The stamp duty holiday is set to end on 31 March 2021 and the government has indicated that it won’t be further extended despite pressure from within the property industry...
If you have assets in Spain, including property, making a Spanish Will is an important step to ensure that your assets are distributed according to your wishes in the event of your death. Above all, a Spanish Will can help your loved ones at a distressing time by saving time and money in dealing with your affairs.
If you die habitually resident in England and Wales without a Spanish Will, then your Spanish estate will need to be administered by your Personal Representatives under English Law.
Your Personal Representative could be your spouse, a friend or a professional. Without a Spanish Will, administering your Spanish estate could become expensive both in terms of unnecessary time, delay and inheritance tax.
The process involved in administering a Spanish estate with a valid Spanish Will is considerably quicker than without one.
Get comprehensive advice from our experts
By failing to have both your English and Spanish Wills prepared by professionals who understand the laws of both jurisdictions and how they interact, you expose your Personal Representatives to potential pitfalls.
A common problem involves your local UK solicitor, without our specialist support, preparing an English Will excluding your Spanish assets with advice that you see a separate lawyer to deal with your Spanish assets. You may then:
- never get around to making a separate Spanish Will; or
- end up making a Spanish Will that unintentionally revokes an earlier English Will or fails to allow for your beneficiaries to save tax.
Another undesired outcome could be your local UK solicitor preparing a valid English Will that covers your Spanish assets but:
- fails to consider problems with non-beneficiary Executors and Trustees dealing with Spanish property; or
- fails to consider wishes of yours that may work from an English perspective but results in unexpected Spanish costs, both legal and tax.
Relieve the tax burden on trustees named in English Wills
It can sometimes be difficult to find a local Spanish Notary who is accustomed to dealing with English Wills naming trustees to administer Spanish assets.
A local Spanish lawyer assisting your Personal Representatives is likely to have established working relationships with Spanish Notaries local to their area. However, the Notaries they work with may not have the experience required to deal quickly with Spanish estates involving Trustees appointed under English Wills.
Although some of the more experienced Spanish Notaries will not insist on certification of English law relating to the powers and responsibilities of English Trustees, many others will.
Following recent European legislation, there is a growing trend for English Trustees to be treated by Spanish Notaries as those inheriting the Spanish estate. English Wills involving trusts and non-beneficiary Trustees are often set up to deal with higher value estates. Given that Spanish inheritance tax is calculated on blood relationship to the deceased and the value of the assets being inherited, Spanish inheritance tax bills where Trustees are involved could be huge.
Helping you plan your estate to reduce your Spanish inheritance tax bill
Under current English law you can, for instance, leave your assets to your spouse tax-free. Spanish law does not always allow for this but, because English law has allowed for spouses to inherit tax free, it would be natural to want to do the same with your Spanish assets without thinking about the tax consequences.
Your surviving spouse will be liable to pay Spanish inheritance tax on their inheritance, and your children will be liable to pay similar additional tax when your spouse dies. It may, therefore, be sensible to consider leaving Spanish assets to surviving children instead of a surviving spouse.
If giving too much control of your Spanish assets to your children is a concern, then it is also possible to allow the surviving spouse to exercise a right of occupation (usufruct) over the Spanish property during your spouse’s lifetime.
Strictly speaking, it is correct to say that Trusts (as we know them) do not exist in Spain. Underused by other Spanish professionals advising UK clients, Trust-like structures do exist and can be used to exercise control in these and other circumstances whilst helping to minimise inheritance tax.
You may have lived with your unmarried partner for many years and instinctively want to leave your Spanish assets to them. However, as a nonrelated beneficiary, they will be taxed at the higher rates of inheritance tax.
As specialist lawyers who understand both jurisdictions and the way the laws interact, we can advise you on how best to plan your Anglo-Spanish estate to avoid unnecessary tax.
Saving you the cost of translating and legalising a Grant
If a valid Spanish Will cannot be found, those responsible for administering the Spanish estate will need to apply for an English Grant of Representation (Grant). An English Grant is the documentation issued by an English Court governing who is entitled to benefit from the deceased’s estate.
The Grant will be either a Grant of Probate, where there was a valid English Will dealing with Spanish assets; or a Grant of Letters of Administration, where there was not an English Will that deals effectively with Spanish assets; or there was no English Will at all.
If you have not made a valid Spanish Will, the Spanish authorities will need a sealed and legalised copy of the Grant, as well as a sworn translation of the Grant.
A Spanish Will speeds up the process of administering your English estate
Whilst it is true that the costs of arranging for a Grant to be legalised and translated are less than those incurred by preparing a simple Spanish Will, there are other crucial factors at play that make a Spanish Will indispensable.
The delay between a Grant application and the Grant being issued is typically between 2 – 6 weeks but the preparation involved prior to submitting the application can take much longer.
When planning your estate, if neither your Personal Representatives nor their professional advisers consult suitably qualified professionals, they may not allow for the processes involved with administering the Spanish estate to be dealt with in time to avoid tax payment deadlines.
Delay in administering the Spanish estate could also delay the release of funds from your English estate.
Avoiding the cost of obtaining a Grant
It may not be necessary for your surviving spouse to make an application for a Grant to unlock your English assets, because:
- you may own your UK property in a way that allows your share to pass automatically to your surviving spouse, and/or
- if your assets are below a certain value, the financial institutions holding your UK cash and investments will often release your assets to your spouse on production of your death certificate without needing to see a Grant
Even if a Grant is not required to unlock the deceased’s English assets, a legalised and translated Grant is necessary to administer the Spanish estate in the absence of a Spanish Will.
In more straightforward circumstances, it is possible for Personal Representatives to apply for a Grant without professional help. However, in most cases and particularly when foreign assets are involved, it is likely that they will require professional help to apply for a Grant for use in Spain, even if a Grant is not required to administer your English estate.
Unnecessary fees involved with applying for a Grant in these common circumstances are avoided if you make a Spanish Will.
Helping you make complementary English and Spanish Wills
If you were to die habitually resident in England and Wales, having either made an English Will appointing Trustees to deal with your Spanish assets or made an English Will excluding your Spanish assets but having not made a separate Spanish Will, then the Spanish authorities will require a formal explanation of unfamiliar concepts of English law. Issues include clarifying the concept of Trusteeship and explaining who is entitled to administer and benefit from your estate under English law when there are no valid Wills.
By making separate and complementary English and Spanish Wills, you avoid these problems and corresponding costs.
Making charitable gifts
If you leave Spanish assets to charities, be they English or Spanish, it is important to be aware that providing for charities in your Spanish Will adds extra tax and administration costs. As specialists who understand both laws, we can advise you on ways of providing for charities whilst avoiding these pitfalls.
Making a choice of law
If you die habitually resident in Spain, Spanish rather than English law may apply to your Spanish assets. If you have not made a Spanish Will and a choice of English law to apply to your Spanish estate, then Spanish law may apply, with sometimes unexpected and costly results.
Removing the barriers and bridging the gaps
Many local Spanish lawyers will be able to competently administer the simplest of Spanish estates.
However, as UK based specialists who understand both laws and the way they interact, we are often asked to help where Personal Representatives, beneficiaries and their advisers need our support to overcome language barriers and bridge legal and cultural gaps involved with the problems we have identified above.