Solicitor Raymond Nesbitt explains the legal consequences European Regulation 650/2012 (Brussels IV) has on foreign resident’s Spanish Wills.
By Raymundo Larraín Nesbitt
Lawyer – Abogado
8th of January 2015
This article serves as a gentle reminder of the impact European Regulation 650/2012 (Brussels IV) will have on all foreign residents who live and own assets in Spain and who have made a Spanish will (I am particularly thinking of British and Irish nationals).
European Regulation 650/2012, in force since 2012, introduces significant changes to Succession that may require you to make a new Spanish will. These changes will come into force as from the 17th of August 2015. Anyone affected by it that passes away on or after the said date, and who has not updated their Spanish will accordingly, may cause devastating problems to their beneficiaries (normally family). Let this article act as a warning to all those affected by it.
These devastating effects on your family include, but are not limited to, protracted, lengthy and expensive litigation besides fights that tear families apart. In my professional experience the bitterest litigation takes place within families fighting over inheritance money.
If you wish to avoid serious problems to your loved ones you should heed the advice given in this article.
This Regulation has EU-wide impact. If you own property elsewhere in Europe, for example in France or Italy, and your habitual residence is located there you may face similar problems to the ones described in this article for those who have taken up residency in Spain. Take legal advice.
If you are looking for in-depth articles on Spanish Inheritance Tax please follow these links:
To close, I have structured my article as a F.A.Q. for ease of comprehension. Please feel free to add any comments below and I will do my best to address any legal queries relating to it.
What Do These Changes Entail?
Prior to this Regulation, British nationals (foreigners in general) had free testamentary disposition in their Spanish wills over their Spanish estate following art. 9.8 of the S.C.C. providing their own national law allowed it (meaning they could leave their Spanish estate to whoever they pleased). This avoided a testator from following Spanish forced heirship rules that establish that 2/3rds of the Spanish Estate would go to their children. Almost everyone buying property in Spain will have been advised by their conveyance lawyer to draw up a Spanish will exclusively for their Spanish assets.
Regulation 650/2012 changes the rules of the game as it introduces that Succession in all Member States will now be ruled by the laws of the land where the testator holds residency status in lieu of his own national law (article 20). The United Kingdom and the Republic of Ireland have opted out of this Regulation.
This change translates in practice, for example, for an English resident in Spain who’s made a Spanish will that his Succession will now be governed by default by Spanish Inheritance Laws instead of England and Wales’ Succession Laws.
Spanish Succession Laws stipulate that both descendants (children or grandchildren) and ascendants (parents or grandparents) will inherit with priority over a surviving spouse. They are entitled, by law, to inherit fixed shares of the estate. Spain’s Civil Code dates back to the nineteenth century and needs to be brought up to speed with modern times.
Meaning that the Spanish will of this Englishman as it stands now, unchecked, may be successfully contested by forced heirs under Spanish Succession Laws unless he has specifically opted that his will is governed by his own national law (England and Wales) in accordance with articles 38 et seq. of this Regulation. In other words, your Spanish will must make express reference that your Spanish estate must be disposed of following your own national law (as opposed to Spain’s which is applied by default unless you make a specific provision in your Spanish will).
Following on the above example, a resident Englishman decides to leave everything to his stunning blonde girlfriend (twenty years her senior) and cut out his three children from a previous marriage. If he doesn’t make a new Spanish will his children (any of them) can challenge successfully his existing Spanish will leaving his girlfriend exposed and unprotected to protracted litigation. It is almost a certainty that his children will win the case under this new Regulation. You can only leave everything to your new gorgeous girlfriend under English law and for that you need to opt specifically for it on making a new Spanish will.
A resident testator can only avoid having their will contested by making a new Spanish will that reflects his personal choice (to have his own national law governing his Succession in lieu of Spain’s Inheritance Laws which do not contemplate free testamentary disposition).
Who Does It Affect?
