Planning Posted on Fri, March 24, 2017 00:05:50

At
the outset of many estate planning cases which involve Spanish assets, advice
is required as to the options for ownership changes within the family.

A
typical scenario is: a married couple, who have owned their Spanish holiday
home for many years, but health/ mobility issues as they have got older, mean
that their use of the holiday home is on the decline. But meanwhile, their
children/ grandchildren are very happily ‘taking over the reins’!

In
terms of estate planning then, the Spanish property starts to become more of a
liability than an asset- particularly in terms of potential future inheritance
tax liability.

The
Spanish property is usually non-income producing (particularly in the light of
recently introduced increased bureaucratic requirements for short term lettings
in Spain). So, it seems logical that the ownership should be ‘passed down’
within the family, to reduce estate size/ future tax liability- but without any
loss of income (and still with the possibility of the continued occasional use
of the property by the transferor).

This
is logical in theory; but other than the obvious practical considerations (the
assumed continued solvency/ marital situation of the recipients; and assumed
continued harmony within the family), there are important additional
considerations which need to be borne in mind; including:

1. There
is a Spanish taxation liability for recipients of gifts of Spanish assets, the
calculation of which is broadly similar to Spanish Succession Tax, (but without
all the regional allowances and deductions). In other words, the Spanish
lifetime gift tax has a similar- or higher- impact on the recipient than if
they were to inherit the asset. (This is therefore entirely different in
concept to a Potentially Exempt Transfer under the UK IHT regime). There can,
of course, be situations in which the Spanish lifetime gift tax does not
counteract the fiscal wisdom of a lifetime transfer- for example, if in overall
(worldwide) estate planning terms, it is still advantageous to pass the Spanish
property down a generation (or two); or if a Spanish property can currently be
transferred at a low value- so a relatively low tax amount- when a future
increase in value is anticipated. It can be better in that case, for the next
generation to ‘enjoy’ the uplift in value, rather than storing up an ever
increasing Spanish Succession Tax liability in the original owner’s hands.

2. Further
on the Potentially Exempt Transfer point- whilst a UK tax payer making a gift
of their Spanish property within the family could constitute a Potentially
Exempt Transfer- so over time, it comes out of the worldwide taxable estate for
UK IHT purposes- one would need carefully to consider the fiscal consequences
of the donor failing to survive the qualifying period to achieve the maximum UK
IHT benefit.

3. Also
for UK nationals considering making a lifetime gift of a Spanish property
within the family, UK ‘gift with reservation’ considerations need to be addressed
and factored into the arrangements for any continued use of the Spanish
property by the donor. As would be the case with a UK asset which is gifted,
but then still used by the donor, the continued use of the asset needs to very
carefully documented/ financially accounted for, to avoid the gift failing for
UK IHT purposes; and the asset therefore not (fiscally) leaving the donor’s
estate.

4. A
change of property ownership in Spain can be effected by way of a sale between
family members rather than a gift- as often, the rate of tax on a sale is less
than the rate of tax on a lifetime gift. However, this type of transaction
would inevitably be very carefully scrutinized by the Spanish Tax Authority, to
ensure that the sale is not a sham, simply to reduce the taxation basis from
lifetime donation down to the sale taxation level. So, the property could not
be sold at an undervalue; and the Authorising Notary would actually need to see
evidence of funds passing between the the buyer and the seller. And of course,
the funds for the transaction cannot be provided by one family member to
another within Spain, otherwise that would be a taxable lifetime gift of the
money! So, any such transaction has to be extremely carefully orchestrated, to
be legally and fiscally compliant. And an assessment has to be made on a case
by case basis, as to whether or not this is advantageous when compared to a
lifetime donation transfer.

5. A
change of Spanish property ownership- even within the family- triggers other
costs and taxes, so these need to be factored into the equation. In addition to
the donation/ purchase tax, the additional expenses include Notary and Property
Registry costs; and Plus Valia tax (a local Town Hall tax payable on property
transfers, based on rateable value and length of transferor’s ownership. It can
also be necessary to update contracts for property services (water/
electricity, etc), and this can trigger a requirement for re-certification for
safety/ compliance purposes; and possible updating/ upgrading of supply
apparatus.

The
above is a non-exhaustive checklist of the issues. In the majority of the cases
we see, whilst a full analysis and discussion can be helpful, the conclusion is
that the costs and complexities of a lifetime transfer of a Spanish property
within the family outweigh the benefits. In this case, the focus returns to tax
efficient Spanish Wills and estate planning.

The
Legal 4 Spain team is always available to provide preliminary advice on a no-
obligation in estate planning cases involving Spanish assets.



