An inheritance agreement: interesting for people with second homes?

Recently, we regularly receive questions about inheritance agreements. The inheritance agreement is a new concept for the practice. Traditionally, Belgian legislators considered the conclusion of an inheritance agreement immoral and undesirable. The inheritance agreement is therefore fundamentally prohibited in Belgium. From 1 September 2018 however, the new inheritance law comes into force, allowing a number of exceptions to this principle prohibition. This contribution will examine whether an inheritance agreement opportunities for Belgians with a second residence in Spain.

What is an inheritance agreement?

The purpose of an inheritance agreement is to settle the rights to the components of a future estate. In other words, the testator and the heirs make binding agreements on the future inheritance.

So how does this differ from a will? With a will, you unilaterally specify who will get what after your death. A will does not contain agreements with the heirs. On this page you will find more information about drawing up a Spanish will.

What is the point of an inheritance agreement?

You can transfer your assets tailored to the family situation to the next generation. The entire estate can be divided more fairly between heirs, taking into account previous gifts, endowments and benefits. The aim is to conflicts over inheritance after death of the testator to avoid.

What types of inheritance agreements does the new inheritance law allow?

A first innovation is the global inheritance agreement, also known as the family pact. The global pact of succession allows the parents to establish with the children that a balanced arrangement has been made between the heirs. This means that the family makes an agreement on the (past) gifts and benefits received by the children or grandchildren. In addition to a donation in the strict legal sense, it may also concern, for example, the payment of studies by the parents, gifts or certain expenses paid by the parents for the benefit of one of the children. With a global inheritance agreement, a fair arrangement are established between the heirs and future conflicts over the estate are avoided.

In addition, there may punctual succession agreements be concluded. With a punctual inheritance agreement, arrangements are made for specific parts of the estate.

An example is the waiver of the right to abridgement. A gift is abridged if the reserve claims of one of the heirs were exceeded. Certain heirs, such as children, are entitled to a portion of the estate: the reserve. If the reserve of one of the heirs is affected by a donation, the aggrieved heir can shorten that donation after the testator's death. The curtailment thus ensures equality of heirs. With a punctual inheritance agreement, parties will be able to waive the right to claim abridgement.

What are the formalities of entering into an inheritance agreement?

An inheritance agreement is concluded by notarial deed and must be registered. The intervention of the notary is therefore necessary. A reflection period is also provided for so that parties can make an informed decision before signing the inheritance agreement.

What does Spanish law say about inheritance agreements?

Under Spanish law, entering into an inheritance agreement is also prohibited in principle. Some autonomous regions do allow inheritance agreements under conditions. In Spanish law, one must therefore take into account Spanish national law on the one hand and Spanish regional law on the other. Catalonia, for example, stipulates that only spouses, legal cohabitants and direct relatives can conclude inheritance agreements. Waiver of reservatory claims to the estate is also limited here. Valencia, on the other hand, does not accept inheritance agreements for the time being.

Does Spanish law apply to Belgian inheritance agreements?

Since the inheritance agreement may govern the transfer of Spanish real estate, the question arises whether Spanish law will apply. A distinction should be made between an inheritance agreement regarding the succession of one person on the one hand and an inheritance agreement regarding the succession of several persons on the other.

In the first case, the inheritance agreement will in principle be governed by the law of the habitual residence of the testator. The testator may also choose the law of the country of his nationality. In the event that the agreement as to succession concerns several persons, it will only be admissible if the agreement as to succession is admissible under all the laws of the habitual residence of the testators at the time the agreement as to succession is concluded. The different testators may also choose the law of the country of their nationality.

As Spain does not recognise inheritance agreements in principle, parties can draw up the inheritance agreement in Belgium. The testators can do so if they have their habitual residence in Belgium. If the testators live in Spain, they can opt for the law of the country of their nationality, i.e. Belgium. In that case, the settlement of the estate, including its Spanish components, will be governed by Belgian law.

What are the concrete benefits for my second stay in Spain?

An inheritance agreement will allow succession planning facilitate. The specific needs of the family can be accommodated, without anyone having to be disadvantaged. This means that specific arrangements can be made for the transfer of Spanish property. Explanations are given below using an example.

An example

Etienne is retired and has two children: Eline and Frederic. Etienne's assets include bank deposits, a modest flat in Turnhout in which he lives and a spacious villa near Alicante. In Alicante, Etienne winters four months a year.

Frederic and his wife are happily expecting twins. Thanks to Etienne's financial support, Frederic has been able to remodel his family home in preparation for the family expansion. To meet later expenses, Frederic would like to inherit the flat in Turnhout to rent out.

Eline suffers from rheumatism. The warmer climate in Spain significantly reduces the pain of this medical condition. Therefore, Eline wants to emigrate to Spain. Etienne therefore wishes to allocate his second residence to Eline.

However, there is a problem: the value of the villa far exceeds Eline's legal claims to the estate. After all, the villa in Spain is the main asset of the future estate. Although Etienne will assign the Spanish villa to Eline, he certainly does not want to disadvantage Frederic. Etienne absolutely wants to preserve equality between his children.

In this situation, the global inheritance agreement can be useful. For example, the parties can agree that Etienne will gift the Spanish villa to Eline as an advance inheritance. Frederic will inherit the flat and the remaining bank balances. The renovation costs on Frederic's house will be treated as a gift, so these costs will be part of his legal inheritance. Finally, Eline will still have a debt towards Frederic in the amount of what exceeds her legal inheritance. In this way, the parties will establish a balanced settlement.

On this page, you can read more about donate in Spain.

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