One of the last things that anyone thinks about when they move overseas is the fact that the laws of succession abroad can differ greatly to those we’re familiar with back home – and that this fact can have a dramatic, and sometimes devastating impact on your family and loved ones if you die overseas or die leaving assets abroad.
Getting the correct legal advice about matters of life and death in Spain relating to the likes of probate, wills and inheritance can seem difficult. If you search on the Internet for example, you’ll find contradictory half stories at best. So, at Expatra we spent some time to build a better understanding of the situation affecting expatriates living in Spain, as well as those onshore with assets such as property in Spain.
It is critical that you understand your position and that of your future heirs and beneficiaries if you want to save them time, stress, worry and even money, and if you want to correctly order your affairs, ensuring you have control over how your estate will be divided up when you die. We appreciate that this is not a particularly positive subject matter – but at the same time, we are acutely aware that this is a topic that has to be touched upon, therefore we will do so in as full and comprehensive a manner as we possibly can to directly assist you.
Following the loss of a loved one, thinking about the inheritance process can never be considered an easy experience – having to deal with all the legal and administrative aspects can be quite daunting, and the whole process is strangely alien at a time in life when you’re already having to adjust to a significant loss as well.
On top of all of this, to then be faced with the fact that the inheritance process is unfolding before you in an unfamiliar language, (i.e., Spanish in the case of this article), and with processes and legal principles differing sometimes greatly from those you are familiar with in your own country, can be quite simply bewildering.
In the experience of the team at Legal4Spain.com, this is how many clients are feeling when they come to them for assistance with probate in Spain following the death of a loved one.
In many cases, people are further frustrated by the inconsistent information encountered when searching the Internet, and often even more confused and overwhelmed than they were when they first started searching for help and advice.
In reality, in over 75% of Spanish succession cases, with proper analysis and understanding the position of the beneficiaries and executors will be apparent at the outset. The documentation that is required should be clear; and quite quickly it should be possible for a reasonably accurate time and cost estimate to be provided so that matters can quickly proceed.
For things to work this way however, it is essential to have a full understanding both of the legal and administrative processes in Spain and also in the country of the family/beneficiaries of the deceased. It is simply impossible to conduct the Spanish succession process for non-Spanish nationals looking only at the Spanish legal aspects.
Beyond that, clarity of communication is essential between the appointed legal representative and the executors/beneficiaries of the will. This is vital as there is a lot of information quickly and accurately to impart and to receive, in order for matters to be progressed and completed efficiently and correctly.
In summary, when faced with responsibility for the Spanish succession process following a bereavement, it is very important that you have a legal representative…
• …Who is appropriately professionally qualified and expert both in the applicable Spanish law and succession procedures; and who knows how the Spanish law and procedures interact with the law and procedures in the country of the estate/beneficiaries;
• …Who can quickly tell you exactly what is involved in the Spanish succession process and provide you with an accurate indication of the costs and timescale involved; and
• …With whom you can communicate easily and openly.
Preparation is the Key to the Smooth Running of the Succession Process in Spain
Legal4Spain.com advise that they are frequently asked, (although usually in retrospect, it has to be said), ‘what can be done in advance to prepare for the Spanish succession process?’ Most people want to ensure that families and loved ones are caused the minimum amount of stress and inconvenience possible in the succession process in Spain. It is indeed an important issue to consider, as proper planning will reduce the family’s cost exposure and also reduce the risk of delays, which can in turn assist in keeping taxation liability to a minimum.
So, to summarise, some key points for you to consider if you have assets in Spain are as follows, (note, this list is by no means exhaustive, as each individual case is unique, which is why you’re best advised to seek personal legal advice to get your affairs in order): –
• Make a will. As set out in detail in our earlier article ‘Why You Need a Spanish Will if You Own Property in Spain’, it is essential to ensure that your assets are covered by an up to date will, (and usually a separate will is required for each country if you have assets in different jurisdictions).
