Owning property or assets in Spain as a non-resident brings many benefits, but it also introduces legal and financial responsibilities that should not be ignored. One of the most crucial – and often overlooked – aspects is inheritance planning. Without it, your heirs could face avoidable tax burdens, legal delays, and even disputes over how your estate is divided.
Inheritance planning for non-residents is not just about writing a will. It’s about understanding Spanish succession law, inheritance tax obligations, and the procedures involved when passing assets on to family members. For British nationals who own property in Spain or have savings or investments held here, forward planning is essential to protect your estate and your loved ones.
One of the key differences between UK and Spanish inheritance law is the concept of “forced heirship.” In Spain, unless you specify otherwise, a large portion of your estate must go to your legal heirs – usually your children or spouse. This can be a surprise for many British citizens, who are used to the freedom of leaving their assets to whomever they choose.
Fortunately, non-residents in Spain can opt to have their national law apply to their estate, rather than defaulting to Spanish law. This right is granted under European Regulation 650/2012. However, to take advantage of it, you must formally declare this choice in a valid will. If you do not, your Spanish-based estate may be distributed according to Spain’s default succession rules, even if your UK will says otherwise.
This makes inheritance planning for non-residents a highly personalised process. Simply having a will is not enough – it must be structured properly and clearly indicate your choice of law.
While some people opt to use an international will, it is usually advisable to have a separate Spanish will covering assets located in Spain. This avoids translation delays, cross-border legal complications, and disputes between jurisdictions.
A Spanish will, properly drafted and signed before a notary, will make the inheritance process far smoother for your beneficiaries. It can also clearly reflect your desire for UK law to apply. Inheritance planning for non-residents is significantly strengthened by this clarity, as it prevents legal ambiguities at a time when your family will already be dealing with a difficult situation.
Spain’s inheritance tax (Impuesto sobre Sucesiones y Donaciones) is not uniform across the country. Each of Spain’s autonomous communities can set their own tax bands, allowances, and exemptions. For this reason, the region in which your assets are located plays a major role in the amount your heirs will pay.
For non-residents, inheritance tax is levied only on assets located in Spain, such as property, Spanish bank accounts, vehicles, or business interests. It is not usually payable on assets held outside the country, but your heirs may still have reporting obligations in their home country depending on their tax residence.
One of the unique aspects of Spanish inheritance tax is that it is paid by the beneficiary, not the estate. This means each heir must calculate and pay tax based on their own situation. Factors like the value of the inheritance, the relationship to the deceased, and any pre-existing wealth all come into play.
This can create scenarios where one child may pay significantly more than another for inheriting the same type of asset. A thorough approach to inheritance planning for non-residents will consider how your estate is structured and how different heirs will be affected.
It’s common for non-residents to consider gifting property or money during their lifetime in order to reduce the taxable value of their estate. While this may be beneficial in some cases, Spanish gift tax (Impuesto sobre Donaciones) is often calculated similarly to inheritance tax – and in some regions, it may be even higher.
Gifting property to your children or spouse during your lifetime can trigger immediate tax liabilities. It may also reduce the flexibility you have to manage your assets later on. Any decision to make a lifetime transfer should be carefully weighed against long-term goals and tax consequences. A well-structured plan is often more efficient than a rushed gift, particularly for high-value properties.
Inheritance planning for non-residents needs to take into account not just what happens after death, but also the best way to protect assets while you’re alive.
Many non-residents make avoidable errors when trying to prepare their estates. Among the most common are:
These mistakes can result in legal challenges, delays, and substantial financial loss. Taking time to engage in proper inheritance planning for non-residents is far less expensive and stressful than dealing with legal problems after the fact.
Inheritance tax in Spain is based on the value of assets at the time of death. If a property has significantly increased in value, heirs could be faced with a high tax bill – and they must pay this before the asset is officially transferred to them. This can be problematic if the estate is made up primarily of property, and the beneficiaries don’t have immediate access to cash.
Careful planning should consider how heirs will fund these tax payments. Life insurance, liquid savings, or having multiple heirs able to share the cost are all solutions worth exploring. Again, professional guidance is critical here, as timing, valuation methods, and regional tax reliefs can significantly affect the final outcome.
Inheritance law is not static. Tax policies change, regulations are updated, and personal circumstances evolve. A will that was drafted five or ten years ago may no longer reflect your wishes or offer the most tax-efficient solution. This is why inheritance planning for non-residents should not be treated as a one-off task.
Your estate plan should be reviewed regularly – especially after acquiring new assets, relocating, or experiencing changes in your family structure. Keeping documents updated, stored securely, and accessible to your heirs ensures that everything is in place when the time comes.
It’s also advisable to appoint a legal representative or executor in Spain, particularly if your heirs are not based in the country or do not speak Spanish. Having someone who understands the local system can reduce stress, speed up the process, and avoid bureaucratic issues.
Inheritance planning for non-residents is about more than avoiding tax – it’s about protecting your family’s future, preserving your wishes, and removing unnecessary burdens for your loved ones. If you own property or hold assets in Spain, the time to plan is now – not when it’s too late.
At Heniam, we help non-residents structure their Spanish estate with clarity, tax-efficiency, and peace of mind. From drafting wills and electing your national law to inheritance tax planning and local legal support, we’re here to guide you through every step of the process.
Contact us today for a free consultation and ensure your Spanish legacy is protected.