International Inheritance between the USA and Spain

Applicable Law for the Succession (USA–Spain)

When a person with connections to both the US and Spain passes away, one of the first questions is: which country’s inheritance law governs the succession? Under European Union law, specifically Regulation (EU) No. 650/2012 (also known as the Brussels IV Succession Regulation), the default rule is that the law of the country where the deceased had their last habitual residence will typically apply to the inheritance. This marked a change from older rules that looked primarily at nationality.

• If the deceased was living in Spain (even if they were a US citizen), Spanish succession law would generally govern their estate. Spain’s inheritance law includes “legítima” or forced-heirship rules that reserve a portion of the estate for close family (for example, children are entitled to a large reserved share). Under Spanish law, only a part of the estate can be freely disposed of by will once these forced shares are allocated.
  
  

• If the deceased was living in the USA, then the situation is more complex because the USA is not under the EU Succession Regulation. Spanish authorities, when dealing with an estate that has assets in Spain, will still use their conflict-of-law rules (now aligned with the EU Regulation principles) to determine applicable law. In practice, this often means U.S. law will be recognized as governing the succession if the person’s last residence was in the USA. However, U.S. inheritance law is not uniform – it varies by state. Generally, in the U.S. there is much greater freedom of testation (no forced heirship for children in most states). U.S. law tends to allow the deceased to leave assets to anyone they wish, with only limited protections (e.g. some states give a surviving spouse a right to claim a portion of the estate).
  
  

Choice of Law: Importantly, an individual can choose which law will apply to their estate by including a clause in their will. The EU Regulation allows someone to choose the law of their nationality to govern their succession. For example, an American citizen residing in Spain can elect U.S. law to apply to their estate. This is a common strategy for American (and other non-Spanish) expats in Spain to avoid the forced-heirship rules of Spanish law. By choosing U.S. law in a Spanish will, the person ensures their assets can be distributed according to the more flexible U.S. rules, rather than Spanish mandatory shares. Without such a choice, a long-term U.S. resident in Spain would have Spanish law apply by default, which might conflict with their estate planning intentions.

In summary, the applicable law depends on the specifics: if the case falls under Spanish jurisdiction, habitual residence is the key factor, but a valid choice of U.S. law by a U.S. national will be honored in Spain. Conversely, a U.S. court (for assets or probate in the U.S.) will apply U.S. state law, but may defer to Spanish law for property located in Spain (since common law jurisdictions often use the lex situs rule for real estate – meaning Spanish real estate might be dealt with under Spanish law). This can lead to fragmentation – e.g. Spanish property governed by Spanish law and U.S. assets by U.S. law. Every situation is unique, so it’s wise to get expert advice on which laws will come into play in a given USA–Spain inheritance.

Applicable Tax Law (USA–Spain)

Spain’s Inheritance Tax: At ImpuestosHerencias.es we remind you that Spain imposes an inheritance tax (Impuesto sobre Sucesiones y Donaciones, or ISD) on beneficiaries. The tax liability in Spain depends on who the heir is and where they reside:

• If the heir is a Spanish tax resident, Spain taxes their inheritance on a worldwide basis (personal obligation) – meaning even assets located in the U.S. or elsewhere are subject to Spanish inheritance tax. The tax is computed according to Spanish law, but Spain offers generous exemptions and deductions, especially by Autonomous Community (region). Many regions (e.g. Andalusia, Madrid, Valencian Community, etc.) have very large allowances or bonuses (often 95% to 99% reductions) for close relatives like spouses and children. This can result in little to no tax due for immediate family, depending on the region and the value of assets. However, a Spanish resident heir must still file an inheritance tax return in Spain even if no tax ultimately arises.
  
  

• If the heir is not a Spanish resident (for instance, an American heir living in the USA) but the estate includes assets in Spain (like Spanish real estate or bank accounts), Spain will tax the inheritance of those Spanish-situs assets. In other words, Spain taxes non-resident heirs only on assets located in Spain. Due to a legal change following EU court decisions, non-EU residents (like Americans) are now entitled to the same regional tax benefits as EU residents. This means an American inheriting property in, say, Andalusia or Madrid can benefit from the same near-100% spouse/child exemption that a local resident would, instead of paying the higher national tax rates that used to apply to non-EU foreigners.
  
