Because you are balancing two whole distinct legal systems, estate preparation is notoriously difficult for UK expats living in Spain. With testamentary freedom in the UK, you can leave your assets to anybody you choose, while in Spain, the law is set up to safeguard the family through forced heirship. This blog looks at estate planning for UK expats in Spain and how working with Spanish probate specialists can prevent costly cross-border mistakes.
Forced Heirship
You cannot simply leave everything to your spouse under the Spanish Civil Code. According to Spanish law, your children or descendants must receive two-thirds of your estate. This is called la legítima. Without planning, Spanish forced heirship rules may override your wishes, even if you have a UK will.
Brussels IV (EU Regulation 650/2012) is the answer. This legislation is still applicable even if the UK is no longer a member of the EU. It enables you to specify in your will that you would like your estate to be governed by your country’s law (for example, English law) rather than Spanish law. By doing this, you can leave your possessions to anybody you want and avoid forced heirship.
Two Wills
Using a UK will for Spanish property is a logistical nightmare, even though it is legally permitted in Spain. It needs to be notarised, translated by a sworn translator, and made lawful with a Hague Apostille. Your heirs experience severe delays as a result.
The Ideal Method:
A UK will – To protect your property, pensions, and bank accounts in the UK.
A Spanish will – To protect your car, local bank accounts, and Spanish villa.
Make sure your Spanish and UK solicitors work together. A phrase that “revokes all previous wills,” which is a regular blunder made in new UK wills, may inadvertently nullify your Spanish will.
Inheritance Tax in Spain
In the UK, the tax is paid by the estate. In Spain, the tax is paid by the beneficiary. Unlike the UK, transfers between spouses in Spain are not automatically exempt from 100% tax. There are 17 autonomous regions in Spain, such as Andalusia, Valencia, and Madrid, each with its own tax rate. While some areas are significantly more stringent, others offer a 99% discount to close family members.
Spanish inheritance tax rules and regional reductions are published by the Spanish Tax Agency inheritance guidance.
Residence versus Domicile
You can still be regarded as UK-domiciled by HMRC even if you reside in Spain full-time. This implies that your overseas assets may still be subject to UK Inheritance Tax (IHT) claims. Unlike income tax, inheritance tax is not covered by a double taxation treaty between Spain and the UK. To avoid paying taxes twice on the same asset, you can typically claim “Unilateral Relief” in the UK for taxes already paid in Spain.
For help with Spanish probate issues, contact Spanish Probate Matters on 0208 150 2010.
