Intestacy in Spain

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When an individual dies intestate in Spain and Spanish law applies to his estate, intestacy proceedings must be dealt with.

Spanish notaries (notarios) and land registrars play an essential role in non-contentious probate matters. Notarios give public faith of documents and assess the capacity and identity of the parties intervening in that particular transaction. The land registrar will only intervene where there is immoveable property involved and will register public documents issued by either notarios or the court.

Notarios are deemed competent to intervene in non-contentious intestacy matters. If the matter is contentious, then it will be dealt by the local courts of first instance. For a notario to be permitted to act in an intestacy matter, they must be located in the area where the deceased had his last habitual residence in Spain, or where the bulk of the estate is located. Please note that this is not the case in an estate where the deceased left a Will. The process will involve two stages:

1 The appointment of the beneficiaries (heirs)

2 The acceptance of the inheritance

The first stage is to determine who the beneficiaries are under Spanish law. It’s important to mention that regional legislation may apply, and the order of succession may be different. Under Spanish general law, if an individual died married with children, then the children will be the beneficiaries of the estate subject to an usufructo or life interest trust in favour of the surviving spouse. This can be problematic, especially if the children are minors.

The value of life interest in favour of the surviving spouse will be calculated by deducting 89 from the age of the surviving spouse, the result will be the percentage that will be applied to one third of the estate. The result will be the value of the life tenancy. The lowest percentage is capped at 10% even if the surviving spouse is 90 years old. On the other hand, if the deceased was married with no children but has surviving parents or ascendants, they will be entitled to one third of the estate. The surviving spouse will have the reminder.

If there is a Spanish Matrimonial Property Regime of Community of Assets, the surviving spouse will be entitled to 50% of the assets that were part of the community. The other 50% of the assets will be part of the estate.

Under Spanish General law, descendants are first in the order of priority of succession, followed by ascendants and then spouses. In other regional systems, the order of priority is descendants, then spouses and finally ascendants.

Matters can be more complicated if the deceased lived with his unmarried partner. In such cases, if Spanish law applies, we must consider the provisions available in that region.

Once the beneficiaries have been identified and they have the supporting evidence of their link to the deceased, then they can execute a Deed of Appointment of Beneficiaries. This Deed must be executed in the presence of two witnesses that have no direct interest on the estate. The Deed will contain detailed information of the Deceased and identify the beneficiaries. Once signed, the beneficiaries must wait 20 working days until the notario closes the valid Deed. Following this period, the beneficiaries can accept the estate by executing the Deed of Inheritance. This is the document whereby assets from the deceased are transferred to the beneficiaries. The Deed of Inheritance will subsequently be sent to the tax authorities for assessment and payment.

In intestacy matters, banks are likely not to provide any confirmation of the balances held by the deceased until the Deed of Appointment of Heirs is signed by the parties. This can be an issue when there is a late payment of the Spanish Inheritance Tax.

The main issue with intestacy proceedings is that it creates uncertainty and anxiety amongst the beneficiaries. Under Spanish law it will not be possible to vary the terms of the estate by executing a Deed of Variation. Any changes to the entitlements contained in the law will trigger Gift Tax which, in most cases, can be more costly than Inheritance Tax.

Most of the intestacy matters I have dealt with have incurred considerable legal costs which could have been much lower if the deceased had a properly drafted Will in place.