Spanish law in relation to inheritance and the Spanish taxation system for IHT differs considerably to the UK and other countries.
What are the key differences
By far the two main key differences between say, Spanish law on inheritance and UK law, is that first of all there is no Spousal exemption on death taxes and secondly that the tax applicable is payable by the beneficiary not the estate.
A third consideration is that if you die intestate and have no Will in either Spain or your country of residency who becomes a beneficiary for the Spanish asset may be very different to who the beneficiary would be in your own country.
In most countries it is your immediate family who automatically inherit, in Spain other more distant relatives may in fact have rights.
What should I do if I have an asset in Spain
It is very important if you have an asset in Spain to have a Spanish Will which works in conjunction with any other Wills you have in the country in which you are domiciled. Having the two Wills working in conjunction with each other will speed up considerably any probate process and ensure your wishes, as to who benefits are followed. Having a Spanish Will could also reduce in the long term the overall costs of probate.
Because there is no Spousal exemption, and Inheritance tax is payable on first death in Spain, going through the process of putting together a Will for Spanish held assets will also ensure you have considered what, if any, Inheritance Tax is going to be applicable and have made some provision to cover this.
IHT taxes vary from region to region in Spain and who inherits and their relationship to you also has an effect on the tax levels payable.
It is not possible, as it is in other countries, to sell the asset to pay the tax due in fact the opposite is true, so death duties in Spain must be paid to enable the beneficiary to take over the asset and to be in a position, if so desired, to sell it.
It is important in Spain when writing a Will to consider how any death duties will be paid otherwise leaving a loved one an asset in Spain could cause them severe financial pressure.
What is the process of probate
On the death of an asset holder Spain should be informed. It is best before informing the authorities and or other institutions to seek legal advice about timings, for instance the Banks in Spain are obliged to freeze Bank accounts on being informed of the death of the holder or the death of a joint holder of any Bank account.
At such an emotional time matters can be made considerably worse if for instance access to money is denied.
In Spain you have up to 6 months from the point of death to deal with the process of Inheritance and pay any related death duties. After 6 months fines will be incurred for late reporting and late payment of tax. The charges are 5% of the asset value for the first three months, 10% for the subsequent 3 months, 15% for the next three months and 20% of you are year late in filing, plus late interest charges.
If finally the Inheritance tax is not paid the Spanish Government can embargo and force the sale of the asset.
Writing a Will in Spain
Writing a Will is a relatively simple process in Spain and all Wills are signed in front of the Notary. Only Wills signed by the Notary will have any legal binding.
The most important point to consider when writing a Will is that you inform the person who is constructing the Will of your wishes, and that these wishes work in tangent with any other Wills you hold.
An experienced lawyer in Spain will be able to help you understand what tax implications will be applicable at this point and guide you to the idiosyncrasies of Spanish Inheritance law.
The cost of writing a Will which includes Notary costs should be in the range of around € 200/€ 250 per person.
Probate costs will range between € 1.500 to € 3.000 except in those instances where probate is complicated and complex. It is unusual for Lawyers in Spain to charge a percentage of Estate value it is more likely they will work on a fixed fee basis.