1. Wills in Spain - who they're for and why they're important
Statistics consistently show that we fail to prepare adequately for the distribution of our assets after we pass away.
Surveys suggest close to 60% of the adult population in the UK currently do not have a last Will and Testament. It seems likely this figure would be repeated in other countries. (Hardly surprising, since who wants to consider their own demise).
In this article, we shall consider the main reasons why it's a great idea to make a Spanish Will and also advise you how to do so in a way that will ensure that your last wishes for your estate are respected and implemented.
2. Taxes and Spanish Inheritance Law
At the outset, it is important to distinguish two separate matters - Spanish inheritance tax and Spanish law.
Spanish inheritance tax: If you are resident in Spain, you will be liable to pay tax in Spain on your worldwide assets. Historically, Spain - like other countries in the European Union - have tended to impose a higher tax burden on its citizens and residents.
Of course, even if you are not resident in Spain, should you own property in Spain you may still be liable to pay a number of taxes, including property tax for non-residents, wealth tax and, of course, most relevant here, Spanish inheritance tax.
It should be noted that making a Spanish Will won't exempt you from any obligation to pay the above taxes on your Spanish assets.
However, should you own assets in Spain, or become resident here, failing to draft a Spanish Will could result in fines being levied on the inheritance of your estate should the delay caused by legalising your foreign Will make it impossible to meet the strict deadlines imposed by Spanish inheritance law.
Failure to meet deadlines are much more likely when heirs have to contend with increased bureaucracy and consequent delays due to complications that arise when a relative passes away intestate in Spain or with a foreign Will drafted in another country.
Spanish succession law: apart from the issues relating to inheritance tax other consequence of failing to draft a Spanish Will, can be the application of the Spanish legal system of forced heirs to your estate. Accordingly, intended beneficiaries could be deprived of their inheritance and, likewise, unintended heirs may benefit.
We shall consider the legal situation when a foreign resident in Spain dies without any Will at all and when they have a Will drafted in their country of origin, then compare these with drafting a Spanish Will.
3. No Will - Intestacy Regulations in Spain
So, what happens if a person dies in Spain without a Will or - legally speaking - intestate.
Under Spanish inheritance law, a 'forced heirship' system is in place, which allows only a portion of an estate to be distributed according to the deceased's wishes. Therefore, if a person passes away without a Will in Spain, the initial step is to determine the estate's value.
In Spain, the most common marital property regime is the 'sociedad de gananciales,' where assets acquired during the marriage are jointly owned. According to Spanish law, the deceased can only bequeath 50% of these jointly-acquired assets.
Assets that were acquired outside the marriage - such as pre-marital assets or an inheritance from a parent - are added to the deceased's estate to make up the total inheritance.
4. Asset Distribution under an Intestacy in Spain
In the absence of a valid will, Spanish inheritance law dictates the following distribution of assets:
The assets are divided equally among any children from the marriage. If a child has passed away before the parent, their share goes to that child's own children (per stirpes).
- If there are no children, the assets are divided equally between the surviving parents.
- If no parents are alive, the closest living relatives like uncles, aunts, or grandparents inherit the assets.
- If no such relatives exist, the assets go to the surviving spouse.
- If there's no surviving spouse, siblings are next in line to inherit.
It should be noted that a child may in certain circumstances forfeit the right to inherit from their parents. For example, should the child subject the parent to some form of physical assault or abuse (a potential risk should a parent depend entirely on their children when elderly), a parent may exercise their right to disinherit a child.
5. Foreign Wills in Spain
Many foreign nationals often neglect to create a Spanish Will for their assets in Spain, relying instead on a will drafted in their home country. While the inheritance process for a foreign will is similar to that for a Spanish will, additional steps are necessary. All relevant documents must be legalized and officially translated so that a Spanish notary can prepare the required Spanish legal documents for asset distribution to the heirs.
This extra layer of bureaucracy not only increases the costs, but can also substantially delay the entire inheritance process. For a foreign will, such as an English will, to be recognized in Spain, it must meet the following criteria:
- The will must be valid under the inheritance laws of England & Wales.
- The testator must have been of sound mind when the will was created.
- Any named executors or trustees in the will must be authorized to manage the estate.
