INHERITANCE  PROCEDURES & TAXES

To continue this subject from the last article, should you need to deal
with the affairs of someone recently deceased, you have six months in
which to collect the necessary papers, prepare the Escritura for
acceptance of the inheritance and pay Inheritance taxes. The basic
procedures are as follows:

When someone dies, a Death Certificate will be prepared stating the
time, date and cause of death.  If death does not occur in Spain, and
the Certificate is not an International version, it will need to have
an Apostille (Official Stamp) attached.  The Apostille is attached in
the country of origin of the document by the Foreign Office in that
country.  In addition, the Death Certificate plus Apostille will need
to be officially translated into Spanish (i.e. by someone who has been
certified by the Spanish Government to carry out translation services).


In order to ascertain whether a Spanish Will has been made, a
“Certificado de Ultimas Voluntades” should be applied for from the
Central Office in Madrid.  The Notary will usually apply for this
Certificate on receipt of the Death Certificate, and this takes
approximately six weeks.

If no Spanish Will has been made, the original British Will with
Apostille needs to be presented in Spain for translation by an official
translator.  In addition, you will need to request a Certificate of
Probate, which is issued by the High Court in the UK, also with an
Apostille attached and officially translated.  This is required in
order to validate the British Will.  

Should the deceased have died intestate (i.e. without a Spanish or
British Will), then just the Certificate of Probate, plus Apostille and
certified translation, is required.

If a Spanish Will has been made, neither the Apostille nor the
Certificate of Probate from the UK is required, and the Will itself
will be in Spanish so obviously no translation is necessary.

The final document you need to produce is the Escritura or other proof
of ownership of any goods or property left by the deceased (this could
be a house, car, bank account, etc).  

In addition to the Death Certificate, the above documents should also
be presented to the Notary, and he/she will prepare an official
Escritura in which the Inheritor/s either accept or renounce the
inheritance of any assets in a formal Inheritance Declaration.  These
assets must be given a market value in the Declaration, which should be
a realistic amount, to avoid re- assessment by the Tax Office at a
later date.

The Inheritance Tax will be based on this Declaration, and must be paid
within 6 months of the date of death.  The amount of Inheritance Tax
payable is based upon the relationship of the inheritors to the
deceased and the value declared in the Inheritance Declaration
Escritura. There is a tax free allowance for direct heirs, and a
smaller allowance for brothers/sisters, in-laws etc.  If there is no
blood relation to the deceased, then no tax free allowance will be
applicable.

Once the Inheritance Tax has been received by the Tax Office, all the
appropriate papers and figures will be checked.  If the Tax Office are
not happy with the figures as presented, they will advise accordingly,
and it will then be necessary to make an appeal against their decision.

Should you be unable for any reason to claim your inheritance for 4
years and 6 months after the date of death, then the date for paying
Inheritance Tax will have passed and will be waived  (the usual Notary,
Property Registry fees etc will still be payable).  During this time,
however, it is not possible to claim any assets, or sell any property,
as everything remains in the name of the deceased.  Should you accept
the Inheritance out of the 6 month time limit, but before 4 years and 6
months have elapsed, you would have to pay any Inheritance Tax due plus
a penalty tax amount for late presentation.

On a final note, please remember that should you hold a joint bank
account with someone who is recently deceased, once the bank are
advised of the situation, they are legally required to  “freeze” monies
in the account until the Inheritance Declaration has been presented to
them.  In a joint bank account, therefore, they would be obliged to
freeze half the balance of the account as at the date of death until
the Inheritance Tax has been paid. 

Similarly, you will not be able to sell any Spanish vehicle in the name
of the deceased until you can prove, by means of the Inheritance
Escritura, that you are the rightful heir. In addition, the vehicle
will have to be transferred into your name before you can then change
the title to the new owner.

GIFT TAX

It is possible to put assets in the name of a third party by means of a
gift in order to avoid Inheritance Tax on death, but it must be
considered that there is then a Gift Tax payable on the donation, which
will be the same amount as the Inheritance Tax but without a tax free
allowance.