Inheritance planning for UK citizens in Spain, including the Canary Islands.

It is worth noting how important it is for UK citizens to review their inheritance planning and probate when living in the Canary Islands, as it is necessary to consider the impact of Spanish inheritance law and inheritance tax, as well as inheritance in the UK, which many British expatriates continue to face.

Inheritance planning is one of those tasks that is easy to put off, but the longer you go without doing it, the more you risk doing it late. Your inheritance may not be distributed the way you wanted, and your heirs may pay more tax than they should.

British expatriates and inheritance in Spain

British'. 'Expats living in Spain need to be aware of and plan for several inheritance issues:

• Your Last Will and Testament
• Spanish inheritance law
• Spanish Inheritance and Gift Tax

If you live in Spain, it is advisable to make a Spanish Will to dispose of your Spanish assets. It is much easier to finalize an inheritance using a local will rather than a will set up in another country. A British Will can be effective in Spain, but its main disadvantage is that it must go through a process of notarization and translation before being accepted in Spain, which inevitably causes long delays and''limitations). In Spain, however, Spanish inheritance law imposes 'compulsory inheritance' rules. In general, children are entitled to receive two-thirds of the inheritance property, so under Spanish law you cannot, for example, leave everything to your spouse. This Spanish inheritance law applies by default to foreign nationals living in Spain. However, you can use the European Inheritance Regulation ("Brussels IV") to choose to apply the inheritance law of your country of citizenship on your death. But you must explicitly state this in your will, otherwise the distribution of your inheritance will be in accordance with the law of your country of residence. Brussels IV applies to all foreign nationals,''Residing in an EU country, this is not restricted to EU citizens, so it is still an option for British expatriates. Please note that Brussels IV only applies to inheritance law. You cannot use it to elect UK inheritance tax instead of Spanish inheritance tax on death.

Inheritance tax in Spain works quite differently to inheritance tax in the UK. The tax is paid by each recipient of the inheritance, rather than the inheritance fund, and the rate of tax depends on the relationship between the person passing on the money and the person receiving the money. There is no general exemption from inheritance tax for spouses. Inheritance and gift tax in Spain is compulsory if the inherited or''the donated asset is located in Spain (irrespective of the recipient's residence) or if the recipient resides in Spain (irrespective of the location of the assets).

Many British expats are still liable for UK inheritance tax as it is based on domicile rather than residence. This means that your inheritance may be subject to both UK and Spanish inheritance tax, but Spain takes into account the tax paid in the UK to avoid double taxation. Depending on your circumstances and intentions, it may be possible that you''You will be able to choose the domiciles of your choice in Spain. This is a complex and specialized area, so consult with professionals.

The first step is to define your inheritance planning goals:

• Who would you like your inheritance to go to?
• Do you want to control how and when they receive their inheritance?
• How quickly will they need the money?
• What can you do to make the inheritance process as easy and cost-effective as possible for them?

Then seek specialized international inheritance planning advice to implement your wishes for your heirs while keeping inheritance taxes to a minimum. В''Depending on your family situation inheritance planning for Spain and the UK can be quite complex, but with careful planning and professional advice you can be sure that you have chosen the best approach, both for yourself today and for your family in the future.

Author: Paul Montague, Partner at Blevins Franks

Phone: (+34) 922 716 079

Email: [email protected]