In the UK, wills often designate one or more executors to oversee the estate after the testator's death. These executors should obtain a 'Grant of Probate,' an official document from the probate registry that confirms their authority to manage the testator's assets. This can be done personally or through a solicitor for a fee.
After receiving the Grant of Probate, it must be legalized with The Hague Apostille stamp by a Notary Public. Then it is ready for translation into Spanish, either by sending it to an official translator in Spain or the nearest Spanish consulate.
Once the non-Spanish Will has been both legalized and translated, it is then a matter of following the standard Spanish inheritance procedures to distribute the assets.
6. Does a non-Spanish Will Cover Spanish Property?
A non-Spanish Will, for example a Will drafted in the UK, will typically name one or more executors to handle testamentary matters when the testator dies.
The executor should request a 'Grant of Probate' in the UK which is an official document issued by the probate registry in the UK that certifies the executor as having the right to deal with the assets of the testator. This may be done personally, or a solicitor can make the application for a fee.
Once the Grant of Probate has been issued by the probate registry, that document must be legalised by having The Hague Apostille stamp attached by a Notary Public, whereupon it is ready to be translated into Spanish. This can be done by either sending it to a sworn translator in Spain or to the closest Spanish consulate.
Once the Will has been legalised and translated, it is simply a matter of following the standard process for an inheritance under a Spanish Will. Therefore, yes, a non-Spanish Will may be used to transmit the inheritance of property in Spain, however, all of this additional bureaucracy, time and cost can be avoided by drafting a Spanish Will to deal with your Spanish assets.
7. Benefits of having a Spanish Will for Non-residents
Whether you are a Spanish resident or not, if you own Spanish property or other assets, it is advisable to have a Spanish Will.
In Spain, unlike in the UK, it is unnecessary to go through a Grant of Probate. All Spanish Wills must first be officially recognised via Spanish notaries. There is also a public Registry of Wills called the ”Registro de actos de últimas voluntades” or “Registry of Last Wills” where the legal heirs can easily access the Will once the testator has passed away.
The Registry will issue a Certificate, upon request by a beneficiary (or their legal representatives in Spain) in which it is certified:
- That the testator has passed away having made a Will
- The Will made by the testator that the last and subsequently the valid one
- Which Notary assisted the testator in drafting the Will and when
It will also provide information in case the deceased person has not drawn up a valid Will, meaning that intestate rules of the Spanish Civil Code should apply in default of a Will.
In our experience, many legal problems arise due to the fact that there is not an equivalent Registry in the UK. There is a tendency among Spanish authorities to seek similar certificates as are issued in Spain and there is little sympathy demonstrated when it is pointed out that the Anglo-Saxon system is different.
As a result, beneficiaries of Spanish assets will be asked by different Spanish Public and Private entities to certify that the Will they are presenting is the last and valid one, (or in case there is no Will, they will be asked to provide a Court resolution granted by the country of the deceased stating the persons that are the legal heirs according to the deceased´s home country intestate rules. in order to be able to gain ownership over the deceased’s assets.
Any non-Spanish documents such as an English will, death certificate, Court rulings, etc will also have to be translated into Spanish by a sworn translator. Should the nationality of the deceased be that of a non-EU State, any documentation will have to have the Hague Apostille attached, in order to make it a valid and enforceable official document in Spain.
Accordingly, in order to reduce costs and avoid delays it is advisable to have a UK Will to manage your assets there if you still haven’t drafted one, and another one in Spain.
Bear in mind that Spanish Wills made by non-residents shall never overrule any Will made in their country of origin, but will serve as a complement, dealing only with their Spanish estate.
8. Who should make Wills in Spain?
Basically anyone with Spanish assets such as property or money, or anyone likely to be considered resident in Spain at the time of their death should draft Wills in Spain.
9. Making a Spanish Will
Assuming that you are convinced by now that making a separate Spanish Will is a good idea, how do you actually go about it?
A Spanish Will must be drafted in person at the office of any of the many Spanish notaries in Spain. It is not permited to draft a power of attorney to have another person attend the signing of your Will in Spain.
Typically it is advisable to seek legal advice and have an English-speaking Spanish lawyer advise you on Spanish law as it applies to your assets in Spain - in particular to ensure that your assets in Spain are distributed according to your wishes.
Often your English-speaking lawyer will act as an interpreter so that the Notary can be certain that when you sign your Will, you understand the contents.