• Ensure that your succession arrangements are tax efficient. As set out in detail in another of our articles ‘If you Live in Spain or Own Spanish Property, You Need to Plan for Spanish Succession Tax,’ it is in the best interests of those who you wish to inherit your Spanish assets to make things as tax efficient as possible. Unlike in the UK, where in some cases it is possible to make post-death variations to wills to improve tax efficiency, in Spain, once you have died then it is simply too late to make any tax efficiency changes. It is essential that steps are taken during your lifetime to ensure that your chosen beneficiaries are not exposed to an unnecessarily excessive tax burden.
• Keep your paperwork in order. In the experience of the experts at Legal4Spain.com, relatively few people keep their documents easily accessible to their chosen beneficiaries. For instance, clear and concise information about bank accounts, investments and ownership of, (as well as dealings with), other assets should be readily accessible in the event of your death. Copies of all legal documentation should be kept together, (including wills, title deeds, etc.,), with a note as to where the originals can be found. There is probably nothing which adds more to the administrative time input – and therefore the legal costs – of executors/beneficiaries than needing to piece together the ‘jigsaw puzzle’ of a disorganised estate. This is a key way to avoid substantial delays in the succession process, which may result in further increasing costs and tax liability.
• Ensure that all relevant parties have NIE numbers. It is now obligatory when dealing with any registered property or other asset dealings in Spain for all parties involved to have NIE numbers. This includes parties to the succession process – in all cases, beneficiaries need NIE numbers; and in some cases, even executors with no beneficial entitlement need NIE numbers in Spain too. In some cases, the simple absence of an NIE number can lead to a very significant delay in the succession process, thereby substantially increasing costs and taxation liability.
• Keep your tax receipts. As well as needing to produce title deeds or registration certificates for properties or vehicles and any other registered Spanish assets in the succession process, it is necessary in order to complete the registration of the succession, to demonstrate that all applicable taxes have been paid up to date. Among the most commonly overlooked records are local vehicle tax payments and property rates payments. It is essential for tax receipts of this nature to be produced in the succession process, so they should be carefully kept with the ownership papers for the asset in question or in banking/legal records. This helps to avoid delays and additional costs in the succession process.
• Keep your old, cancelled passports. Passports are generally renewed every 10 years. In some cases, (particularly in relation to dealings with properties prior to the introduction of compulsory NIEs), parties to transactions, (or in executing wills), are identified by reference to their national passport numbers. Therefore the original, (albeit by then cancelled), passports can be useful in terms of proving identity.
• Hold joint bank accounts. In many cases, in the context of the legal succession process, it can be both more tax efficient and more legally/administratively efficient for joint owners of a Spanish property to hold a joint Spanish bank account to cover the running expenses of the property, rather than holding individual bank accounts.
• Be ready to move fast. Hacienda, (the Spanish tax authority), shows no mercy in terms of the requirement for the Notarial stage of the Spanish succession process to be completed and taxes paid by the expiry of six months from the date of death. To have everything ready and concluded by the six month cut-off point is a very tall order indeed. This means that you should have a legal representative in place, who is familiar with your situation, and who has the necessary experience and expertise to quickly hit the ground running when the time comes, to deal with your legal succession process.
• Purchase a funeral plan. It is important when making your estate planning arrangements that you carefully consider the arrangements for, (and funding of), your funeral. Your will writing professional should cover this with you, to ensure that you have appropriate arrangements in place. Otherwise, the complexities of dealing with this, (and securing funds to cover the cost), following a bereavement can cause problems and delays in commencing the succession process, in turn adding to the cost and tax exposure of your beneficiaries/estate, and potentially increasing their stress.
Despite the many mixed messages available, (particularly on the Internet), about Spanish probate taking years to complete, costing a fortune and nobody being truly certain as to what documentation is required in a given case etc., it doesn’t have to be that way.
By advance planning with appropriate professional advice – or in a case where a death has already occurred, with the right professional representation – the mystery and stress can be taken out of the Spanish succession process, and matters can be concluded quickly and efficiently.
You can also help the process and make the entire experience that your beneficiaries will have to face so much easier if you take a little time to get your affairs correctly ordered. Once done, you don’t need to worry about it again unless your circumstances change…so why wait, why not take matters in hand and get them arranged and organized sooner rather than too much later.
With thanks to Andrew Eastwood, Managing Director of Legal 4 Spain for his assistance in the preparation of this article.