Most of my legal work relates to the administration of Spanish estates where the deceased and the beneficiaries are British. Very often the estate is comprised by a property and a bank account. In those cases, the lawyer acting for the beneficiaries and executors needs to gather the necessary documentation to produce a Deed of Inheritance that will be eventually signed in the presence of a Notary Public in Spain. This is compulsory when the estate had a property as the Land Registry will not update its records and change the title unless is provided with a Deed of Inheritance.
At the same time, there are other estates where the only asset of the deceased is a Spanish bank account.
In the UK closing the account and transferring the funds to the executors and beneficiaries is quite straightforward if the balance in the account is reasonable i.e below £20,000. In those cases, there is no need to produce a Grant of Probate or Administration. Unfortunately, the situation is as not as simple in Spain.
It does not matter how much is left in the account, whether there is 1000 or 100,000 Euro. In Spain the process is the same. The Spanish bank will want to see the following:
- The Will
- The death certificate
- A power of attorney from the beneficiaries and executors in favour of the person who will close the account in Spain
- The certificate from the Spanish Wills Registry
- The beneficiaries Spanish Tax numbers
- The Inheritance tax forms duly sealed by the tax office
- And, in certain circumstances, specially if the Will was a UK one, a certificate of law
The above are the documents that most banks will request but this should not be taken as closed list as each bank acts differently. However, the key thing is that the cost of gathering the above documentation, specially if the lawyer involved is not familiar with cross-border estates between UK and Spain, can sometimes prove higher than the value of the account. In other circumstances, the value of the account will be much higher than the costs of closing it and therefore it will be worth proceeding.
As usual, a Spanish lawyer versed in this type of matters should be able to guide the executors and beneficiaries as to the best route and the costs associated.
In most occassions, inheriting from a dead relative or friend comes associated with an increase in wealth. The heir or beneficiary inherits the assets or money that the deceased had and once the inheritance tax is paid, which sometimes can prove very expensive, the heir is left with a property in Spain and hopefully some money in the bank. This, once we dettach it from the pain and grievance caused by the death of the loved one, usually has a positive side. There will be a property in Spain that can be sold, let or used during holidays. If the property is sold, the heir will be able to get some money after the sale and hopefully spend it or save it as he wishes.
However, this is not always the case. In some cases the property might be charged with a Spanish mortgage leaving no equity for the heir. In other occassions the property could be subject to very high maintenance expenses such as community fees, golf course fees, etc that make the whole thing of owning the property more burdening than having no asset at all. Finally, it may be the case that the inheritance tax due on the Spanish assets is extremely high and the heir is unable to pay it without selling the property. In those circumstances it is normal for the heir to question his intentions and weigh the possibility of renouncing to the Spanish estate.
In general terms, renouncing to the Spanish estate is not a good idea because in most of the cases there will be a property that can be let out or sold. Sometimes it will be a matter of waiting a few years until the market picks up or the mortgage is paid off, but most people do not renounce to what they inherit in Spain. Notwithstanding this, it is true that there is a small percentage of heirs that are not interested in inheriting the assets in Spain and who see the Spanish property more as a burden than an asset. In those circumstances, the heirs can renounce to the Spanish estate and their rights will pass to either the substitutes under the will or to their own beneficiaries, which usually means their children. This is something that needs to be considered before making any renounciation because the renounciation can trigger further consequences that may prove even more detrimental. For instance, imagine that Joe Bloggs dies with assets in Spain. His Spanish will states that everything will go to his daughter Isabelle. She is not interested in the Spanish property and therefore decides to renounce. However, the will states that if Isabelle renounces, everything will go to her children (the grandchildren of Joe Bloggs) and the said children are minors. Under Spanish law, minors cannot renounce to an inheritance without the consent of a Judge. This means that the inheritance will reach a dead point where the minors can accept the estate but not reject it without the consent of a Judge. As you can see this has caused an even bigger problem.
The above is one of the scenarios that can arise. The important thing is to seek legal advice before making any decision in this regard. Do not listen to those who say that you cannot renounce to a Spanish inheritance because this is not true. Anyone, who is of age, can renounce to the Spanish inheritance but before doing it they should seek legal advice to ensure that they understand the consequences of the renounciation and see the different options available. The heirs might be surprised to see that they can transfer their rights to a specific person who might be more interested in the property than them.
Many Britons own property in Spain. The majority of them will know by now how convenient is to make a Will to cover their Spanish assets. They will have seen it on TV programs or read about in in the press or on the internet. However, I still find many cases where a Spanish Will has not been made.
Let’s clarify first that making a Spanish Will is not compulsory, as UK Wills can be perfectly valid in Spain. However, in reality, the situation proves to be quite different. The costs involved in having to translate and legalise a UK Will for its use in Spain are noticeably higher than those involved in making a Spanish Will. At the same time, the Spanish estate will suffer unnecessary delays as it will be necessary to wait for Probate in the UK prior to doing any paperwork in Spain. The problem becomes even bigger when the UK Will refers to terms of Common law such as “Trusts” and “Executors” which are not always recognised in the Spanish legal system. If that is the case, then applying a UK Will to the Spanish estate of a UK national could turn into a bureaucratic nightmare.
Last but not least, the British trend to appoint executors in their Wills could also become a problem as now, under Spanish law, any person mentioned in the Will should have a non-residents fiscal number, known as NIE. This implies that the executors would also have to obtain a NIE number, which could prove complicated and expensive when not being able to fly to Spain and request this in person.
It is then no exaggeration when we say that making a Spanish Will can simplify the process of winding up a Spanish estate.
The Spanish Will has to be restricted to the Spanish assets and should be drafted by a fully qualified Spanish lawyer or Spanish Notary. The former can be found in Spain and the UK (as some UK law firms do count with in house Spanish lawyers) and the latter can only be found in Spain. The Will can be signed either in Spain or in the UK and will be valid as long as it complies with certain formalities.
To summarise, there is no obligation to have a Spanish Will to cover the Spanish assets but this is advisable and failing to make one would not benefit the beneficiaries of the deceased who will incur unnecessary expenses and suffer complicated delays that could have been easily avoided.