Spanish Succession Legal Services
Where there’s a Will there’s a Way? Some pointers on Spanish Succession law
The past few decades have seen an explosion of property ownership amongst Irish persons abroad, most particularly in Europe. The majority of such properties are bought as holiday homes meaning that Spain, with a climate many Irish persons would consider enviable, counts many Irish citizens and residents as property owners. It is not uncommon for Irish persons to buy property in Spain without any real experience of Spanish society or its legal system for which reason, when such a property owner requires legal assistance, they frequently turn to their trusted solicitor in Ireland. Whilst the need for legal services of the owner of real property can be exotic and diverse, there is none so inevitable than the need for expert guidance in respect of the law of succession or inheritance. This article purports to give a few pointers in the hope of orientating Irish practitioners who are asked for such guidance.
Formal Requirements for a valid Will
Any non-resident owning property in Spain should first be advised to seriously consider making a Spanish will disposing of that property. Such a will must comply with the formalities specified in the Spanish Civil code, namely that the will must be handwritten dated and signed by them or granted before a notary, (with certain exceptions) and should be registered in the Central Registry of Last Wishes. Most Spanish persons making a will would go to one of the Notaries in their locality and make their will with those testators who require a slightly more sophisticated treatment of their affairs having first had a draft prepared by their lawyer which they in turn present to the Notary. It should be noted that pursuant to Spanish Law, a will cannot be granted via power of attorney meaning that the testator must travel to Spain to make their will, or avail of the Consular services of the Spanish Embassy. The option of handwriting their will is not recommended. It is also possible however for an Irish Citizen to make a will disposing of their Spanish property before a Notary Public in Ireland, which they then can have “apostilled” in the Department of Foreign affairs, and subsequently lodged in the Register of Last Wishes in Spain. Where a testator intends making two wills, one disposing of their estate in Spain and another disposing of their other assets, it is essential that the wills are mutually exclusive with regard to the property they dispose of, particularly where different dispositions are made as between the two wills. An estate can be administered using an Irish will and grant of probate although this is more expensive and time consuming.
Administering an Estate in Spain
To administer a deceased person’s estate in Spain, the heirs must go through a procedure called “accepting the inheritance”. There is no exact analogue to the legal figure of the “Executor” or “Administrator” as exists in Irish Law. The acceptance of the inheritance may be done before a Notary, or in Court. The notarial procedure is generally quicker. If there is any contest as to the proper division of the estate, the dispute will normally find its way before the Courts with the difference that, as opposed to non-contentious judicial administration of the estate, Court taxes must be paid on initiation of the proceedings which can be very significant indeed.
Substantive Provisions of Spanish Succession Law
The most significant difference between Irish and Spanish succession law is the restriction on testamentary freedom which exists in Spanish law. In Spanish Law a portion of the deceased’s estate (called “la legitima”) is reserved for certain family members being primarily the children of the deceased, or great/grandchildren. The testator must leave a third of his or her estate equally between his or her children or descendants, he or she has freedom to dispose of another third of his or her estate to whichever descendant he wishes, (although his or her Spouse retains a life interest over this part) and he or she has complete testamentary freedom in respect of the final third. If the testator has no issue, and no Spouse, then his or her parents may inherit half of the estate. Where there is a surviving spouse the parents or ascendants are entitled to a third with a third being reserved for the spouse. If the testator has no ascendants or descendants, then the surviving spouse is entitled to, pursuant to law, two thirds of the Estate.
Where the deceased dies without leaving a will or a valid will, the estate is distributed in equal parts amongst their children and descendants. In the absence of children or descendants, the estate is distributed amongst the ascendants of the deceased and in their absence the spouse inherits the property in the entire estate. In the event of there being descendants or ascendants, the surviving spouse is nevertheless entitled to a life interest in one third or two thirds of the estate respectively.
Private International Law Considerations.
