Inheritance

What does the term inheritance mean?

Inheritance or succession mortis causa (by cause of death). To succeed means to place oneself in the legal position of another, what happens after the death of a person is that the heir is placed in the same position as the deceased, he succeeds him in all his rights and obligations.

Inheritance is a universal succession of a person as heir to a set of assets and transferable rights and obligations belonging to the deceased person, with the heirs occupying the same legal position as the deceased.

What does it mean to be an heir?

The heir is the continuator of the legal relations of the deceased, which have not been extinguished by his death, of all his assets, rights and debts, who is called to the whole of the inheritance and who will be subrogated to the position of the deceased. He or she is his or her universal successor.

What is a legatee?

A legatee is an individual successor who acquires only specific and determined assets from the inheritance; he or she is a successor in his or her own right, as opposed to an heir who is a successor in his or her own right.

The legatee is only liable for the debts of the inheritance up to the value of his legacy.

A legacy only exists when the testator (deceased) has so provided in his or her will; when a person dies without making a will (intestate succession) there are no legatees.

Therefore, if a person dies having made a will, we will call it testate succession and if he dies without making a will, it is called intestate succession.

In the following sections we will continue to develop the succession process, subject to the Common Law, the Civil Code, as there are different Foral Laws in Spain with their own Inheritance Codes that govern their inheritance, which will not be dealt with here.

What documentation do we need to obtain in order to process an inheritance?

• First of all, the Death Certificate of the deceased issued by the Civil Registry. This document is usually issued between one week and two weeks after the death.
• Once you have the death certificate, you have to request the Certificate of the Register of Last Will and Testament, this document is essential as it is where it will be stated whether or not the deceased has made a will.

In the same body we will also request the Certificate of Insurance with Death Cover, to see if the deceased had life insurance or annuities, which later, when the inventory of the assets is carried out, it will be necessary to know if they exist or not.

What happens if there is a will or not?

• If there is a will, as it appears in the Certificate of the Register of Last Will and Testament, we will be dealing with a testate succession, and we will have to go to the Notary before whom the last will and testament was granted, to obtain an authorised copy of the same. A simple copy of the will that the deceased may have at home is not sufficient.
• If there is NO will, as it appears in the Certificate of the Register of Last Will and Testament, we will be dealing with an intestate succession, and we will have to go before a Notary Public of the notarial district corresponding to the habitual residence of the deceased in order to execute the corresponding Act of Declaration of Intestate Heirs.

We will refer to all of this in the following sections.

Will

What is a will?

It is the act by which a person disposes of all or part of his or her assets after his or her death.

If the testator has not disposed of all of his or her assets in his or her will, intestate succession will be opened for those assets for which he or she has not made any provision.

The will is an individual, solemn and very personal act and essentially revocable, i.e. at any time a subsequent will can be granted which automatically revokes the previous will and so on. The testament that will be valid is the last one granted by the person before death. The revocation may be express or tacit.

Who has the capacity to testament?

They cannot testate:

• A person under fourteen years of age.
• A person who at the time of testament cannot conform or express his/her will, even with the help of means or aids.

A person with a disability may make a will when, in the opinion of the notary, he/she is able to understand and express the scope of his/her dispositions. The notary shall ensure that the person making the will is able to develop his own decision-making process by supporting him in his understanding and reasoning and by facilitating, with the necessary adjustments, that he is able to express his will, wishes and preferences.

In assessing the testator’s capacity, only the state in which the testator is at the time of making the will shall be taken into account.

What types of wills are there?

Essentially there are two types of will, the open will and the holographic will, although there are other types, they are practically not used nowadays.

• A testament is open when the testator states his last will in the presence of the persons who must authorise the act. It is granted before a notary.

In the will you can simply institute heirs and/or legatees of all your assets. Or you could make an authentic partition within the will itself.

This is a complex matter and it is therefore advisable to seek professional advice.

• Holographic wills can only be granted by persons of legal age.

In order to be valid, the will must be written in full and signed by the testator, stating the year, month and day in which it is granted.

If it contains words crossed out, amended or between the lines, they shall be saved by the testator under his signature.

• The holographic testament must be notarised by means of a procedure of Voluntary Jurisdiction before the Court of the habitual residence of the testator, and two witnesses who recognise the signature and handwriting of the testator are required.

The decision issued in Voluntary Jurisdiction, whether or not the will is notarised, does not have the force of res judicata, and a contentious judicial procedure may be initiated in order to declare the validity of the will definitively or not.

What is the testamentary executor?

