Mistakes made when making a Spanish Will- Part III

This week I will talk about a mistake that is made after making a Spanish Will. I am talking about marriage.

Obviously, I am not saying that marriage is a mistake (although some of my divorced friends may have something to say in this respect…). It is what happens with the marriage what worries me.

In certain jurisdictions, like England for example, when  you marry any existing Will is automatically revoked. This means that if you had made a Will and you marry or re-marry for the second time, that Will gets revoked. This is quite clear when it comes to English Wills but what is the position with respect to Spanish Wills?

Spanish law does not contemplate a similar scenario. Basically, if you marry your Will is not automatically revoked. Therefore, it is necessary to revoke it, otherwise that Will continues to be valid.

The problem arises with English nationals owning property in Spain as Spanish law states that, in general terms, English law should be applied to the Spanish Estate (although there are some exceptions which will be explained in a future article). If this is the case and we do have to apply English law to the Spanish Estate, then clearly any marriage will also revoke any Spanish Will granted before tying the knot. This means that we need to be very careful if we marry as we may be revoking the Spanish Will.

The truth is that Notaries and Land Registrars in Spain are not usually aware of this peculiarity of English law and therefore in many occasions this issue is not picked up when dealing with the Spanish estate. However, this situation can cause potential problems in the future, mainly as Notaries and Registrars are becoming more and more versed in international private law matters. The increased pressence of inmigration and North-Europeans retirees in Spain is forcing those professionals to update their knowledge of international private law at considerable speed and therefore are more likely to be able to detect scenarios like the one I have described above.

Having said that, what should you do if you marry and have assets in Spain?

If you have granted a Spanish Will before being married then it is advisable to grant a new one. If you have not granted a Spanish Will then there is nothing to fear, although it would still be advisable to grant one to ensure that you provide for your loved ones.

As always it is better to be safe than sorry or as we say in Spain “Más vale prevenir que curar”.

Mistakes made when granting a Spanish will – Part II

About two weeks ago I started a series of posts on the most common mistakes made when granting a Spanish Will. Now is time for another post.

In my previous post I made mention to the tax aspects of leaving the property or a share on a property to the surviving spouse. This time I want to talk about a mistake that is made after the signature of the Spanish will. I am talking about the granting of a Will in the UK.

Lets imagine the scenario. Mr Six-Pack grants a will in Spain and deals accordingly with his Spanish Estate. Fine, so far. Then he returns to the UK  and life goes on as normal. Around 5 years later he decides to change his UK will. He has had another child and wants to include the child in his UK Will. He then goes to a UK solicitor and grants a UK will where he deals with his estate in the UK. Unfortunately, he forgets to mention that he has a property in Spain and a Spanish will. The solicitor, unaware of the Spanish element, drafts the usual will which contains the following standard clause: I hereby revoke all my previous wills. Full stop. Nothing else is added. No clause saying “except those granted outside England and Wales”  for instance. By doing that, Mr Six-Pack is revoking his Spanish will. Obviously, this will not be discovered until Mr. Six-Pack has passed away and by then it will be too late to ask him if he really wanted to revoke the will.

The most likely interpretation of the said clause will be that Mr. Six-Pack did want to revoke his Spanish will and therefore any solicitor, based in UK or in Spain, who is in possession of both testaments will consider the Spanish, and any other will granted, revoked.

I have seen the above happening in more than one occassion. The name of the client was obvisouly not Mr Six-Pack and the casuistic is not necessarily the same but the truth is that the above happens quite often.

How to avoid it? Any person who has made a Spanish will should inform his solicitor to ensure that he does not revoke the Spanish will. At the same time, solicitors in the UK should always ask the question to their clients. In my firm we have a client questionnaire that is sent to the client prior to taking any instructions. The questionnaire always contains one paragraph where the client is asked on whether he/she has any assets abroad and whether a foreign will has been granted. This precaution can save the solicitor from more than one headache (and lawsuit). It also helps to ensure that the client’s wishes abroad for after his death are respected.

More next week.

Mistakes made when granting a Spanish will- Part I

As some of the readers of this blog are aware, I am a Spanish lawyer based in Manchester, UK. Most of my clients are British with interests or assets in Spain.  I think I have lost track of the number of Spanish wills I have drafted in the last 7 years since I came to the UK. I would say that the total number is getting close to 100.

In many occasions, clients ask for guidance on the tax side. You cannot do many miracles with Spanish wills as there is no nil rate band in Spain and Trusts are not recognised by the Spanish legal system but you can still manage to minimise your client’s tax liabilities if the will is properly drafted. However, in many occasions some clients are reluctant to listen to your advice and end up signing the will as they please. This is absolutely fine with me. It is their right in the end and their wishes you should always be respected. However, as a lawyer you always feel that the decision taken may not be the most appropriate from a legal or tax point of view. This is why I take the opportunity to write about some of the most common mistakes that I have seen when drafting Spanish wills.

The first and perhaps most important is the usual misconception that the surviving spouse is Spanish Inheritance Tax exempt. Many English clients extrapolate the situation in England, where the spouses do not pay tax, to Spain, thinking that the surviving spouse will not pay Inheritance Tax and then leaving the property on the second death to the children. This is a big mistake because the surviving spouse does pay Inheritance tax in Spain. In fact, the surviving spouse only benefits from an allowance of €15,956.87. Then on the death of the surviving spouse, the children or whoever inherits the assets will pay inheritance tax again.

A good way to avoid the above is setting up a usufruct-or life interest- for the surviving spouse. This means that the surviving spouse will inherit the right to use the asset and no one will be able to sell it without his/her consent. At the same time, the inheritance tax to be paid by the spouse will be much lower than the tax that would be paid should he/she inherit the asset in the first place. This system also allows the final beneficiaries, usually the children, to inherit the asset in stages and space their tax liability.

Another option, although this should only be used when there is a good relationship between the different members of the family, is to leave the asset directly to the children. This is quite useful in those cases where a couple with children own a property in equal shares. The spouses can leave their share directly to the children on the understanding that the surviving spouse already owns 50% and therefore the children will respect the parent’s right to use the property. This option should never be used when problems can be expected from some of the beneficiaries, ie. one of them is willing to sell the asset or by no means should be used when the children are not the issue of the surviving spouse.

I realise that I have written too much. It is easy to extend your posts when you are enjoying the subject but I do not want the posts to be long and boring comments on the wonders of Spanish wills. I will therefore continue this topic on my next post. That will be next week.

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