New European Law Affecting Wills and Inheritance in Spain

Spanish Wills & Estate Planning Posted on Thu, February 02, 2017 15:27:03

September 15th, 2014

A new European law will come into
full effect on August 17th 2015, with the intention of simplifying inheritance
cases across Europe.

This new law will apply to owners of
Spanish properties.

The problem the new law addresses

There has been legal uncertainty
previously in the estates of many non-Spanish owners of Spanish properties, as
to whether Spanish succession law applies or the owner’s own national
succession law.

The distinction is particularly
important for English owners of Spanish properties, where their own (i.e.
English) succession law effectively enables them freely to choose their heirs
(including as to Spanish assets), without limitation in the majority of cases.

Conversely, if an English owner of a
Spanish property were to choose (or be legally forced) to follow Spanish
succession law, then a strict division of the Spanish estate would be imposed
under Spanish law- with a minimum of two thirds passing to descendents; and
very limited discretion generally as to who receives the Spanish estate.

The solution provided by the new law

The new law gives people affected by
the problem, choice as to which succession law applies to their estate.

Well advised English owners of
Spanish properties will in any event, have already made separate Spanish Wills
in anticipation of the new law, clearly electing for their own national
succession law to apply. So they can be certain that their Spanish estate will
pass as they wish; and not pursuant to the strict Spanish legal requirements
(which in the vast majority of cases, are incompatible with English testators’
actual wishes).

In any event, English (and indeed
other nationality) owners of Spanish properties are advised to take this
opportunity in anticipation of the new law, to review their Spanish Wills with
their legal advisers, to ensure that they have clearly and unambiguously chosen
for their own national succession law to apply to their Spanish assets (if that
is what they wish). Also, to ensure that their Spanish Wills are in all other
respects, fully up to date; legally compliant in Spain; and tax efficient.

In the event of a failure of by an
English owner of a Spanish property to leave a valid Spanish Will electing for
English succession law to apply to their Spanish estate, the position under the
new law will be determined by a new statutory ‘habitual residence’ test, such
that:

• If the English owner of the
Spanish property is habitually resident in Spain at the time of death, then
Spanish succession law will apply to the Spanish estate.
• If the English owner of the Spanish property is habitually resident in
England at the time of death, then English succession law will apply to the
Spanish estate.
• If the English owner of the Spanish property is neither habitually resident
in Spain at the time of death nor in England, then it could be either English
law or the law of the actual country of habitual residence. This scenario would
need to be legally determined on the circumstances of the case.

Conclusion

In order to avoid uncertainty-
bearing in mind also that many people change residential status in the final
period of their lives, particularly due to healthcare considerations- it is
always best not to rely on the ‘default’ position under the new law. Instead,
it is always best practice for a Spanish property owner to sign a professionally
prepared, up to date Spanish Will with a clear statement of their wishes as to
the succession of their Spanish estate. This can also ensure that any up to
date tax saving opportunities are used to their full advantage.

This general commentary is not
intended to be exhaustive; and case-specific legal advice should always be
sought.

The Legal 4 Spain team provides a
full estate planning and Will writing service for properties and other assets
anywhere in Spain. We are always happy to provide a competitive cost estimate
in the first instance, on a no-obligation basis.



When to Gift Spanish Properties to Children

Spanish Wills & Estate Planning Posted on Thu, February 02, 2017 15:13:23

It occurs to many
existing owners of Spanish properties that transferring their properties into
their children’s names could provide future inheritance tax savings.

Unfortunately, once the
Spanish property has been purchased and registered in the parents’ names, it is
often too late in economic terms, to achieve this.

For non- Spanish
nationals, the tax consequences of passing a Spanish property down to the
children need to be extremely carefully considered- both in Spain and also in
their own country.

In Spain, a lifetime
gift is subject to taxation at a level which is, in many cases, even higher
than the tax payable in the event of a parent’s death. As an alternative to a
gift, a sale/purchase between parents and children can result in a lower tax
liability; but the transaction has to be meticulously executed to avoid it
being treated by the Spanish Tax Authority as a gift in any event; and
therefore taxed at the higher rate.

There does exist in
certain circumstances, however, a further alternative option- the property
ownership structure can be collapsed, to reduce the number of co-owners in a
comparatively tax efficient manner. But this only enables transfers to other
co-owners. For example, a transfer can be made from one co-owning spouse to
another; or (if children are already registered co-owners of the property), in
favour of children.

So, for families to
avoid being ‘locked in’ to a Spanish property ownership structure which stores
up unnecessarily onerous tax liabilities in the long term, careful thought
needs to be given at the outset- when the property is first purchased- as to
the most efficient holding structure.