The testator may appoint one or more executors for his or her inheritance. It is a voluntary and temporary position (1 year) which can be extended for another year if the testator says nothing. It is an eminently gratuitous position. He/she will have the powers of administration and disposition of the assets of the estate as determined by the testator, in addition to the legal powers attributed to him/her by law:

1. To dispose of and pay for the suffrages and funeral of the testator.
2. To satisfy legacies consisting of cash, with the knowledge and approval of the heir.
3. To defend the validity of the will in court and outside of it.
4. To conserve the inherited assets.

What is the Accountant-Partidor?

The testator may entrust by act “inter vivos” or “mortis causa” for after his death the simple power to make the partition to any person who is not one of the co-heirs. In addition to this power, the testator may confer other powers to assist or complement his function.

Even if there is no appointed accountant-partidor, the heirs and legatees representing at least 50% of the inheritance assets may request the Notary Public or the Legal Advisor of the Administration of Justice to appoint a proxy accountant-partidor.

What are inheritance substitutions?

It is a testamentary disposition by which the testator calls a third party to the inheritance or legacy, in the absence of another person or after that person.

Types:

• Direct substitution, by which a person is called in the absence of the first beneficiary, is the common substitution in the event that the first beneficiary dies before him or does not want to accept the inheritance.
• Indirect substitution, by which a person is called after another, is the trustee substitution. It is the one by virtue of which the heir is entrusted to keep and transmit to a third party the whole or part of the inheritance.

Residuary trust, here two hypotheses can occur: (1) the testator empowers the trustee (first called) to dispose of the assets he inherits without any hindrance, so that the trustee will inherit what is left. And (2) the testator requires the trustee that the trustee must necessarily receive a minimum of the estate.

The legitimate shares

In common inheritance law, whether the testator has made a will or not, there is a portion of assets that he cannot dispose of freely, since by law they must go to certain persons.

The legitimate share is the portion of assets that the deceased cannot dispose of because the law has reserved it for certain heirs, called forced heirs or legitimated heirs.

The following are forced heirs:

• The children and descendants with respect to their parents and ascendants.
• In the absence of the aforementioned, the parents and ascendants with respect to their children and descendants.
• The widow or widower in the manner and to the extent established by the Civil Code.

The reserved portion is intangible; therefore, if the testator has left to a person assets that may affect the reserved portion of the forced heirs, it will give rise to its reduction and other legal proceedings in defence of the reserved portion if it is attacked. The provisions relating to the reserved share are mandatory law and the will of the deceased to the contrary cannot prevail against them.

With regard to the intangibility of the legitimate share, the figure of the cautela socini must be mentioned, which appears in the event that the testator has more than one child, and leaves to the legitimate shareholder a greater part than what corresponds to him/her by strict legitimate share, but encumbering what is left with charges or limitations (normally the usufruct for life in favour of the widowed spouse), warning that if the legitimate shareholder does not accept these limitations he/she will lose what has been left over and above the strict legitimate share. This figure is accepted.

1. The legitimate share of the children and descendants:

This will be two thirds of the inheritance.

The inheritance is divided into three thirds:

One third of the legitimate (strict), one third of improvement and one third of free disposal.

The legitimate share of the children and descendants will necessarily be the third of the strict legitimate share, the third of improvement being destined to improve some or all of the children or descendants.

The third of free disposal, as its name indicates, can be left by the testator to whomever he wishes.

2. The legitimate of the ascendants:

The legitimate of the parents or ascendants constitutes half of the inheritance of the children and descendants, except in the case in which they concur with the widowed spouse of the deceased descendant, in which case it shall be one third of the inheritance.

3. The right of the widowed spouse:

The spouse who at the time of the death of his or her spouse is not legally or de facto separated from the latter, if he or she concurs in the inheritance with children or descendants, shall be entitled to the usufruct of the third destined for improvement.

If there are no descendants but there are ascendants, the surviving spouse shall be entitled to the usufruct of one half of the inheritance.

If there are no descendants or ascendants, the surviving spouse is entitled to the usufruct of two thirds of the inheritance.

The unmarried partner is not on the same level as the spouse for inheritance purposes and is therefore considered a third party. As for the payment of the Inheritance Tax, there are many Autonomous Communities that establish tax allowances for unmarried partners.

Determination of the legitimate share

In order to determine the legitimate share, the value of the assets remaining at the death of the testator will be taken into account, with the deduction of debts and burdens. In addition to the liquid value of the inherited assets, the value of the donations that can be collated shall be added to the liquid value of the inherited assets.

Thus:

• Payment of debts
• Calculating the value of donations that are eligible for collation

What is a gift that can be collated?

The collation means to bring to the estate the value of the assets (at the time of the partition) that were donated to forced heirs during the lifetime of the deceased (the deceased), in order to compute them in the account of the partition of the inheritance.

This sum of the value of the donated property is added up in order to calculate it within the inheritance quota of the heir who received the donation, on the understanding that the donation would be considered as a simple advance on the inheritance, compensating the other heirs with property of equal value.