In a nutshell, Regulation 650/2012 affects all foreigners who have their habitual residency in Spain and die on or after the 17th of August 2015 (articles 23 and 83). Spanish nationals may disregard the whole article as they are unaffected by the changes. Specifically:
• Foreigners who have their habitual residence in Spain. It affects Spanish wills witnessed prior to the 17th of August 2015 or else which are non-compliant with Regulation 650/2012 terms i.e. there is no mention that your Spanish estate should be disposed of following your own national law. If you are resident in Spain and have made a will according to your own national laws but it is not clearly reflected within (e.g. there is no specific provision in the Spanish will that your Spanish estate should be ruled by your own national laws) you may need to make a new Spanish will compliant with this Regulation. It really falls to a case-by-case scenario; seek a lawyer’s advice to double-check your Spanish will if you are unsure.
• Non-resident foreigners, who have made a Spanish will, and plan to become resident in Spain at some point in the future i.e. British family who bought off-plan property in Spain and plan to sell up in the UK and retire to Spain over the next years.
Can I Choose my Own National Tax Law Besides Opting for my National Succession Law?
Short answer is no.
What this Regulation entitles you is to choose freely the Succession Law of your own nationality (i.e. England and Wales or Scotland’s) in lieu of Spain’s compulsory heir rules which, following this new Regulation, applies by default if your habitual residency is in Spain at the time of your death on or after the 17th of August 2.015.
I stress, to avoid misunderstandings, that you cannot choose what Inheritance Tax Laws apply to your Spanish estate. As a rule of thumb, any beneficiary, whether resident or non-resident, inheriting assets located within Spanish territory has to pay Spanish inheritance tax.
So, for example, an Englishman whose habitual residency is in Spain and inherits Spanish assets will pay Spanish inheritance tax.
And likewise, a non-resident Scottish man who inherits Spanish assets will also pay Spanish inheritance tax.
You cannot opt out or choose your own national Inheritance tax laws on inheriting assets located in Spain. You have to pay Spain’s IHT.
What Can I Do? Can I Simply Update my Existing Spanish Will?
Short answer is no.
After speaking with multiple notaries it is clear that a simple addendum (codicil) cannot be made to your existing Spanish will without incurring in legal risks. In order to avoid your will being successfully contested at the time of your death it is necessary you make a new Spanish will.
Only by making a new Spanish will does it ensure you have a cast-iron guarantee that it will remain uncontested. If you do not heed my advice your outdated will may be challenged by any forced heir under Spain’s Succession Laws. And they will most likely win the case.
If I Make a New Spanish Will What Happens With The Old One? Could there be a Conflict?
No. In Spain the newest will always overrules any prior ones. Spain has a Central Registry of Wills located in Madrid. Any will that is witnessed by a notary anywhere in Spain will have the details sent to this central registry. The original will is stored for safekeeping by the notary himself. There shall be no conflicts.
The only problem is if you decide to make a holographic will instead of having it witnessed by a public notary. I highly recommend this is never done as Spain has very strict rules for these type of wills and they can be easily annulled.
Can I grant a Power of Attorney and have my Spanish Lawyer make a New Will for me?
No. Making a will under Spanish law is a personal act that requires it is made in person and not through proxies.
I am a British/Irish national resident in Spain. Neither the UK nor the RoI have Ratified European Regulation 650/2012, Therefore I don’t Need to Follow your Vested Advice. Thank You Very Much.
It’s beside the point.
Spain has ratified it and your assets are located in Spain for the purpose of this article. When you pass away your Spanish Estate will be unwinded following your own national laws. Both the UK and the RoI make an internal “renvoi” to Spanish Succession laws which happen to follow Regulation 650/2012. So regardless if neither the UK nor the RoI have ratified this Regulation, Spain has and your Spanish estate will be bound by it following European Regulation 650/2012.
I am a British/Irish national and NOT resident in Spain. I Don’t Plan to Become Resident in Spain.
In such a case this Regulation does not affect you. It only affects existing residents in Spain or else those who at some point in the future plan to take up residency in Spain. There is no need for you to make a new Spanish will. You may disregard the whole article.
