Succession Planning for Spanish Property: Wills and Inheritance

Forced Heirship Rules in Spain

Spanish inheritance law is fundamentally different from English law. While English law allows you to leave your estate to anyone you choose (complete testamentary freedom), Spanish law reserves a mandatory portion of your estate — the legítima — for certain close family members. These are known as herederos forzosos (forced heirs).

Who Are the Forced Heirs?

• Children (and descendants): Entitled to two-thirds of the estate, divided into:
  • Legítima estricta (strict legítima): One-third divided equally among all children
  • Mejora (improvement third): One-third that can be distributed among the children in any proportion the testator chooses (or left equally if not specified)
• Surviving spouse: If there are children, the spouse is entitled to a usufruct over the mejora third (one-third of the estate). If there are no children but surviving parents, the spouse gets a usufruct over one-half. If there are neither children nor parents, the spouse gets a usufruct over two-thirds.
• Parents (and ascendants): Only if there are no children. Parents receive one-third of the estate (or one-half if there is no surviving spouse).

The remaining one-third (the tercio de libre disposición — free disposal third) can be left to anyone the testator chooses — a partner, a friend, a charity, or anyone else.

Why This Matters for UK Owners

Consider this scenario: You are a UK citizen, divorced, with two adult children from your first marriage. You are now in a long-term relationship with a new partner and you buy a Spanish property together. If Spanish forced heirship rules apply to your estate, your children would be entitled to two-thirds of your share of the property — potentially forcing your partner to sell the property to pay them out, even if that was never your intention.

EU Succession Regulation 650/2012: Choosing UK Law

The EU Succession Regulation 650/2012 (commonly called "Brussels IV") is the single most important legal tool for UK property owners in Spain. It allows you to choose the law of your nationality to govern the succession of your entire estate within the EU, overriding the default rule that the law of your habitual residence applies.

How It Works

By including a professio juris (choice of law clause) in your will, you can elect English law (or Scottish law, or the law of Northern Ireland) to govern your succession. Since English law has no forced heirship rules, you regain complete testamentary freedom — you can leave your Spanish property to whomever you wish.

Does It Still Apply Post-Brexit?

Yes. Although the UK has left the EU, the Regulation continues to apply in EU member states (including Spain). The Regulation specifically permits choice of the law of any country — not just EU member states. Spanish courts and notaries routinely accept English law choices from UK nationals. This has been tested and upheld in practice since the Regulation came into force in 2015.

How to Make the Choice

The choice of law must be made expressly in your will. A typical clause reads: "I direct that the law of England and Wales shall govern the succession to all my assets, wherever situated, pursuant to EU Regulation 650/2012." Your Spanish notary will include the appropriate wording in the Spanish will.

Spanish Will vs UK Will

Should you make a separate Spanish will for your Spanish property, or should your UK will cover everything? The strong recommendation is to make both:

Why You Need a Spanish Will

• Speed: When a UK owner dies with Spanish property, the heirs need to obtain a Spanish escritura de aceptación de herencia (deed of acceptance of inheritance) at a notary to transfer the property. A Spanish will, registered in the Registro General de Actos de Última Voluntad, can be located and used immediately.
• Avoiding delay: A UK will must be translated into Spanish, apostilled, and presented to a Spanish notary. This process can take months. A Spanish will is ready to use immediately.
• Local expertise: A Spanish notary drafting a Spanish will understands the tax implications, regional inheritance tax rules, and the interaction with EU regulations.
• Cost: A Spanish will costs just €150-€300 at a notary. This is trivial compared to the delay and expense of administering Spanish property under a UK will alone.

Coordinating the Two Wills

It is critical that your Spanish and UK wills are coordinated to avoid one revoking the other. Each will should contain a clause specifying its geographic scope:

• Your Spanish will should state: "This will covers only my assets situated in Spain and does not revoke any will I have made or may make in the United Kingdom covering my assets situated elsewhere."
• Your UK will should state: "This will covers only my assets situated outside Spain and does not revoke any will I have made or may make in Spain covering my Spanish assets."

If either will contains a general revocation clause (such as "I hereby revoke all previous wills"), it could accidentally revoke the other will. This is a common and costly mistake.

Inheritance Tax Rates by Region

Spanish inheritance tax (Impuesto sobre Sucesiones y Donaciones) is devolved to the autonomous communities, creating large variations in effective rates. The heir pays the tax — not the estate — and the applicable regional rules depend on the heir's residence (for Spanish residents) or the location of the property (for non-resident heirs).

