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Spanish Inheritance Deeds
1 INHERITANCE INFORMATION IN GENERAL
3 TESTATE SUCCESSION
4 INTESTATE SUCCESSION
5 SPANISH LAW
6 COMMON LAW
7 INHERITANCE TAX
8 IDENTIFICATION NUMBER FOR FOREIGNERS (NIE) IN SPAIN
When a relative dies we face a dramatic emotional change, despite the loss we have to manage the paperwork inherent to the inheritance, causing additional stress.
Part of this stress is caused by ignoring the procedure to be followed when dealing with the inheritance rules in Spain or the United Kingdom. The required documentation to sign an Inheritance Deed, probate, Inheritance taxes etc.
Inheritance means the transfer of property, rights and obligations of the deceased to the heirs,, legatees or beneficiaries.
The succession can be a TESTATE SUCCESSION or an INTESTATE SUCCESSION depending on whether the deceased had stated his wishes before his death or not.
It is called testate succession when the deceased has expressed his wishes through a Will before his death.
When the deceased does not leave a Will (among other reasons) it is normally called Intestate succession.
In Spain the Intestate Succession is governed by the Spanish Civil Code which in Chapter III, art. 912 and followings, where is stated the following four reasons to consider a succession as Intestate:
1. When the deceased did not grant a Will or the Will is no longer valid.
2. When a Will was granted but it does not cover the entire estate of the deceased then the intestate rules shall apply for that portion of the estate not included in the Will.
3. When the heir does not meet the imposed condition, or dies before the testator, etc.
4. When the heir is unable or not capable to inherit.
Unlike other countries, Spain has a Central Registry for Wills (Registro de Ultimas Voluntades) and in order to be able to prove that a succession should be considered intestate the Spanish authorities require a Death Certificate and a Certificate issued by this registry
Intestate succession is governed by the Succession Act in England and Wales.
SPANISH LAW: ESTATE ACCEPTANCE:
Under Spanish law the rightful heirs or legal beneficiaries (normally the children) have the legitimate right (la legitima) of the total value of the assets even if the deceased did not leave a Will or did not set out provisions for them.
It is impossible to disinherit them as the law considers them rightful heirs and legal beneficiaries.
The forced heirs can only be disinherit by the reasons stated on the Spanish Civil Code to this regards.
ENGLISH LAW. COMMON LAW.
Under Common Law, mainly the law of England and Wales, the testator has the freedom to leave the assets according as he wishes, the figure of forced or necessary heir does not exists as it does in Spanish law. It is true that this freedom is only limited when the testator has persons dependent on him as in this case the Will could be contested.
The Inheritance process in the UK from the time of death to the transfer of the assets is completely different to the Inheritance process in Spain. The figure of the executors is of great importance in the UK as it is the executor who should submit the Will to the appropriate Probate Registry office of the High Court of Justice in order to be approved through the publication of the Grant of Probate . If the deceased did not appoint any executors then the competent judicial authority will name them. If the deceased did not grant a Will then a Letter of Administration should be issued.
Under English law the executors-trustees have more power than their counterparts in Spain (albacea-contador-partidor) as they have full authority for the purposes of: enforcing the Will, liquidate and distribute the corresponding assets to each beneficiary, selling properties; and withdrawing money from the bank accounts etc.
As per Spanish Law each beneficiary of an Inheritance must pay inheritance tax individually and in proportion to: the assets they are receiving, their family relation with the deceased and their residency status, etc.
It is important to note that in Spain the deadline for the inheritance tax payment (IHT) is just six months from the date of death. It might be difficult to respect this period in case of delay in obtaining the required documents from abroad, if necessary (i.e. Certificate of English law, probate, etc.). It is convenient to request an additional extension to avoid accrual of interest for late payment. The extension request must be submitted within the first five months from the date of death, as per the Articles 67 and 68 of the Spanish IHT Rules (Reglamento de Impuestos y Sucesiones y Donaciones – R.I.S.D.).
The calculation of the inheritance tax is determined by a gradual table starting from 7.65% to 34% depending on the following facts:
1.) Estate to be awarded
2.) Deceased was tax or non tax resident in Spain and if resident the specific region in Spain must also be taken in consideration (Comunidad Autonoma).
3.) Beneficiaries are tax or non tax resident in Spain and if resident the specific region in Spain must also be considered (Comunidad Autonoma).
4.) When the beneficiaries are also family members they will be able to benefit from the corresponding tax reduction for family members. The National Tax in Spain is regulated by the Law 29/1987, of December 18 and the RD 1629/1991, of 08 November. The Valencia Community has its own Inheritance Tax Laws.
