There is not a magic formula that will make you avoid succession tax, but there are some things you can do to pay less because of it.
The first thing you should do is to check the debts associated with the legacy. In Spain, you cannot inherit assets and avoid the debts. If you accept the inheritance, you also have to accept the debts.
What you can do is to accept the inheritance with inventory benefit, which means that you will only receive the assets after having paid all the debts. As a result, you will not need to pay the debts with your own money.
Sometimes it is not a matter of paying less, but the need to pay it suddenly and unexpectedly. In principle, once you accept the inheritance, you can ask the tax authority to divide the payments through five years.
In addition, you can opt to donate some of the assets before your death with a private contract that specifies you can use it until you pass away. The donations also involve taxes, but you can manage the timing much better than with death.
Keep in mind that the donation does not involve the acceptation of debts, so it could be a way to avoid them and still receive the assets from the grantor.
Sometimes, it can be worth it to legate some assets to the heir’s couples. This is dangerous of course in case of a divorce, but the succession tax increases with the value of the legacy. So if you divide it between the couple, they could pay less. However, it also will depend on the matrimonial regime they have.
Making a clear and legal will is always a way to decrease the costs of the inheritance. If everything is clear, there will likely not be a need for lawyers, courts, and arguments.
By dividing the legacy between many people, you can reduce the tax rate. We are not saying you should leave your assets to anyone, but you can divide it between your couple, sons, and grandsons. The law should give you the chance to give the right of usufruct to your couple if that worries you.
Of course, all these are just some ideas, but you need to ask an expert about your specific case. Things like the family relationship with the grantor, the region of Spain in which you are located, etc. may generate great changes.
Do not hesitate to contact us about anything related to Spanish probate. We are here to help!