10. Registering a Will with the Spanish Wills Registry
Once the Will has been signed, it is stored locally by the Notary where it was signed. The Notary will also ensure that the Last Will and Testament is registered at the Official Registry of Wills in Spain.
11. How much does it cost to make a Will in Spain
In general terms, the cost of making a Will in Spain is inexpensive given the various problems and likely costs that will arise if a Spanish Will is not made.
The costs of a Spanish Will vary across Spain given that some localities insist on the presence of a Sworn Translator while others will accept the presence of the beneficiary's English-speaking lawyer.
In general terms a notary will charge between 60€ - 80€ per simple Will and a lawyer will charge between 150€ - 250€ to advise the testator on Spanish inheritance law and ensure that their Spanish estate is distributed according to their wishes.
12. Ensuring English law is applied
An important function carried-out by a Spanish lawyer advising a client on making a Will in Spain is to ensure that the Will is drafted in such a way that the law of the testator's nationality is applied.
The ability of a foreign citizen to choose which law applies to their inheritance was made possible by the entry into force of the European Inheritance Regulation (R650 / 2015 Regulation (EU) no. 650/2012 of the European Parliament and Council, of July 4, 2012). This regulation came into force on August 17, 2015.
Since that date, every foreign citizen with habitual residence in Spain should consider the possibility of choosing the national law of their own country as the governing law of their succession. Why?
The answer is simple: the regulation provides, as a general default rule, that in the event of the death of a foreigner in Spain (or in another member state covered by the Regulation), the law of the country of their last habitual residence at the time of death will apply (art. 21.1 RES).
A good example that shows the importance of deciding which national law will be applicable is that of English citizens residing in Spain. In England there is absolute freedom to testify, so there are no legal limitations: the testator can leave his or her property to whomever he or she wants.
Therefore, if an English citizen dies in Spain without drafting a Will in which he or she chooses that English law is applicable to his or her inheritance, then Spanish law shall be applied to the distribution of the Spanish estate of the deceased - including the Spanish system of obligatory heirs.
The result of an inheritance under one legal system can be completely different to the result under another.
13. Spanish inheritance laws and Inheritance Tax
The beneficiaries of Spanish assets subject to an inheritance will need to deal with Spanish inheritance tax. The actual amount of inheritance tax payable is calculated according to the rules of Spanish succession law which is a complex area in its own right.
Spanish inheritance tax is levied according to inheritance tax rules that are quite different to the Anglo-Saxon inheritance systems most would be used to.
Instead of there being a single threshold above which inheritance tax becomes due, as under UK law for example, Spanish inheritance tax is determined by reference to both the overall value of the assets inherited (less any general deductions such as debts, mortgages, final medical expenses etc) as well as the beneficiary themselves.
So, for example, the more closely related the beneficiary is to the deceased less inheritance tax is payable (children of the deceased under 21 years of age have a higher exemption than a brother of the deceased, for example).
Also relevant is the current wealth of the beneficiary with less wealth beneficiaries paying less tax potentially.
Also relevant are the deductions and exemptions made available by the regional government of the Autonomous Community in which the deceased was deemed to be resident for tax purposes at the time of their death. These can vary considerably with residents of Madrid and Andalucía paying little or no inheritance tax while their counterparts in Cataluña pay rather more.
14. Advice for executors of Spanish Wills
Given the number of foreign nationals relocating to Spain over the years, it is not entirely unlikely that a relative or friend who has assets in Spain names you as the executor of their Will,
When that person passes away, you will need to take responsibility for dealing with their Spanish assets and the related bureaucracy - paying off any debts and distributing the remaining estate to the beneficiaries.
This can be a complex, time-consuming and often stressful role, that few are truly adequately prepared for: you will need to make several trips to Spain to handle Spanish paperwork; of course it is likely that there will be different assets to deal with, potentially a significant tax liability, or potential disputes among beneficiaries.
An executor in Spain has the following main tasks:
- take action to protect the assets of the estate
- distribute the assets to beneficiaries, and,
- pay any debts and taxes that are due.
If an executor mismanages estate funds and this results in a loss for the beneficiaries, the executor can be found personally liable, so it is important to know that a person named as an executor does have the right to refuse the position.
The executor will administer an estate and remains in charge until it is legally closed. After that, creditors and taxes, if any, must be paid and then the named beneficiaries are entitled to their share of what is left.
