Expats in Spain: How to Structure Your Estate to Avoid Problems for Your Heirs

1. Make a Spanish Will (and Coordinate it with Your Foreign Will)

We’ve said it before in this series: Make a Spanish will! If you’re an expat with property or significant assets in Spain, having a Spanish will covering those assets is one of the best ways to avoid inheritance delays and confusion. As an expat, you likely also have a will back home. The key is to ensure your wills are aligned, not conflicting:

• Spanish Will: Cover your Spanish assets specifically. Explicitly state it doesn’t revoke your foreign will (and vice versa). Use it to exercise your right under EU law to choose your national succession law if you want (more on that next).
  
  

• Foreign Will: Let it handle assets in your home country or elsewhere. Include wording that it does not override your Spanish will for Spanish assets.
  
  

• This dual-will approach means when you pass, the process in Spain is straightforward for Spanish assets, and your heirs don’t need to navigate foreign probate for those. Meanwhile, your home assets go through the familiar home process.
  
  

• By doing this, you avoid problems like: lengthy translations, foreign executors dealing with Spanish bureaucracy, or inadvertently revoking a will and leaving some assets intestate.
  
  

In short, a Spanish will is like giving your heirs a local roadmap. As an expat, it’s arguably the most important step in structuring your estate properly.

2. Consider EU Regulation 650/2012 (Brussels IV) – Choose the Right Law

As an expat from an EU country (or even a third country, the rule allows it), you have a powerful tool: EU Regulation 650/2012. It says your estate will be governed by the law of your last habitual residence (Spain, if you live here), unless you choose the law of your nationality. Why does this matter?

• Forced Heirship: Spanish law might force you to leave a big portion to children. If you prefer your own country’s more flexible law (like English law, which allows you to leave assets freely), you can opt for your national law in your will. This way, you won’t inadvertently cause, say, your surviving spouse to get only a life interest instead of full ownership (which Spanish default law would do if you have children).
  
  

• Clarity for Heirs: Explicitly stating the governing law avoids confusion or disputes over which law applies. For example, a German expat in Spain might want German law (which still has forced heir rules but different) – if that’s not stated, Spanish law will apply by default.
  
  

• Single Law Approach: If you have assets in multiple EU countries, ideally one law (the one you choose) will apply to all – simpler for heirs. (The regulation covers most of EU except Denmark/Ireland – and even non-EU nationals can benefit, as Spain will honor a choice of any nationality’s law.)
  
  

• Do note: choosing your home country’s law doesn’t affect taxes (that’s separate), but it affects who gets what and how easily.
  
  

• Action item: In your Spanish will, include a clause like “I elect that the law of my nationality, [e.g. England & Wales], shall govern my estate.” Spanish notaries are familiar with this now. If you have multiple nationalities, specify which one’s law.
  
  

By doing this, you avoid scenarios where your heirs might have to deal with forced heir disputes or complex distributions they weren’t expecting. For many expats, this is crucial – especially Brits, as many want their spouse to inherit everything, which Spanish law doesn’t default to without that choice.

3. Understand and Plan for Spanish Inheritance Tax and Keep Funds Available

Even though many regions have reduced or eliminated inheritance tax for spouses and children, you should still plan for inheritance tax because:

• If you’re from a country without forced heirship and you left everything to your spouse, but in Spain your children are forced heirs (if you didn’t opt out by choosing your law), your children might inherit a portion and have tax due.
  
  

• If you have distant heirs or non-relatives inheriting, Spain can still levy tax – sometimes significant.
  
  

• There’s also plusvalía municipal on property inheritance, due within 6 months.
  
  

• As an expat, your heirs might not have easy access to liquid funds in Spain to pay these expenses. A problem we see: heirs need to pay tax before they can access the Spanish bank account of the deceased, which is frozen until inheritance is processed.
  
  

Structure your estate to mitigate this:

• Life Insurance: Life insurance payouts to heirs can provide liquidity to pay taxes and also often have tax advantages (Spanish state law gives each beneficiary about €9,200 exemption for life insurance, and regions often more). Also, life insurance can be arranged to pay out quickly to cover tax bills. Some expats use offshore life policies specifically to cover Spanish IHT.
  
  

• Joint Accounts: If you have a joint bank account with your spouse, note that the account might be half frozen at death, but the surviving spouse retains their half. It can help with immediate cash flow (though legally the deceased’s half is part of the estate).
  