But (as an example of
the complexities which can arise) even for English buyers of Spanish
properties, it is not simply a case of ‘buying in the children’s name’. There
are also UK taxation ‘gift with reservation’ issues which need to be addressed.
If the parents pay for the Spanish property, then register it in the children’s
name but continue to use the property themselves, they then need to pay (and
carefully document) an appropriate rent or contribution towards outgoings.
Failing that, the gift of the money to buy the Spanish property could end up
not leaving the parents’ UK IHT estate.

In summary therefore,
when acting for clients on the acquisition of Spanish properties, it is
essential that the legal adviser provides full advice both under Spanish tax
law and also having regard to the buyer’s own national tax law, as to the most
efficient way to hold the Spanish property. This enables the buyer to secure
the best overall tax position; and to ‘keep their options open’ as regards future
tax and estate planning within the family.



Am I forced to leave my Spanish house to my children under Spanish Law?

Spanish Wills & Estate Planning Posted on Thu, February 02, 2017 14:11:06

March 11th, 2013

For English nationals with property
in Spain, in the majority of cases we deal with, the answer to this question
is: no. Most English nationals are not subject to the Spanish law of succession
(which would otherwise require parents to leave specified proportions of their
estates to their children).

However, individual circumstances
have individual legal consequences. So, this is a matter which has to be
considered carefully in each client case in dealing with Spanish Wills and
estate planning- both from the Spanish and UK legal perspectives. This ensures
that correct legal advice is given; and appropriate and secure legal
documentation is signed.

To have clear, correct and
individual advice on this point, helps to avoid anxiety and uncertainty when it
comes to Spanish estate succession.



How can I be confident about professional standards and expertise in Spanish legal services?

Spanish Wills & Estate Planning Posted on Thu, February 02, 2017 14:08:34

February 22nd, 2013

Back in 2011, a widely
publicised BBC television programme, Panorama, highlighted concerns about the
levels of professionalism and regulation of will writing and probate services
under English law. Following that, a major regulatory review was undertaken in
the UK, which concluded with much stricter regulatory controls. So, effective
consumer protection in the UK for this area of legal services is now firmly
established.

It is equally
important (if not, even more so) when choosing your Spanish legal adviser, that
you make the same enquiries of your Spanish legal adviser, as you would make of
professional advisers in your own country.

Due to the
professional background of our team (see “Our Team“), these are matters which have always been
extremely important to us.

Our professional body
in the UK is The Society of Will Writers and Estate Planning Practitioners
(www.willwriters.com). Also, the Spanish lawyers handling our Spanish legal
cases are fully qualified and highly experienced in Spanish legal matters. They
are accountable to; regulated by; and professionally insured through their own
professional body in Spain (the Colegio de Abogados).

In addition to this,
every single Spanish legal document we provide for execution in Spain is
specifically approved by an authorising Notary- and in the case of Wills, also
accepted by the Central Wills Registry in Madrid. As such, the level of
accountability and professional protection afforded to our clients is second to
none.

It is essential if you
are not a Spanish national, but have assets in Spain, that the legal advice you
receive is from legal professionals, who are appropriately qualified and
experienced in Spain. But equally importantly, your Spanish legal professionals
must also have the necessary qualification and experience of such matters in
your country of origin. Otherwise, it is impossible for you to be confident
that your legal position and responsibilities in Spain are correctly
“dovetailed” with your legal position and responsibilities in your country of
origin. Getting it wrong by not having proper professional advice could end up
being very costly for you and your family.

Also, it is important
to note that before confirming instructions in any Spanish legal matter, you
must be certain that you are completely clear about all applicable charges and
costs and how they are calculated; and further, you should ensure that any
client monies will be securely held on your behalf, in a designated client
account.

We are more than happy
to give our clients the comfort they need on all these matters, as we are
dedicated professionals, committed to 100% client security and satisfaction.



Professional Conduct Risks in Estate Planning Cases with Spanish Assets

Spanish Wills & Estate Planning Posted on Thu, February 02, 2017 14:02:14

Professional
Conduct Risks in Estate Planning Cases with Spanish Assets

November 29th, 2016

The existence of
Spanish assets in cases handled by UK practitioners can give rise to specific
considerations, which can be professionally risky to disregard. A few of the
key stages requiring particular care are as follows:

Spanish Property
Acquisition

Estate Planning
assessment and advice can be critically important at the point of Spanish
property acquisition. It has to be borne in mind, that in the event of
subsequent inheritance, there can be significant exposure to Spanish Succession
Tax- even potentially between spouses. Lifetime changes of ownership of Spanish
properties can be extremely costly to transact, so it is important to have
matters structured correctly- and tax efficiently- from the outset.