The collation aims to maintain equality between the heirs, and only proceeds when either the collation of the property is stated in the deed of donation or when nothing has been said in this respect.

It does not apply if the donor has expressly stated that the property is “not eligible for collation”.

Reduction of inofficious dispositions

If, after these operations have been carried out, the compulsory heirs’ legitimate is affected, the donations or legacies shall be reduced at the request of the heirs on the grounds that they are inofficious or excessive.

The legitimated heirs and their heirs are entitled to bring an action based on inofficiousness.

Order of reduction

The order to be followed in the reduction: first the legacies are reduced and then the donations. Legacies are reduced pro rata, while donations are reduced starting with the most recent donation.

Once these acts have been carried out, the inheritance is divided in accordance with the provisions of the will.

Unfitness to succeed

The legal causes of incapacity to succeed by reason of unworthiness are determined in Article 756 C.C..

They can be summarised as follows: having been condemned for having attempted against the life or physical or psychological integrity, moral integrity and sexual freedom of the testator, spouse, ascendants or descendants; false accusation of a crime; not having denounced the violent death of the testator; the one who with violence or intimidation forces the testator to make or change the will; in the case of a disabled person who has not been given the due attention.

Disinheritance

Disinheritance may only be made in a will, stating the legal cause on which it is based.

Proof of the truth of the cause of disinheritance shall be the responsibility of the testator’s heirs if the disinherited person denies it.

The just causes of disinheritance also include some of the legal causes of unworthiness to succeed under Article 852 of the Civil Code.

Specific grounds for disinheritance are established for children and descendants in Article 853 C.C., for parents or ascendants in Article 854 and for spouses in Article 855 C.C.

Due to its special relevance, it should be noted that the cause of disinheritance for children and descendants relating to having mistreated in deed or seriously insulted in word, includes, according to current case law, psychological mistreatment as a form of mistreatment in deed, which could consist, for example, in a behaviour of contempt and family abandonment shown by not taking an interest in their father, when he was ill, during the last seven years of his life.

Acceptance and repudiation of inheritance

Acceptance of inheritance is the voluntary and free act by which a person called to an inheritance expresses his or her willingness to accept it. It is an individual act. The inheritance is accepted in its entirety; partial acceptance is not possible, neither in instalments nor conditionally.

• Acceptance of the inheritance may also be tacit, that is, it is made by acts that necessarily imply the will to accept, or that there would be no right to execute except in the capacity of heir.
• The repudiation or renunciation of the inheritance cannot be partial or conditional.
• The renunciation of the inheritance must be express and made in a public deed like any renunciation of rights. If the heir repudiates the inheritance to the detriment of his own creditors, the latter may request the Judge to authorise them to accept it on his behalf.
• The inheritance may be accepted purely and simply, or with benefit of inventory.
• Acceptance with benefit of inventory. The declaration to make use of the benefit of the inventory must be made before a Notary.

In this way, the heir can see what the assets and liabilities of the inheritance are before accepting. In this case, the heir will only be liable for the debts and burdens of the inheritance up to the extent of the assets of the inheritance and will never be liable with his or her personal assets.

• As long as the inheritance has not been accepted, we will find ourselves in a situation of inheritance in abeyance.

Ineffectiveness or nullity of the will

There are two groups of causes of nullity of the will.

The so-called general causes of nullity, as they affect the will considered as an indivisible organic whole and are those referring to capacity, consent and the essential solemnities for its validity.

And the causes of partial nullity, which only give rise to the ineffectiveness of the clause that contravenes it, the rest of the will remaining valid.

The nullity action may be brought by any of the heirs or the executor.

The absolute nullity action is imprescriptible.

The action for relative nullity can be brought within 5 years from the death of the testator.

The action must be brought before the Court of First Instance corresponding to that of the habitual residence of the testator.

The partition of the inheritance

The partition of the inheritance is the act that puts an end to the community of heirs by distributing among the co-heirs the ownership of the assets of the inheritance.

The partition can be done in a private document or in a public document. It is recommended to do it in a public deed if there is real estate, so that it can be easily registered in the Land Registry.

An inventory and valuation of all the assets must be carried out and the debts of the inheritance must be determined. In order to determine the inheritance estate, donations that can be collated must be taken into account.

The partition can be made by common agreement of all the heirs or, if there is an accountant-participant, this can be done by the latter.

If there is no will, no accountant-partidor appointed therein or if the office is vacant, the clerk of the court or the notary, at the request of heirs and legatees representing at least 50 per cent of the estate assets, and with the summons of the other interested parties, if their domicile is known, may appoint a proxy accountant-partidor. The partition thus made shall require the approval of the clerk of the court or of the notary, unless expressly confirmed by all the heirs and legatees.