Andalusia

Andalusia has become one of the most favourable regions for inheritance, following reforms in 2018 and subsequent years. Key features:

• €1 million allowance per heir for Group I and II (children, spouse, parents, grandchildren)
• Effective result: most family inheritances in Andalusia of property and assets worth up to €1 million per heir attract zero inheritance tax
• This is enormously beneficial for UK families owning property on the Costa del Sol

Madrid

Madrid offers a 99% reduction for Group I and II heirs, making the effective tax rate close to zero for family inheritances.

Valencia

Valencia provides significant reductions for close family, with effective rates very low for Group I and II heirs. However, the rules change frequently — check current provisions with a local adviser.

Catalonia

Catalonia has its own inheritance tax scale with reasonable allowances for close family (€100,000 for children, €500,000 for spouses in certain cases) but can result in higher bills than Andalusia or Madrid for larger estates.

Non-Resident Heirs

If the heir is not resident in Spain, they can choose to apply either the national rules or the rules of the autonomous community where the property is located. Since a 2018 Supreme Court ruling (following an EU Court of Justice decision), non-resident heirs have the right to apply regional reductions. This is a significant benefit — previously, non-resident heirs were stuck with the much less generous national scale.

Usufruct for the Surviving Spouse

The usufruct (usufructo) is one of the most useful tools in Spanish succession planning. It allows you to give one person the right to use and enjoy a property while leaving ownership to someone else.

How Usufruct Works in Practice

You leave the bare ownership (nuda propiedad) of your property share to your children, and a lifetime usufruct to your surviving spouse or partner. Your spouse can live in the property, rent it out and keep the income, and generally enjoy it as if they owned it — but they cannot sell it or mortgage it without the bare owners' consent.

When the usufructuary dies (or the usufruct period expires), full ownership consolidates automatically with the bare owners (your children). No further legal action is needed.

Tax Treatment of Usufruct

For inheritance tax purposes, the usufruct is valued using a formula based on the usufructuary's age:

• Value of usufruct = 89 minus the usufructuary's age (expressed as a percentage), with a minimum of 10%
• Example: A 70-year-old usufructuary receives a usufruct valued at 89 - 70 = 19% of the property value
• The bare owners inherit the remaining 81% of the value

This split reduces the inheritance tax for both parties — the usufructuary pays tax only on their portion (19% in this example), and the bare owners pay tax only on their portion (81%).

Life Insurance as an Inheritance Tool

Life insurance (seguro de vida) can be a powerful inheritance planning tool in Spain:

• Liquidity: When someone dies, their Spanish bank accounts are frozen until the inheritance is formalised. This process takes months. A life insurance payout provides immediate cash to cover funeral costs, legal fees, and living expenses.
• Tax efficiency: Life insurance proceeds are subject to inheritance tax in Spain, but they benefit from a €9,195.49 reduction per beneficiary (for close family). For larger policies, the tax is the same as on other inherited assets.
• Paying the tax bill: If the inheritance includes illiquid assets (like property) and the heirs face a large tax bill, life insurance can provide the cash to pay the tax without forcing a sale.
• Naming beneficiaries directly: Life insurance proceeds go directly to the named beneficiary — they do not form part of the estate for forced heirship purposes. This gives you flexibility to direct funds to specific people.

Getting a Spanish Will: The Process

Making a Spanish will is simple and inexpensive:

Step 1: Instruct a Lawyer

While you can go directly to a notary, it is advisable to instruct a Spanish lawyer (abogado) with experience in international succession to draft the will. They ensure the choice of law clause is correct, the UK and Spanish wills are coordinated, and the tax implications are considered. Lawyer fee: €200-€500.

Step 2: Attend the Notary

You attend a Spanish notary (notario) in person. The notary reads the will to you in Spanish (an official translator must be present if you don't speak Spanish). You sign it, and the notary signs and seals it. Notary fee: €50-€100.

Step 3: Registration

The notary registers the will with the Registro General de Actos de Última Voluntad (General Registry of Last Wills) in Madrid. This is a central database of all wills made in Spain. When someone dies, the first step is to obtain a certificate from this registry showing whether they made a Spanish will and at which notary.

Total Cost

Including lawyer fees and notary fees, a Spanish will typically costs €150-€300 per person — one of the best investments you can make as a Spanish property owner.

When to Review

Review your Spanish will whenever your circumstances change: marriage, divorce, birth of children, death of a beneficiary, or purchase of additional Spanish property. A will made when you were single may not reflect your wishes after marriage.

Succession planning is not the most exciting aspect of buying property in Spain, but it is arguably the most important. Without proper planning — a Spanish will, a choice of law clause, and consideration of regional inheritance tax rules — your family could face unnecessary legal complexity, high tax bills, and outcomes you never intended. Spend the €300 on a Spanish will. Your family will thank you.