Planning your inheritance
The fact that Inheritance and Gift Tax has not been abolished, and is tending to rise in several Spanish regions, makes proper financial and tax planning of your inheritance essential, whatever your financial and family situation. It avoids unnecessary costs and surprises for your future heirs, who sometimes have to sell assets cheaply to pay for the inheritance, or even renounce it.
Planning your inheritance
Planning allows you to decide who your heirs will be; otherwise, the law will decide for you (intestate succession). Some of the tools available are:
Wills
A will is a document in which the testator decides what will happen to all or part of their assets, rights and obligations after their death.
It is a strictly personal act: the testator cannot delegate the making of their will to anyone else, in whole or in part.
It can be revoked until the moment of death, so you can change it as many times as you like; the last one made is the valid one.
This is particularly important for parents of children whose legal capacity has been restricted: in their own will, parents can make a will on behalf of those children (exemplary substitution, substitució exemplar), avoiding intestate succession where the child is unable to make a will.
Succession agreements
A succession agreement can be an alternative to a will for setting out how assets and rights will be passed on, although it is only available in certain regions of Spain: Navarre, Biscay, Aragon, the Balearic Islands, Galicia and Catalonia.
It is a contract in which the parties (spouses, unmarried partners or relatives) agree to appoint an heir or to allocate specific parts of the inheritance to certain beneficiaries.
As a contract between the parties, it cannot be changed and, unlike a will, it is irrevocable, except by agreement of the parties, on the grounds set out in the agreement itself or on the grounds provided by law (such as failure to meet the obligations imposed on the beneficiary or a change in the circumstances on which it was based).
Reducing the tax impact
Planning allows you to minimise the tax impact of accepting the inheritance for your heirs, avoiding surprises and even renunciations.
That is why an individual and specific study of the estate is essential, analysing each client’s personal and family circumstances. There are no universal solutions or general answers: every person is a case, and every case has its own features that lead to different conclusions.
A number of variables — such as where the deceased and the heirs live, their relationship, the value of the estate, the heirs’ existing wealth, where the assets are located and their age — can mean that one heir pays nothing at all while another pays more than 50% of the value of what they receive.
It is essential to plan your inheritance with lawyers who specialise in this area and who will analyse your particular situation to find the best way to protect the assets you wish to leave to your heirs.
