ESTATE PLANNING IN SPAIN - SPANISH WILLS
Do I actually need to make a Spanish will?
No. There are, however, good reasons for doing so.
Although your English Will can probably be recognised as valid by the Spanish authorities, the cost of having it recognised is usually far greater than the cost of dealing with a "proper" Spanish will.
Furthermore you may want to make some quite complicated arrangements in your English Will, which may simply not be appropriate for a limited number of assets located in Spain or may even lead to considerable extra tax being due in Spain.
The problems when making an English Will You may already have made a Spanish Will dealing with your assets in Spain. Unless you are asked about this when you make an English Will there is a great danger that a standard clause may be pulled off the computer, revoking not only your pre-existing English Wills but also your earlier Spanish Will. The consequences of this can be expensive!
Equally, if you are not asked about Spanish property, an entirely inappropriate English Will can be drafted, again causing you or your beneficiaries considerable loss.
If you choose not to make a will at all, relying on the intestacy provisions, worse consequences can follow.
Inappropriate English wills If an existing Spanish Will is not to be revoked it is vital that the English Will does not attempt to deal with the property located in Spain and so effect a double and possibly inconsistent disposal of the same assets.
Inheritance in Spain does not normally require the intervention of an executor. Legal title passes directly to the beneficiaries. An English Will may provide for the appointment of executors & trustees to whom the estate is given "in trust".
Spanish law has no concept of a trust (except in very limited circumstances) and so such a provision may be treated as a gift to the Trustees.
Such a gift is likely to result in far higher taxes being paid than if the house were to be given directly to the likely beneficiaries under the trust - the wife and children.
This is particularly true if the Trustee is a bank or solicitor, as gifts to non-family members are taxed at a much higher rate.
For example, in the case of a gift of a typical £50,000 house, if it was given to a wife and 3 children the gift would be tax free whereas a gift to a solicitor trustee would result in tax being paid on the entire gift, and at double the rate that would have been charged to a family member.
Additionally the trustee would presumably then wish to transfer title by way of gift to the wife and children. This transaction, too, would be taxable and also incur legal costs. The gift being a gift by the trustee owner to somebody not a member of his own family would again attract the higher rate of tax.
The combined total of these taxes and charges could consume a large part of the value of the house!
Although the English will can be recognised in Spain it is not a cheap process. In the first place is the cost an official translation of several documents including the grant of probate which can costs in excess of £500.
The result can be an overall bill totally out of proportion with the value of the house in Spain.
lf there is to be an English Will for use in Spain it should, therefore, be short, simple and take into account Spanish law.
The best solution is to make a separate Spanish Will and register it in Spain.
Why should I make a separate Spanish will? Apart from eliminating the risks mentioned above, the existence of a Spanish Will usually makes it much quicker to deal with your affairs in Spain. If you rely on an English Will no action can be taken until the probate of your English estate has been dealt with. This can take some time, particularly if your English Will or affairs are complicated.
The Spanish authorities impose tax penalties if matters are not dealt with quickly.
You have only 6 months (in certain cases up to 12 months) to pay the taxes due on the Spanish estate. If you fail to meet the deadlines a high penalty is applied as well as interest.
It is rare for the English probate to be dealt with in time to allow this deadline to be met.
How do I make a separate Spanish will?
A will in Spanish drafted in accordance with the Spanish formalities usually need to be signed in front of a Notary Public and then registered in the Spanish wills registry in Madrid.
lf you are planning to visit Spain we can arrange for a Notary in Spain to prepare a will for signature and register it with the authorities. We will ensure that your will is in order and it will be signed in both Spanish and English.
What should I put in my Spanish will? Whilst you are free to stipulate who you want Spain certain people, mainly your spouse and children have semi-automatic rights in respect of your estate. These should, if possible, be respected.
If you want to make any complex arrangements or to leave assets to people who are not members of your family, it is generally better to do so in your English Will and to make your Spanish will as simple as possible.
We will be happy to advise on the best structure once we know more about your circumstances.
What does it all cost? The total cost of a will is 200 Euros plus 16% VAT. This includes our fees and the costs of the Notary in front of whom you will sign the will.
What if I do not make a will of any kind? The risks of Intestacy Under Spanish law the share of property you own jointly with someone else does not pass automatically to that other person on your death. It will be disposed of either in accordance with your will or, if there is no will, under the laws relating to intestacy.
This can produce quite unexpected results.
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