Spanish wills: Life possession and residual value. What is all this about ?
( Please note that the question below has been altered to avoid identification of the people involved but the essence of the question is real and it is not the first time we have attended a similar query in our office).
QUESTION: My father recently deceased in Marbella . He had a Spanish will that left the “nuda propiedad ” of his villa to my brother and me and the “usufructo vitalicio “ which I am told is a life possession of the villa and anything else in Spain to his very young third wife (not our mother) with whom he had only been married for 5 years.
His Spanish estate was a villa in Marbella that we are told is worth about 900000 euro, a small car and a bank account with less than 10,000 euro in it.
The solicitor acting for my fathers wife has told us to come to Spain to sign the acceptance of the inheritance deed. We are wary of signing anything.
What exactly is the “nuda propiedad” and what does it mean in practice?
ANSWER: What your father has actually done is to make sure that his wife is able to continue living in the house as up to now, while making sure that the property eventually goes to you. She will not be able to sell or mortgage it . All she can do is enjoy it and if she wishes rent it out.
Explaining if bluntly: While she is alive you will not have any access to the house and you will have to pay the rates every year but eventually when she dies you will become the owners.
If she is short of cash and you are not, to make a deal with her may not be a bad idea in exchange for her renouncing her life possession.
Life possession is worth more the younger you are. As a guideline the tax office considers life possession to be worth 70% when you are 20 and goes down 1% a year.
I would recommend making a Spanish will because in practice (and even though you can not enjoy it ) you are the owner of a villa in Spain.
If she is younger than you and your brother, maybe it will be your children that enjoy the villa.
In any case your father has made sure that the villa remains in the family and has avoided her inheriting the villa which could have resulted in her leaving it to somebody else and your side of the family loosing out.
I have to admit that we use this system very often as one of the best way of providing security to spouses versus children from other marriages.
Your father when making the will was clearly looking to protect both parties and this in our opinion was the most logical way of doing it even though in this case her young age may result in you never enjoying the villa but you can make sure your own children do by leaving it in your will.
Life is not simple.
