ESTATE PLANNING FOR FOREIGN OWNERS OF REAL ESTATES IN SPAIN

This is a very general and accesible article about a very particular aspect of estate planning for foreign clients owning assets in Spain. Every single case has its own peculiarities, which always need an individual assessment and approach, but we try to give an overall picture to  create a better awareness in our international clients about the significance of any aspect regarding cross-border estates, because when international aspects are involved, a specialized advice is the best key to get peace of mind, as many different questions need to be studied and, if possible, planned in advance, and not only for tax purposes, but also for civil and international ones.

Today we focus now on an essential issue when planning an inheritance, as it is to know in advance which law of succession will be applied after the death of the deceased, what is particularly relevant after the European Inheritance Regulation 650/2012.

In my opinion, this should be first step to be taken into account: who and how will receive my assets? Of course, together with this main priority, we should considere the tax aspects and formalities arising from the acceptance of the inheritance and registration, which are not minor issues, as a deficient estate planning can bring to disputes, conflict and long proceedings.

In deed, the election of the applicable law is of critical importance, but even more so in the case of British, Irish or Scottish citizens, as under their national law they have complete freedom to make wills and leave their assets to whom ever they wish, and are often unaware of the risks of not making a will without planning their estate in advance.

This is especially important after the entry into force of the European Inheritance Regulation 650/2012, in particular since 17th August 2015: if the last habitual residence prior to the death of the deceased was in Spain, Spanish Inheritance Law will be the one to be applied to the whole estate, and considering that it imposes limitations to the freedom of testament, it is highly advisable to make a will in which the choice of the testator´s national succession law is included and the testator’s will can be carried out after his death without unpleasant surprises. The European regulation estates that the succession law governing the inheritance has to be applied to all assets included in the inheritance, no matter in which country they are, in Spain or abroad.

The above explained reasons reinforce the priority to make this choice of law, as it´s relevant for any foreign national with assets in Spain, whether Norwegian, Dutch, English, French, German,  or any other nationality.

Notwithstanding the above, if the testator or the testatrix make a will including a condition where clearly include the choice of applicable succession law, they can plan their estate (regarding civil, international and tax aspects) and make everything much easier for their heirs.

Usually, foreign clients prefer to apply the law of their nationality, but if their usual residence is here , it can be of advantageous to apply the Spanish law, what should be studied  and assessed case-by-case, as it depends on personal and economic circumstances.

After death of the testator, a certificate of Central Registry of Wills in Spain will be issued and next steps will be much easier if everything has been properly planned in advance.

However, this chosen law will not govern the tax aspects, but only the civil ones, what means, that it´s highly recomendable to properly plan all aspects of the estate in advance, using the opportunity of granting a will to be able to make the right choices.

In addition to the above, and although it is not the subject of this article, we´d also like to emphasize in every occasion that it is even much more necessary to grant lasting powers of attorney for the prevention of disability, which can be done at the same day at the notary to prevent and enable the decission making process in case of sudden illness or disability .

María del Mar Hernández Cortés is a Spanish solicitor advicing foreign clients during more than 25 years in Estepona and Costa del Sol, supporting clients and civil, tax and international aspects and working together with foreign lawyers whenever it´s necessary to get a better overview of every cross-border inheritance.

For any particular query you can call us +34 952 80 44 64, we can also meet online or you can send an email to maria@balmaseda-abogados.com