It is fundamentally
important that, prior to completing the purchase of a Spanish property, the
proposed ownership structure is very carefully thought through- and the future
succession route (and fiscal consequences) are factored into the purchase
process. Otherwise, unnecessary/ avoidable fiscal exposure can arise.

Fiscal Compliance

Owners of Spanish
properties (both those who are resident in Spain; and those who are not
resident in Spain) have a series of fiscal obligations in Spain, which must be
performed correctly and promptly, otherwise there can be significant
repercussions in terms of exposure to escalated costs/ Spanish fiscal
liability. It is important that estate planning advisers in cases where there
are Spanish assets are aware of these responsibilities, in order to provide
correct cross-border advice.

In many cases, a
Spanish property owner remains responsible for fiscal compliance obligations in
Spain until the end of the calendar year following the year of sale of a
Spanish property. It cannot therefore be assumed that the completion of a
purchase or a sale of a Spanish property concludes matters for the professional
adviser.

Residency

Many people-
particularly in their retirement- dream of a move to a warmer climate and the
more relaxed- and economical- lifestyle Spain seemingly offers. However, making
a full time move to Spain; and becoming an official Spanish resident, can cause
specific complications in the fiscal affairs and liabilities of non-Spanish
nationals. Also, for their families in the event of inheritance.

Any Estate Planning
advisers involved in the context of their clients considering moving to Spain,
need to ensure that the clients have a full understanding of the fiscal
consequences for them and their family of taking Spanish residency- both in
Spain and in their home jurisdiction. In many cases, the fiscal consequences
(and some of them being fairly oblique to the uninitiated), are so far reaching
that it is better to remain UK resident whilst enjoying lengthy stays in Spain-
to the extent legally permitted, without triggering Spanish residency.

Spanish Wills and
Estate Planning

Many UK Estate
Planning professionals seemingly continue to be unaware of the risks of
endeavouring to deal with Spanish assets in English Wills- rather than
following the correct convention of advising that separate Spanish Wills should
be made in respect of Spanish assets.

It continues to
surprise us in taking on Spanish probate cases, how many UK practitioners
endeavour to ‘muddle through’- seeking to deal with Spanish assets in English
Wills. This gives rise (in the event of probate) to additional procedural hurdles
in the Spanish process. Furthermore, it is typical in these cases, that Spanish
assets are implicitly (or even explicitly) placed in Trust structures, which
are incompatible with Spanish law.

In any event, the
risks of delays, complications and additional costs in the legal probate
process in Spain where there is no Spanish Will have been widely covered in
articles in the professional Press over the years. But there are also
situations in which the absence of a separate Spanish Will can have the effect
of an increased Spanish Succession Tax liability. Hence, UK professionals need
to be completely clear and accurate in their advice as to Will structuring, to
avoid the risk of exposing their clients to unnecessary/ avoidable fiscal
exposure and costs.

In principle,
post-death variations to Wills are not permitted under Spanish law. So, that
sometimes-useful fiscal device in the UK does not exist as a facility in
respect of Spanish assets. However, UK testators (for example) with Spanish
assets are entitled to include in their Spanish Wills (along with a properly
drafted choice of law clause), a certain amount of flexibility in the
succession route, enabling their beneficiaries to elect for the most tax
efficient succession route to be applied at the time.

So, this enables post-
death up to date fiscal advice to be obtained, in order to select the most
expedient succession route/ structure. But a Will writer who does not take into
account this highly valuable facility which is available to non-Spanish owners
of Spanish assets, can leave the testator’s beneficiaries exposed to a
significantly greater fiscal liability than might otherwise be the case, with
correct advice and a thorough approach to Spanish Will writing.

Probate

In the Spanish probate
process, it is essential that the practitioner engaged to deal with the Spanish
Estate is professionally regulated, PI covered; and specifically experienced in
the conduct of Spanish probate cases for the estates of non- Spanish
individuals. This type of case is significantly different to a ‘regular’
Spanish probate case; and if the case is not conducted absolutely correctly,
this can not only cause problems in the Spanish process, but can also impact
adversely on the home jurisdiction probate case.

The practitioner handling
the home jurisdiction probate case and the Spanish process need to liaise
closely- especially on fiscal issues. Particular regard must be had to: the
succession route of the Spanish assets (and evaluation of the fiscal
consequences of any discretion as to the succession route); how asset values
are assessed and declared; and the availability of any deductions/ credits
under dual jurisdiction taxation treaties.

A failure by a UK
practitioner (for example), to agree to the appointment of an appropriately
qualified and experienced practitioner in Spain; or to liaise closely with the
appointed Spanish practitioner to achieve the best result overall for the
estate, can leave the Estate/ beneficiaries financially disadvantaged.

The above is a non-exhaustive
list of situations requiring particular care and attention.

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.