As per Spanish Law the beneficiaries will receive the assets resulting from deducting the deceased’s debts (debts, mortgages, last illness costs, funeral expenses, etc.) so this debts could be deducted from the total value of the assets owned by the deceased at the time of his death: i.e., property, rights, shares etc.
Therefore the total to be awarded to each heir will be the difference between the assets and the deceased’s liabilities at the time of death, being this the value to be taxed.
The total value and valuation done of the deceased’s assets must be specified in the Inheritance Deed. When, for example the only asset is a bank account, the value will be determined through a bank certificate with the account balance on the date of death.
If a property is part of the assets, then the market value at the time of the death must appear in the Deed of Inheritance.
If the tax authorities understand that the declared value is below market value the Inheritance Tax paid might be reviewed by them and an additional payment, that could include sanctions and interests, can be requested to be made. When a property in part of the Inheritance and once the above mentioned process has been completed, the property will then be registered under the beneficiary’s name.
All foreigners resident or non-resident dealing with financial affairs in Spain (such as an Inheritance) and regardless of being or not being EU citizens must have a FOREIGNERS TAX IDENTIFICATION NUMBER OR NIE (Número de Identificación de Extranjero). This is the equivalent of a Spanish citizen’s fiscal and/or ID number (Número de Identificación Fiscal) (NIF).
Therefore any person involved in an inheritance process in Spain, who will sign the Inheritance Title Deed, pay Inheritance Tax, etc, must apply for a NIE number in order to be able to carry out these this process or even to authorize others to do it on their behalf (beneficiaries, executors, etc).
Once the NIE number has been obtained and in order for the Tax Authorities to register this new number in their files you need to present the original NIE and the 030 TAX FORM at the Tax Office. This form is used to register new tax payers, changes to existing addresses or changes to Personal data. (Declaración censal de alta de obligados tributarios, cambio de domicilio y/o variación de datos personales)
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In Spain we can differentiate between two types of inheritance. Testate succession (when the deceased granted a will before passing away) and intestate succession (when there is no will).
The initial document in all inheritance proceedings is the Death Certificate. Once obtained, it will be necessary to get the Last Will and Testament Certificate, Insurance Certificate, authorised copy of the will and the rest of the documentation related to the assets that form the inheritance (properties, bank accounts, etc). When all the documentation is ready, the deed of acceptance of inheritance can be signed.
Yes, it is necessary that each and every one of the heirs accepts the inheritance. If an heir cannot sign, it will be necessary for him/her to authorise another person, by means of a Power of Attorney, to accept and sign the inheritance on his/her behalf.
If you grant a Power of Attorney, it will not be necessary for you to travel to Spain. This POA can be granted either to your lawyer or the person you wish to represent you in all the formalities.
Yes, in order to accept an inheritance in Spain you will need an NIE (Foreigner’s Identity Number). Please note that the NIE must be registered with the competent tax authority.
Even if the only asset to be inherited is a bank account, in Spain the inheritance process is the same. Please note that, even though it is a joint account between the deceased and the heir, the change of ownership is not automatic. It will be necessary to collect all the documentation, prove payment of taxes, etc in order to have access to the account.
It will depend on the amount of assets to be inherited, the documentation to be compiled, the number of heirs, etc. However, if the deceased granted a will in Spain, the procedure is usually much quicker than if the testamentary/succession document has to be obtained in a foreign country. In this case, it must be translated, apostilled, etc. If everything goes well, the process can take between a month and a half and as long as necessary, depending on the complexity of the matter.
No. In Spain, European Regulation 650/2012, will be applied to Inheritances. That is to say, the law applicable to the inheritance will normally be: either the law of the habitual residence of the deceased at the time of death, or the law of his/her nationality (had the deceased opted for it). Therefore, even if the inheritance takes place in Spain, or if there are Spanish assets, Spanish law and the ‘forced heirs’ rights of the Spanish Civil Code will not necessarily apply. In other words, it will depend on the law that rules the inheritance. If Spanish law is applied, the children will be forced heirs. If the law of another country applies, it will depend on what that law says.
If the deceased did not make a will, the intestate succession would be opened. The law applicable to the inheritance (that will determine who the heirs are) will be the law of the last habitual residence of the deceased.
No. If Spanish law is applicable, the Civil Code establishes that will inherit descendants, ascendants, spouse, siblings and nieces/nephews, other collaterals up to the fourth degree. Only if none of the above exist, the government would inherit the assets.
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