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Spanish Wills for UK Nationals

An English Will allows you to pass on your estate to whomever you wish. Without one, the State will decide how your assets will be distributed – for instance the first £125,000 only will go direct to your surviving spouse. This may cause all sorts of problems if your main asset is your house and suddenly it is owned by others.

A Spanish Will allows you to decide to whom you would like your Spanish assets left. Without it, sorting out your affairs in Spain will be complex, expensive and very time consuming. A well drafted Will also allows you to take advantage of Inheritance Tax planning

Each Will gives the instructions on what should happen to the property in each country. But they need to be drafted carefully so that one does not cancel the other out.

One Will may not cover assets in the other country – so an English Will might not cover the distribution of assets in Spain and vice versa. The law is complex on this subject and if you die without having made valid Wills, then your family will have much less freedom to determine what needs to be done, will spend more money on legal fees and will find that it will take a long time for things to be sorted out. We recommend that if you have assets (like a house) in Spain and England , then you need two Wills.

An English Will appoints executors who can then act for the whole estate wherever it is situated. Spanish Wills do not appoint executors, as the people who inherit are considered to be charge of the estate.

Doing nothing about inheritence is not an option for anyone you love. Without an English and Spanish will you could be subjecting your family to years of administrative hassle before your assets can pass to your family.

If you are considering or have bought some property in Spain, you need to act. If you don't you will give your family considerable hassle, anguish or perhaps have them pay extra and unnecessary tax, particularly at a difficult time for them, after your death. This can be made simple, easy and convenient, providing you do something now.

You can reduce the amount of Spanish inheritance tax your estate might have to pay. Since the rate of tax can be higher than 80% of what a beneficiary receives, this is an important part of the tax planning advice your broker can give.

Consider also having a funeral plan, as the Spanish authorities act very quickly in the case of a death and the family issues are not seen to be important.

Inheritance tax

Both Spanish and English jurisdictions have inheritance tax. This tax is designed to raise money for the Exchequer and to help re-distribute your wealth. But there are things you can do, either to reduce the tax your estate will pay or to avoid it completely but legally. A good company can advise you on the English and Spanish Inheritance tax rules as they stand at the moment and look at ways of minimising the impact.

Both tax systems are different and at present there is no double taxation treaty between Spain and the UK for Inheritance Tax. This means that you could pay inheritance tax on your Spanish assets and then pay again on these assets in the UK.

In simple terms English Inheritance tax is levied on estates over the nil rate band at the rate of 40%, but a spouse, or civil partner will pay no tax on assets left to them.

The nil rate band rates are as follows:

April 2005 - £275,000
April 2006 - £285,000
April 2007 - £300,000
April 2008 - £312,000
April 2009 - £325,000

For Spanish tax, there is no allowance for a spouse, but anyone left assets can claim a €16,000 allowance. Tax is paid on any amount above this, at a rate that can go above 80%. It is complex and you are advised to take advice on this.

Civil Partnership Act 2004

This act is now in force and same sex couples can take advantage of it - however, you must have your relationship registered so that you may then pass your assets on to your partner on your death, without any Inheritance Tax being paid.  But you must make a new Will, as any previous Will may not be valid.

Breaking News

Inheritance tax blow to families in UK Chancellor's budget

The Inheritance tax threshold is to increase to £325,000 in April 2009. This increase is well below the rate of house inflation. So, many more homeowners will be dragged into the IHT trap.

Furthermore the Accumulation and maintenance trusts, set up to pass assets to children and grandchildren will now be taxed. Putting assets into the trusts will be taxed at 20%, the assets will be taxed at 6% every 10 years, and up to 6% when the beneficiaries take the assets out of the trust. 100,000 people are estimated to have one of these such trusts and they now need to review their tax planning.