If it is not possible to carry out the partition in any of the above cases, the corresponding judicial division of inheritance procedure must be filed.

Procedure for the judicial division of inheritance

The corresponding claim for judicial division of inheritance shall be filed represented by a solicitor and assisted by a lawyer.

• The claim must be brought before the Court of First Instance corresponding to the habitual residence of the testator.
• The heirs, the executor and the legatees of an aliquot part shall have standing to bring the action.
• An initial inventory of the assets of the estate will be carried out.
• Once the court decision establishing the inventory is final, a second phase will begin in which experts will be appointed to appraise the assets and appoint a partitioning accountant to carry out the partition of the inheritance, which will be approved by judgement.
• In this procedure, measures for the intervention and securing of the estate can be requested.

Intestate succession

Intestate succession, also known as legitimate succession, is that which is granted by operation of law when there are no testamentary heirs, in whole or in part.

It takes place:

• In cases of death without a will or when the will is null and void or loses its validity.
• When the will does not contain an institution of heir in whole or in part of the assets.
• When the condition placed on the heir is missing or the heir dies before the testator or repudiates the inheritance without a substitute.
• When the heir instituted is incapable of succeeding.

Order of calls to succession

This general statement is specified in the following order of preference:

1. Succession in the straight descending line

The Civil Code calls in the first place the straight descending line, children and their descendants succeed their parents and other ascendants without distinction of sex, age or filiation.

2. Succession in the straight ascending line

In the absence of children or descendants, the next persons called to inherit are the ascending line, parents and other ascendants.

The father and mother shall inherit in equal shares.

In the event that only one of the parents survives, he/she shall succeed to the child’s entire inheritance.

In the absence of a father and mother, the next of kin in the ascending line shall succeed to the child’s inheritance.

3. Succession of the widowed spouse

In the absence of the foregoing, the widowed spouse shall inherit.

The call referred to in the preceding Article shall not take place if the spouse is legally or de facto separated.

4. Succession of collaterals

In the absence of the foregoing, siblings and children of siblings shall inherit in preference to the other collaterals.

If there are only siblings with a double bond, they shall inherit in equal shares.

If brothers concur with nephews and nieces, children of brothers and sisters of double bond, the former shall inherit by head and the latter by lineage.

5. Succession of the State

In the absence of persons entitled to inherit in accordance with the provisions of the preceding Sections, the State shall inherit.

Right of representation in intestate succession

The right of representation is that which the relatives of a person have to succeed him in all the rights which he would have had if he had lived or had been able to inherit.

The right of representation always exists in the straight descending line, but never in the ascending line.

In the collateral line, it shall only apply in favour of the children of siblings, whether they are of double bond or of one side only.

Act of declaration of heirs abintestato

If the deceased dies without a will, any of the heirs called to the inheritance will have to process before the Notary of the judicial district of residence of the deceased, the corresponding act of declaration of heirs of the deceased.

It will be necessary to bring the Death Certificate of the deceased, the Certificate from the Register of Last Will and Testamentary Acts stating that he/she did not grant a will, or the judicial decision determining the ineffectiveness of the possible will granted.

Likewise, it will be necessary to prove the relationship with the deceased, for example, in the case of children being heirs, the Family Book will suffice.

Two witnesses must also appear who state that they know the deceased and that they are the sole heirs of the deceased.

Once the deed has been drawn up and registered in the corresponding Register, the procedure will be the same as indicated for testate succession, acceptance and division of the inheritance.

Taxes

The taxes levied on inheritance are:

Inheritance Tax

The inheritance is subject to the corresponding Inheritance Tax which must be paid within 6 months from the date of death.

You can request an extension for a further 6 months (one year in total) to pay this tax, as long as you apply within the fifth month from the date of death.

This tax is administered by the Tax Departments of each Autonomous Community. The tax is normally filed in the Autonomous Community where the deceased has his or her habitual residence.

Each Autonomous Community has different allowances for this tax, which means that depending on where you have to pay it, you will pay more or less, even if your estate is the same.

Tax on the Increase in the Value of Urban Lands

Known as Plusvalia municipal, this is a tax that must be paid to the Town Hall where the property you inherit is located.

This tax is usually quite high and its amount will depend on the Municipal Ordinance of the corresponding Town Hall, taking into consideration the cadastral value (land value) of the property and the number of years of ownership.

The deadline for payment is 6 months from the date of death, extendable for a further six months at the request of the interested party.

Inheritance is a complex matter with many nuances that can cause problems if not handled properly and professionally from the beginning. Thanks to our specialisation in this area, our law firm Winkles Abogados can advise you on the whole process and its formalities at our law firm in Madrid.