The Directive has now been in force since 2015 after providing citizens with 3 years to adapt their wills to the new system.
We have been writing about the subject since 2012 when the Directive was published and so have many other solicitors but we are finding when going to probate that not everyone has taken action on this.
There are still ex-pats resident in Spain who have not revised their wills to take the new system in to account and they should.
For those that have asked Brexit has no effect on this subject. It may have an effect on inheritance tax but this is another story.
You may have heard from friends, neighbours etc about a European Union Directive that is causing certain concerns regarding wills made in Spain .
If you are and ex-pat living in Spain, have assets in Spain and wish to avoid what could be potentially a very serious problem for you’re surviving partner it is very important for you to understand the changes introduced by European Union Directive 650/2012 (which came into force 17/08 2015 ) and in consequence take immediate action if necessary in your case. We are not saying that everyone will have to change their will, but many will. Basically if you any doubts consult your solicitor.
What is all the fuss about:
It is all about what law will be applicable to how you can distribute your Spanish estate.
This is very important because under Spanish domestic law spouses/partners unlike for example in the U.K. or Ireland cannot leave their estate to each other, as they have to leave 2/3 directly to their children/grandchildren. (In Spain there is a system of obligatory heirs)
(To English couples this may sound surprising because it is so different from the English system that allows you to do whatever you like with your estate , but Spanish Inheritance law goes back to the 19th century (our civil code dates back to 1889 when things where very different. It happens that France and Italy have very similar systems . In other words a Spanish husband with children/grandchildren cannot leave his estate to his wife and vice-versa as they have to leave the children /grandchildren their obligatory share. If they have no children but have living parents they also have limitations. The risk of not taking action could be that you are also subject to these limitations.
The situation before the Directive came into force:
Up to the Directive coming into force foreign couples in Spain have been allowed in principle to leave each other their estate as long as their national law permitted it. This was based on the fact that the Spanish norm of conflict (article 9.8 of the Spanish civil code established that to an inherence you apply the law of the nationality of the deceased). In other words for example English and Irish couples would typically lead everything to each other and then only as a second step down to their children. When you purchased your property typically your solicitor will have recommended makings a will which the correct advice (and still is ) and in many cases if you are English you will have drawn up a will leaving everything to each other and then as a second step to descendants etc .
The situation after the directive has come into force:
Directive 650/2012 changes the existing system completely. In fact is is so important to act on it that it provided 3 years for people to adapt their wills. The directive is in force since August the 17th ,2015. Under the new system if you die and your will is not found to contain a clause by which you expressly manifest your wish for your national law to rule your estate , it will be the law of country of last residence that rules how you can distribute your assets by default. If you are resident in Spain the will described before will now only work if you make the express choice of law. Otherwise children and grandchildren are entitled to 2/3.
You will find below what the Directive actually says:
• Article 21 of the Directive:
“Unless otherwise provided for in this Regulation,the law applicable to the succession as a whole shall be the law of the State in which the deceased had his habitual residence at the time of death.”
• Article 22 of the Directive:
“A person may choose as the law to govern his succession as a whole the law of the State whose nationality he possesses at the time of making the choice or at the time of death.”
In a nutshell if you are a resident in Spain and die after the 17th of August of 2015 your will (made any time before or after that date) must be found to contain an express mention of you wish for your national law to rule your inheritance. If this express declaration of wishes is not in your will they will apply Spanish law by default which the result explained below.
What would the application of Spanish law mean for you:
- That if your have children or grandchildren (regardless of them being from your previous relationship or your present one ) they will be entitled to 2/3 of your Spanish estate.
- That if your parent/s are alive at the time of your death they would be entitled to 1/2 of your Spanish estate if your are not married and 1/3 of your Spanish estate if you are married.
You need to take a look and probably make a new one:
- If you are resident, have children (from the present relationship or a previous one) and wish to leave your estate or a large share of it to your wife or partner.
- If you are resident , do not have children or grandchildren and wish to leave your estate to your wife or partner.
- If you are are a resident and with to leave one of your children out of your estate or give him less than the minimum established by Spanish law.
- If you are a resident an wish to avoid any of the limitations imposed by the Spanish systems of obligatory heirs that establishes various limitations to how you can distribute your estate . (the most important being the ones described above)
- If you are non-resident but consider you may become a resident in the future or wish to avoid your partner/spouse having to prove your resident/non resident status at the time of death. (in particular, but not only if there are children from another marriage where the notary will be more strict regarding proof of residency status.
SINCE OUR ORIGINAL ARTICLE ON THE SUBJECT WE HAVE RECEIVED QUESTIONS ABOUT THE NEW DIRECTIVE:
- I understand that England and Ireland have opted out of the Directive. Does the Directive still affect me? Yes, because it overrides our own norms of conflict and Spain will apply it regardless of reciprocity.
- Will Brexit change everything again ? No for the same reason as above.
- I am a still resident in England . Does it affect me ? Theoretically no, but if you have not made an express choice of law in your Spanish will it will be up to you to decide if you are comfortable that you will be able to prove non-residency of Spain ,and residence in England if needed. I would recommend making the choice of English law in the will in any case and definitely if you consider that there is risk of a claim (for example if there are children from another marriage)
- Can I still change my will now, or is it too late ? If you are alive it is not too late (for a new will or anything else for that matter). The problem would arise if you die withoght.
- Do I have to make a new will or can I simply make an amendment to the existing one? I am afraid the only safe way is having a new will drawn up and registered in the central register of wills revoking the previous one.
- Is this just Spain complicating life for ex-pats yet again? No, this is a European Directive and ex-pats living in other European countries will need to revise their wills for the same reason.
- Does this mean that Spanish inheritance tax is not applicable ?The directive has no effect on inheritance tax. You cannot choose who charges inheritance tax on your estate. Spain will continue as always to tax non resident beneficiaries for assets received situated in Spain and resident beneficiaries for assets received worldwide. Article on Spanish inheritance tax.
- Does the directive change the convenience of a Spanish will? Absolutely no. Nothing has changed . We strongly recommend having a Spanish will. The will exactly the same as before will be used in Spain to wind up the Spanish estate following the Spanish formalities and before the Spanish Notary, Registrar and tax office. We always recommend a will in each country where you have assets. The reason for making a Spanish will have not changed and you can read them by clicking why you need to have a Spanish will ?
- What do I have to do if I have doubts ? speak to your solicitor and have a new will drawn up if necessary.
All this sounds complicated but the solution is very easy. Most solicitors that deal with Ex-pats are now fully aware of this issue so all you need to do is go and visit your solicitor and take his advice. In any case he will probably take the opportunity to discuss sentence of the ECJ OF 3/9/2014 and the extra options it provides compared to before if you have non resident children/grandchildren.
Please note that his article does not intend to be a substitute for individualised legal advice bases on your particular circumstances. We strongly recommend a visit to your solicitor to discuss the Directive.
If you would like to read past articles on this subject follow this link
If you have any other questions about the Directive you can use the e-mail below.