  

• Spanish Bank Bonds for tax: Spain allows an heir to delay inheritance tax by 6 months (with possible extension to 12), but interest accrues. You could plan in your will that certain assets can be sold quickly or are earmarked to pay taxes.
  
  

• Gifting in Advance (with caution): Some expats gift parts of their estate to children while alive to reduce what will be taxed at death. But Spain taxes gifts similarly, and in some regions the inheritance route is taxed less due to allowances. Still, if you’re domiciled in a high-tax country like the UK, some pre-planning may reduce the home country estate tax. It’s a balancing act – get professional advice if considering significant gifts or setting up trusts (trusts are problematic in Spain though; they don’t recognize them easily).
  
  

• Regional allowances: If you have a second home in Spain, note which region’s rules apply if you’re non-resident (usually region where asset is). Some expats even changed residency within Spain to benefit from e.g. Madrid’s no IHT, though now non-residents can use property region rules.
  
  

• The main idea is: ensure your heirs won’t have to scramble to find cash. Either by having money accessible or insurance to cover those costs, or by minimizing the costs via planning.
  
  

Also consider any tax in your home country (as previous article). Estate planning isn’t just local – e.g. a UK expat in Spain might want to consider UK inheritance tax thresholds (if UK-domiciled, their worldwide assets including Spanish home are subject to 40% tax beyond allowances). Solutions could include establishing trusts or changing domicile if appropriate, but that’s complex. At least being aware, so you don’t inadvertently cause double taxation for heirs.

4. Title Assets Wisely (Joint Ownership, etc.)

How you hold assets can affect inheritance ease:

• Real Estate Title: In Spain, some couples put property in joint names (usually half each). Spain doesn’t have joint tenancy with right of survivorship as in some countries; if one dies, their half must still go through inheritance to the other. But if you both make wills leaving to each other, that’s straightforward. If you wanted to avoid any inheritance process on first death, you legally can’t with Spanish property except through maybe a corporate ownership or something (some use a UK company to own Spanish property, then shares can be dealt with – but that has its own complexities and tax downsides now, like “benefit in kind” taxes if someone’s using company property).
  
  

• Bank Accounts: Consider having accounts as joint accounts with spouse or even with an adult child (if you trust them), so that not all money is frozen on death. A joint account is usually accessible by the survivor (the portion that was theirs). However, the deceased’s share still becomes part of estate. But at least some continuity of access.
  
  

• Foreign Assets: If you have assets outside Spain, structure them as per that country’s efficient way. For example, UK expat might keep UK investments in ISAs or pensions that are outside estate or more tax-efficient (pensions often can pass outside inheritance tax, and in Spain pension payouts can sometimes avoid succession tax if structured as life insurance, etc.).
  
  

• Spanish Company: Some expats with multiple Spanish properties put them in a Spanish SL (company). Then heirs inherit shares. This doesn’t avoid inheritance tax (shares are assets too) and can complicate capital gains. So generally not worth doing purely for inheritance, unless other business reasons.
  
  

• Community Property (for Americans): Americans from community property states might have their own estate planning differences. But in Spain, marital property regime matters if you’re married to a Spaniard or opted for something. Spain might treat property as 50/50 marital property, which influences what is part of the estate. Ensuring clarity on what’s joint vs. separate will help your heirs not fight over whether something was already partly the spouse’s.
  
  

The goal is to ensure no asset is stuck or contested. If you have a second marriage or blended family, asset titling and explicit will clauses are vital (e.g., giving spouse a life usufruct and kids bare ownership to meet both sets of needs, which is common). It’s a problem-avoider: structure it now so they don’t quarrel later.

5. Communicate and Document Your Wishes Clearly

Even the best legal structuring can be undermined if your heirs don’t understand what you intended or can’t find the documents:

• Discuss your plan (to the extent comfortable) with your spouse and perhaps adult children. Explain that you’ve made a Spanish will, who the executor is (if any), what major assets they’ll need to handle, etc. This avoids confusion at a stressful time.
  
  

• List Assets and Liabilities: Keep a document (and update it) listing your assets (bank accounts, properties, life insurance policies, even digital assets) and any debts. Indicate where relevant documents are. An heir armed with this can settle things much faster. Expats often have accounts in multiple countries – a clear list prevents something from being overlooked (like a bank account that gets escheated eventually).
  
