I am an Executor on a Spanish estate. Do I still need an N.I.E.?

The answer is simple: Yes.

Any person appearing in a Will that is going to be used for the administration of a Spanish estate, whether this is an English or a Spanish Will, requires a N.I.E. number. Obviously, this applies to those who inherit the asset but also to those who are not beneficiaries under the Will but have been appointed as Executors of the estate. In the event of several executors there is no need to get N.I.E. for all of them unless they have been appointed in a joint basis whereby all their signatures are required for any document with legal implications.

The above means that if Joe Bloggs died with no Spanish Will but he had an English Will that covered all his assets around the world and in that Will he appointed his brother and his trusted solicitor as Executors, both of them will need a N.I.E number and both will have to fly to Spain to attend the signing of the deed of inheritance at the Notary’s office. If this is not convenient, they can give power of attorney to someone based in Spain (ideally a lawyer or someone they trust) to sign the deeds on their behalf.

With regards to the N.I.E. this can be obtained in different ways:

– In person at the local police station in Spain

– In person at one of the Consular offices or delegations of Spain in the UK ( Aberdeen, Edinburgh, Leeds, Liverpool, London or Manchester)

– By way of granting power of attorney to someone based in Spain

For those who are not aware, there is no need to appoint an Executor in a Spanish Will as the heir/beneficiary has the same powers as a UK Executor. This is a mistake that many people make when signing their Spanish Wills. They appoint Executors when these are not necessary. Having said that, there is no harm in appointing Executors on a Spanish Will or in an English Will that is going to be used in Spain. It is just not as necessary and important as in the UK. In the end is up to the Testator or Testatrix to decide.

 

 

Can I renounce to an inheritance in Spain?

A Business Men Climbing a Pile of Papers

 

 

 

 

 

 

 

 

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.

 

Wills, wills, wills…

As one of the few Spanish lawyers living and practising in this country, I often come across international probate matters where the deceased had assets both in Spain and in the UK. In certain occasions, the deceased is a Spanish national who moved to the UK for work and ended up owning assets in this country but in the majority of cases the situation is the reverse; a British person moved to Spain (seeking sun and more gentle weather) and kept assets in both countries.

When the said person dies there is a probate procedure to be dealt in Spain but also in the UK. If there is a will for each country then great but quite often this is not the case and conflicts of international law start to arise. Last week I saw a case where an English national who died in Spain had a Spanish will, which was only applicable to the Spanish estate, but no English will at all. The Spanish will could not be applied to the UK assets as it clearly stated that it was solely restricted to Spain and therefore a partial intestacy procedure needs to be started in the UK in order to get what is called letters of administration.

The above scenario reminds me how convenient is to seek the advice of a professional who is qualified to deal with both jurisdictions or if this not possible, at least try to get separate advice from a Spanish lawyer and UK solicitor and, hopefully, get them to work together in order to ensure that both wills are in accordance and do not create any unnecessary problems in the future. In my opinion, many problems take place because there is no communication between the two different lawyers or because the wills are signed at different times and places. This can be avoided by appointing a law firm with solicitors of both jurisdictions or by simply asking the lawyers, if they are based in different countries, to liaise and work together.

As we say in Spain”más vale prevenir que curar” which means something like “it is better to be safe than sorry”.

More next week.

Photograph from www.dreamstime.com

 

Mistakes made when granting a Spanish will- Part IV

  

This is my last article on the topic that I started some weeks ago. I could write about wills for weeks as this is a subject that I enjoy quite a lot but I am aware that this would make my blog quite boring and repetitive. I have therefore decided to conclude with an article on one of my favourite topics within Wills and Succession and then move to new topics.

The topic I will cover today is jurisdiction.  Lets imagine a person called Joe Bloggs. He is British, English national and domiciled, lives in England and has assets in England and Spain.  Joe is a cautious man, no surprise his nickname is Cautious Joe, and he has made 2 wills. One for Spain and the other one for England. On his death, his beneficiaries appoint an English law firm to deal with the estate. As there are some Spanish assets, the English law firm has to instruct a Spanish lawyer to help with the Spanish side. The first question the English lawyers ask the Spanish is the following: is the Spanish estate regulated by Spanish law or English law? The Spanish lawyer will probably look at the Spanish Civil Code and confirm that English law applies to the deceased’s estate as this is what is stated in article 9.8 of the Spanish Civil Code.

The above would be the usual scenario but things are not as simple as they look because English law states that immovable assets (properties) are regulated by the law of the place where these are located. This means that there seems to be a conflict between English law, which states that Spanish law should apply, and Spanish law, which states that English law should apply. In general terms the conflict is resolved and English law is applied but this is not always the case, specially when the deceased died living in Spain with all his assets in that country.

There are two good ways to avoid the potential application of Spanish law  to the Spanish estate of an English person (and therefore avoid the strict forceship rules of Spanish Inheritance Law). The first one is to include a clause on the Spanish will to confirm that the testator wants English law to apply to his Spanish estate. The second one is to keep some assets in England to ensure that the jurisdiction is not returned back to Spain.  Sometimes is sufficient with keeping a parking space or a bank account with a relevant amount of money but when in doubt a property would prove the best option.

If the above is not done, then the testator may have his will challenged by one of the forced heirs under Spanish law (spouses, children and, in certain occcasions, parents) if he/she has been ignored in the will.

This is a fascinating topic that is evolving constantly. However, the above recommendations will help to avoid future problems for the loved ones.

Photographs by www.freefoto.com

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.

Photograph supplied by www.freefoto.com

 

About the “international wills” and other confusing type of wills

The World is getting smaller. There is no doubt about it. In this era of globalisation, we have seen British acquiring properties in other countries such as Spain, France, Italy, you name it. The British affair with sunny places is well known. Programs such as “A place in the sun” are a good example of it. However, not everyone has taken the necessary measures to deal with the assets they own abroad and to ensure that their loved ones are covered if something were to happen. I am talking obviously about the convenience of making a will.

Fortunately, not everyone has neglected this particular point as many have signed wills to cover their assets abroad. Some have even signed a peculiar type of will called “international will” which I personally find very confusing. This so called “international will” is presented to the testator as the panacea, the magic solution, the philosopher’s stone that will cover the entire testator’s worldwide estate.

I have seen a couple of these “international wills” and they have raised several alerts on me as they do not appear to comply with a specific jurisdiction and therefore are under the risk of being considered null. For instance, the wills I have seen were signed by English nationals and were supposed to deal with assets in Spain. However, the form of the wills was neither compliant with Spanish or English law. This could involve a potential nullity that will inevitably lead to intestacy as Spanish law states that it is possible to sign a foreign will as long as this complies with the formalities of the country where it’s signed. Unfortunately, the “international wills” I have seen do not comply with a specific jurisdiction and therefore the potential problems are numerous.

I might be wrong but my opinion is that if someone has signed one of those “international wills” then the person should seek legal advice as it may be the case that the will is not valid. He/she may still be on time to change the will and grant a proper will that will be recognised in the necessary countries.

About the convenience of making a separate Spanish will

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.