I am a Foreign Resident Living in Spain. I Plan to Leave All (or Most of) My Estate to My Spouse/Partner. I Have Children (or Grandchildren) and my Parents (and Grandparents) are all Dead. Do I Still Need to Make a New Spanish Will?
Yes, you would need to make a new Spanish will. You should do it before August’s deadline.
It is important to note that Spanish law will govern the estates of all foreigners who have their habitual residency in Spain and who die on or after the 17th of August 2015 as per art 83 of this new Regulation. In other words, Spanish law will govern by default the estates of all foreign residents unless a specific provision is worded in their Spanish will to avoid it.
Children, under Spanish Succession law, have priority on inheriting over a surviving spouse; regardless if they are from a previous marriage or not. They are entitled to 2/3rds of the deceased’s estate. Your children – any of them – could apply to a Spanish court to have your will set aside. They would most likely succeed under this new Regulation leaving your wife or partner in dire straits i.e. they could for example inherit the villa where your wife/partner currently lives in and throw her out leaving her unprotected.
If you care for your partner/spouse’s future well-being act now and make a new Spanish will according to your own choices (providing of course your own national law allows it).
The same rule applies to grandchildren. Grandchildren also have priority on inheriting over the surviving spouse. They would likewise be entitled to 2/3rds of the estate.
In order to legally leave everything to your wife (or partner) you need to override Spanish Succession Laws by making a new Spanish will and specifically opt that your own national law governs the will (E.g. England and Wales’) in lieu of Spain’s Inheritance laws.
I am a Foreign Resident Living in Spain. I Plan to Leave All (or Most of) My Estate to My Spouse/Partner. I Do Not have Children (or Grandchildren) and One (or Both) my Parents/Grandparents are Alive. Do I Still Need to Make a New Spanish Will?
Yes, you need to make a new Spanish will.
If there are no descendants (children or grandchildren), ascendants (parents or grandparents) of the deceased are next in line in the pecking order (arts. 809, 810 and 935 et seq. of the S.C.C.). They have priority on inheriting over the surviving spouse. You run the risk of having one of your parents, or both, contesting your will and leaving your spouse or partner unprotected as a result.
Parents of the deceased are entitled to half of the estate if the deceased wasn’t married to their partner.
Parents of the deceased are entitled to one-third of the estate if the deceased was married to the surviving spouse.
I am a Foreign Resident Living in Spain. I Plan to Leave All (or Most of) My Estate to My Spouse/Partner. I Do Not have Children (or Grandchildren) and my Parents (and Grandparents) are all Dead. Do I Still Need to Make a New Spanish Will?
No. Your existing Spanish will leaving all (or most of) your estate to your spouse/partner should suffice.
I have read your article but the 17th of August 2.015 is now past; Is it now too late to make a new Spanish will in compliance with this European Regulation or can I still make a new will?
No, it is not too late. In fact you should make a new Spanish will immediately updating it. You can make a new will at any moment after said deadline. The problem I highlight is only if you die on or after the 17th of August 2.015 and you have not updated your will.
Spanish Wills and European Regulation 650/2012 – Conclusion
To avoid potentially devastating consequences to your loved ones that may lead families to fight over inheritance money it is your duty to have your existing Spanish will checked by a Spanish lawyer and, only if necessary, to make a new Spanish will compliant with European Regulation 650/2012. This will allow your own national law to be applied to your late estate in lieu of Spain’s Inheritance Laws.
Making a new Spanish will typically has an individual cost of between €100 to €250. This is a paltry amount compared to the dozens of thousands of euros your family stands to lose unless you take evasive action now before August’s deadline; not to mention the additional grief and aggravation you will spare them at a time of bereavement. It is in truth a small price to pay for peace of mind.
Surviving spouses or partners are the ones who stand to lose most (or all) under this new Regulation unless you act now.
Remember, you have until the 17th of August 2015 to make a new Spanish will if this Regulation affects you. Do not take chances with your loved ones’ well-being and plan ahead for your demise.
“If you fail to plan, you plan to fail” – Benjamin Franklin.
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