The difference between the substantive law applicable to the division of a deceased person’s estate in Spanish and Irish law places a particular importance on ensuring that a non-resident owner of property in Spain is properly advised when making a will. The position according to Spanish law is deceptively simple; article 9.8º of the Spanish Civil Code provides that succession shall be in accordance with the national law of the deceased at the time of his death. The position is not so simple as, in the case of an Irish national (irrespective of domicile or residence) with real property located in Spain, Spanish law says that Irish law is applicable however Irish law, following English law, applies a “renvoi” to Spanish law in the case of real property (but not in the case of personal property). This is known as the “double renvoi” and means that Spanish law is once more applicable. As one may appreciate, this may have very significant effects on the distribution of property between various children, widow / widower and other family members and the testator must be advised of this at the time of making a will. There is also a view that in the circumstances of an intestacy, Spanish law provisions for intestacy must apply although, in the experience of the author, an intestate person’s estate in Spain can be administered notarially using an Irish grant of administration although this is tends to take longer and be more expensive.
There is a line of authority emanating from the Spanish Supreme Court which permits the circumventing of problems which might be associated with the double renvoi in respect of real property located in Spain. These decisions prohibit the application of different legal regimes to personal and real property and accordingly justifies the application of the national law to the entire estate. If for no other reason, this may make it well worth a non-resident’s time and expense maintaining a bank account in Spain with a small balance in the same.
In any case, in practice, where the national law of the testator provides for free disposition, Notaries and Registrars will rarely interfere with the dispositions of the will. What one must be conscious of however, is that a disgruntled family member, who would be entitled to inherit under Spanish law as a “legitimario” would be entitled to challenge such a disposition.
As regards foreigners disposing of property in Spain and documentary formalities, the practitioner must have regard to the 1961 Hague Convention on the Conflict of Laws Relating to the Form of Testamentary Dispositions which may permit the rescuing of a will which fails to fulfil the Spanish formal requirements but does satisfy Irish law in this respect. Both Ireland and Spain are signatories of the said Convention and have transposed the same.
EU Regulation Nº 650/2012 on Jurisdiction, Applicable Law and Recognition and Enforcement of Decisions in matters of Succession will lend a great deal more certainty to transnational successions however be warned, Ireland has, with the United Kingdom, derogated from the said regulation for the time being. The regulation will apply to deaths after 17th August, 2015 and will nevertheless have an important indirect effect on the administration of certain estates of Irish persons. The regulation will be applicable in Spain making a “choice of law” in favour of Irish law in the will binding, without any double renvoi. For this reason, as from now, it may be important to specify a choice of law on the basis of nationality in any Irish national’s will disposing of Spanish property.
The provisions of a testator’s will require careful consideration in order to mitigate the tax consequences for the disposition of the Estate. Advice should be taken in this regard while drafting a will. Where a married couple with children own a holiday home, for example, and wish to ultimately bequeath the home to their children, they may wish to make mutual wills bequeathing their share of the property to their children with a life estate in favour of the surviving spouse. In this way a double ration of inheritance tax may be avoided.
While inheritance tax is a competence of the Central Spanish State (except in the Basque Country and Navarra) the competence has been transferred to certain Autonomous Communities to strike the inheritance tax for that Community and as such rates may vary from one area to another. In certain Autonomous Communities significant tax free allowances were available to “residents” which meant that the Irish resident, for example, paid a far higher rate of inheritance tax. Of particular interest in this regard is a recent decision of the European Court of Justice (dated 3rd September, 2014) which has found that the Spanish State cannot impose a higher tax rate on non-resident owners of Spanish property than Spanish residents. It may be anticipated that many non-residents who have paid these higher inheritance taxes in recent years will be entitled to recover the tax collected from them.
This article attempts to describe, in the most superficial of ways, relevant aspects of Spanish succession law so as to provide a starting point for the Irish practitioner. It cannot purport to replace specific advice by a properly instructed professional.
Edmund Sweetman B.L. Spanish Legal Services