When a person dies, the estate falls open and all assets must be transferred to the heirs. This article explains step by step how inheritance works in Spain.
Step 1. Identification of the assets and liabilities of the estate
The first step to inheritance in Spain involves surveying all the testator's assets, including real estate, bank accounts, shares, life insurance policies, cars, etc. We also check whether there are any debts. Think, for example, of a mortgage. This is important not only for the transfer of the estate, but also for inheritance tax purposes.
Step 2. Determine the applicable inheritance law when inheriting in Spain
The second step involves determining the applicable inheritance law. This is important. After all, inheriting in Spain is not necessarily done according to Spanish inheritance law. Each country has its own inheritance law, with differences and similarities. Like Belgian inheritance law, Spain has a system of reservatory heirs, which means you cannot simply disinherit the children, for example. With the new Belgian inheritance law, which in principle will give more freedom to the testator, it may be useful to ensure that Belgian inheritance law continues to apply to your Spanish assets.
There are two options:
1) Either the testator made the choice of inheritance law of his nationality in the will;
2) or no choice was made and the inheritance law of the country of the testator's permanent residence during the last five years is valid.
If the permanent residence is not clearly established, the country with which the testator has the strongest connection is considered.
Step 3. Checking wills
The third step is to check whether the testator made a will. To inherit in Spain, it is perfectly possible that there are multiple wills: a home country will and a Spanish will. We describe three scenarios when the estate becomes open.
A. There is a Spanish will
In this case, the estate can be distributed in Spain without any problems. Please note that a Spanish will is only valid if it was registered in the Registro Central de Ultima Voluntad.
B. There is only a will of the country of nationality
First, you need to translate this will into Spanish by affidavit. This makes inheriting in Spain more expensive. Drawing up a Spanish will is generally cheaper. In addition, the heirs should pass on the death certificate, birth certificate and any civil status records.
A local administrator of the estate may also need to be appointed. This is rather exceptional.
The whole procedure can take several months. This is potentially problematic as inheritance tax has to be paid within six months of death.
C. There is no will
In this case, if the testator's permanent residence was in Spain, Spanish inheritance law will apply to his entire estate, i.e. both Spanish and non-Spanish assets. If the testator did not live in Spain but, for example, in Belgium, Belgian inheritance law will apply.
Step 4. Settling the estate
Accepting or rejecting an inheritance is done before a Spanish notary. The heirs (or representatives) handle the Escritura off. This is a description of all assets and liabilities in the estate, the rank and distribution of property among the heirs and its formal acceptance. Finally, the new titles to real estate are registered in the registry office.
If you cannot attend the settlement of the estate yourself, you can appoint a representative. You will then have to give someone a notarised power of attorney. If you give someone a proxy wishes to give, you can do so:
- at the Spanish consulate in Brussels or;
- through a Belgian notary.
In the latter case, the notarised power of attorney must be legalised by apostille.
Step 5. Spanish inheritance tax
Inheritance in Spain also involves Spanish inheritance tax. This tax is complex and is regulated partly at national level and partly at regional level. Regardless of the applicable inheritance law, Spanish inheritance tax applies to all real estate located in Spain (unless the property is owned by a company).
The valuation is done on the basis of a tax reference value. The Spanish government sets a minimum value based on local registered prices. This value serves as the basis for calculating inheritance tax.
Note: all heirs have a NIE number needed to pay inheritance tax in Spain. This is an identification number for non-residents. Not only will inheritance tax have to be paid, but also, for example taxes on possession of inherited property. You can apply for a NIE number at the Spanish consulate in Brussels or at the police station near the Spanish property. We can also apply for a NIE number for you with a power of attorney.
Note: distribution of the estate must be completed within six months of death, under penalty of payment of fines on top of inheritance tax. Find more information on estate declaration in Spain here.
Spanish inheritance law in outline
Spanish inheritance law only applies if you are a Belgian living in Spain. And even then, you can opt for Belgian inheritance law using your will.
As in Belgium, there are reservatory heirs in Spain. In addition, the surviving spouse is also protected. An important difference is that Belgian inheritance law is more flexible for the testator. In other words, you have more freedom of choice with Belgian inheritance law than with Spanish inheritance law.