  

• Store Wills Safely: The Spanish will is stored with the notary (and recorded centrally), so that’s secure. For your foreign will, ensure it’s stored properly (with a solicitor or registry, depending on country) and that a copy or reference is known to someone.
  
  

• Funeral/Burial instructions: While not directly estate structure, if you have wishes (especially if repatriation is desired or burial in Spain), note these in a letter or separate document (wills are sometimes read after funerals, so communicate separately to family).
  
  

• Powers of Attorney for Incapacity: Consider setting up a Spanish power of attorney or parallel to a UK lasting power of attorney for financial matters in case you become unable to manage. Spain now has a concept of “preventive power of attorney” for future incapacity. This won’t affect inheritance directly, but is part of estate management. It ensures your affairs can be handled if you’re alive but incapacitated (so your estate doesn’t diminish or get tangled due to inability to act).
  
  

By communicating and documenting, you reduce the risk of disputes or lost assets. For expats, maybe your heirs live in another country – clear communication bridges that distance.

6. Seek Professional Advice for Complex Situations

Every expat’s situation is different. Some have businesses in Spain, some have mixed nationality families, some might be on second marriages with stepchildren. These complexities can create potential issues:

• Mixed Nationality Couple: e.g. British husband, Spanish wife. Whose law applies? Possibly each could have different applicable laws to their share of joint assets. They can sort this by each choosing a law in their wills. They should also consider both Spanish and UK tax angles.
  
  

• Children from Prior Marriage: Spanish forced heir rules could cause a second spouse to only get a usufruct, not ownership, which might not be what you want. Using the Brussels IV election plus careful will drafting (maybe a trust via foreign law or Spanish alternatives like mejora portion usage) can align with your wishes. Possibly life insurance to provide for spouse so children can get the house, etc.
  
  

• Large Estates with cross-border tax exposure: If your estate value is high, you might face UK or other country’s inheritance tax in addition to Spanish. Professionals can find ways to reduce the overall bite (maybe use the UK spouse exemption if one spouse is UK-domiciled and the other not – by equalizing assets, etc., or trusts that are recognized for UK but need careful Spanish handling).
  
  

• Owning Foreign Companies or Trusts: If you have assets in trust or own a company abroad that holds assets, the inheritance of those can be tricky in Spain. Spain may not recognize your living trust and might treat trust assets as directly yours for succession. A specialized lawyer can plan around this (maybe advising to rely on will rather than trust for Spanish assets).
  
  

• Keep updated on law changes: Spanish inheritance tax rules changed in 2015 for non-residents (became equal to residents), and regional policies change often with politics. E.g., Andalusia went from having tax to 1 million exempt to now basically nil for kids/spouse. Wealth tax or plusvalía rules also change. Having a review every few years with an advisor can ensure your plan still works as intended under current law.
  
  

The takeaway: don’t assume what worked in your home country plan will work smoothly in Spain. Integrate your estate planning across jurisdictions with professional help to avoid legal and tax pitfalls that could burden your heirs.

Conclusion:

As an expat in Spain, structuring your estate properly is a final gift you can give your family. It prevents legal tangles, undue taxes, and inter-family strife. To avoid problems for your heirs:

• Make a Spanish will and align it with your foreign will.
  
  

• Use EU rules to choose the inheritance law that fits your wishes (likely your home country’s).
  
  

• Plan for taxes by leveraging exemptions, insurance, or gifting when prudent, and ensure funds are accessible for any unavoidable taxes.
  
  

• Title and organize assets in a way that simplifies transfer (joint names where appropriate, clear documentation).
  
  

• Communicate your plans and keep paperwork and instructions in order so heirs aren’t left in the dark.
  
  

• And don’t hesitate to get expert guidance for your cross-border situation – it can save your heirs far more in stress and money than the consultation costs.
  
  

By taking these steps, you transform a potentially complicated international inheritance into a mostly routine process. Your heirs can focus on remembering you, rather than fighting bureaucracy or paying lawyers to unscramble things. Clarity, simplicity, and legality – those are your goals in estate structuring as an expat. Achieve that, and you truly earn the peace of mind that your legacy, both emotional and financial, will pass on smoothly to those you care about.

(In the next piece, we’ll address a common expat question head-on: “Do I need a Spanish will if I own property in Spain but live abroad?” – essentially summarizing some points made here for those in that scenario.)