15. Delegate to a Local Representative
Given that this is a complex role, even for a native Spanish speaker, a sensible solution for anyone not fully conversant in Spanish would be to delegate this responsibility to a Spanish solicitor.
A good Spanish solicitor will help you deal with formalities, advise on tax, assist with selling the assets and paying off the debts, dealing with distributions to beneficiaries, and preparing the estate accounts. Below, we detail how this would function in practice.
According to Spanish legislation, a Spanish solicitor, when acting as a ‘delegated executor’ has the same responsibilities as the actual executor. The Spanish Civil Code specifies the following:
- Oversee the security of the assets that form the deceased’s estate.
- Ensure that the assets are maintained until the inventory has been made, taking out such insurance policies as would be prudent to protect them.
- Provide notification to the beneficiaries that the succession process has started.
- Determine that the distribution of the assets has been made and that there are sufficient assets to cover any debts owing by the estate of the deceased.
According to Article 1344 of the Spanish Civil Code, when the executor fails to meet the obligations set out above, the executor will be responsible for any damages suffered by creditors. However, executor obligations also relate to the beneficiaries, who may also take legal measures against the executor if they fail to fulfil their obligations.
16. Power of Attorney to Manage an Inheritance in Spain
A ‘power of attorney’ is a legal document used to delegate decision-making authority to a third-party- and when dealing with an inheritance in Spain it will allow a solicitor to manage the following aspects of the process: financial matters, such as the ability to sign cheques, make deposits, pay bills, manage financial and business affairs, selling a Spanish property, obtain insurance, manage investments and pay taxes.
In addition, powers of attorney can be drafted to meet your specific needs, as every family's situation is slightly unique. Some prefer to confer only specific areas of authority that they wish to delegate.
17. Quick Tips when Dealing with Assets
Some final thoughts on actions you may need to take if you are an executor of a Spanish Will:
Before proceeding to liquidate assets such as properties, it will be necessary to determine the value of the property via a local real estate agency. Note that a professional evaluation would require a technical architect, who will charge a fee. If the estate includes artwork and antiques, any valuation will require an evaluation by the relevant experts in those fields, who may well charge a fee for that service.
It would also be advisable to insure the properties since anything could happen in the meantime such as theft or damage.
It is recommended to open a new bank account where the executor appears as the account-holder, until the moment of the liquidation of the properties which are part of the succession.
One of the responsibilities of an executor is to use the estate’s funds to pay for funeral and burial expenses. The funeral home will also provide the executor with copies of the death certificate, which will be needed for several purposes, including closing financial accounts and cancelling any state benefit payments.
18. Dementia and Estate Planning in Spain
When we talk about mental illnesses in relation to Wills in Spain, we are particularly concerned with the individual’s mental capacity i.e. any mental disorder or any situation that affects the power of a person to express their intention or will.
In order to determine the extent of any mental incapacity, usually a capability test is carried out by the Notary, where the will is drawn-up. However it is always good to get a certification in advance from a doctor that declares the person as having such capacity in cases where there might be any doubt.
Should the disease have progressed to the point that it is not possible to create a valid will then it will become necessary to appoint a guardian who will do this on their behalf. This will require civil proceedings to be undertaken in court, which will determine who the guardians are and also the attributions, obligations and prohibitions that the guardian is subject to, such as are laid out in title X of the Spanish Civil code.
19. Exequatur and Enduring Power of Attorney
Of course, there are many examples of those who have undergone this procedure in their home country. If this is the case, then the ‘guardianship’ already obtained in the foreign jurisdiction may be validated via the exequatur procedure, which is how most foreign court orders are enforced in Spain.
Any 'Enduring Power of Attorney' created in a foreign jurisdiction and which allows you to manage the affairs of someone after they become mentally incapacitated will need to be legalised, ie have the Hague Apostille attached and the power of attorney will need to be translated into Spanish by an approved translator so that it may be used in Spain.
In any event, any last will and testament that a guardian makes in the name of the person they represent must meet the Spanish regulations for valid Wills and we need to make sure
that is not going against the true will of the person that is represented, by taking into consideration previous Wills or the testimony of relevant witnesses.
Often these types of situations are quite delicate so it is always good to seek legal advice to make sure that the necessary diligence that this situations requires, is applied.