  

U.S. Estate and Gift Taxes: The United States, at the federal level, does not levy an inheritance tax on heirs. Instead, the U.S. imposes an estate tax on the overall estate of the deceased (if the deceased was a U.S. citizen or domiciliary) or on U.S.-situated assets of a foreign decedent. The U.S. estate tax only hits very large estates – as of 2024, the exemption is about $13.6 million and only the value above that is taxed at 40%. Additionally, a handful of U.S. states have their own estate or inheritance taxes, but those typically kick in at lower thresholds and depend on state law (e.g. an estate tax in New York, or inheritance tax in Pennsylvania, etc.).

For most cross-border inheritances, the practical effect is: if the estate is below the U.S. taxable threshold, no U.S. estate tax is due. The heir in the U.S. also does not pay income tax on inheritances received – inheritances are not considered income under U.S. tax law. Thus, an American inheriting from Spain or a Spaniard inheriting from a U.S. person often face taxation only by one country (Spain), not both.

Double Taxation and Treaties: Spain and the USA do not have a specific bilateral inheritance tax treaty (Spain has inheritance tax treaties with only a few countries like France, Sweden, and Greece). However, both countries have domestic mechanisms to mitigate double taxation:

• Spanish side: If a Spanish-resident heir has paid a similar tax abroad on an inherited asset (for example, if they ended up paying U.S. estate tax on U.S. property from a U.S. estate), Spanish law allows a unilateral credit for the foreign tax against Spanish tax due on the same asset. In practice, Article 23 of Spain’s inheritance tax law lets the heir deduct the lesser of (a) the actual tax paid in the U.S. on that asset, or (b) the Spanish tax attributable to that asset. This prevents the heir from being taxed twice on the same value.
  
  

• U.S. side: If a U.S. citizen or resident dies leaving assets in Spain that are taxed by Spain, the U.S. estate (if subject to estate tax) can typically claim a foreign death tax credit on the U.S. estate tax return for the Spanish inheritance tax paid on those assets. U.S. tax law permits credit for foreign estate taxes on property that’s included in the U.S. taxable estate, even without a treaty. For example, if a U.S. citizen dies owning a villa in Spain, and that villa is taxed in Spain when passing to the heirs, the U.S. IRS would allow the estate to credit the Spanish tax against the U.S. estate tax due on the villa. This ensures the same asset value isn’t taxed twice.
  
  

Key Point: Thanks to these credit systems, true double taxation is usually avoidable, even without a treaty. Typically, the heir or estate ends up paying the higher of the two countries’ taxes on a given asset, not both in full. In many cases, because of high U.S. exemptions and Spanish regional reductions, only one country’s tax actually applies. For instance, an American heir receiving an inheritance from Spain would pay Spanish inheritance tax (if any), and $0 to the U.S. – there is no U.S. inheritance tax on beneficiaries. Conversely, a Spanish resident inheriting from a wealthy U.S. estate might pay Spanish tax on the inheritance and the U.S. estate might owe estate tax, but credits should offset one against the other. Always consult a tax professional in both countries to structure the inheritance optimally and claim available credits.

Heirs Residing in Spain Receiving an Inheritance from a Parent in the USA

Consider the scenario where you are a resident of Spain (either a Spanish citizen or an expat settled in Spain) and you inherit from a parent or relative who lived and passed away in the United States. What steps should you take, and what are your obligations?

1. U.S. Estate Process: First, the U.S. estate will need to be settled according to U.S. laws. Usually, this means a probate proceeding in the state where your parent was domiciled or where their property is located. If your parent left a will, the will is submitted to the local probate court. If there was no will (intestate), the state’s intestacy laws determine who the heirs are and what share each receives. As the heir, you’ll likely work with a U.S. attorney (and possibly an executor of the estate) to navigate this process. It may involve providing documents to the U.S. court, signing affidavits, etc. If you cannot travel to the U.S. for probate, you can often handle affairs by granting a power of attorney to someone stateside (for example, authorizing an attorney or trusted person to represent you in the probate) and by signing documents in Spain that are later apostilled for U.S. use.

2. Which Law Governs Distribution: If your late parent was a U.S. resident, generally U.S. (state) law will govern how the estate is distributed. That means if they had a will, assets will go as the will directs (with very few restrictions – in the U.S., it’s possible to leave out even close family in many cases). If they had no will, state intestacy law will give you and any co-heirs a share (for example, in many states if one dies with a surviving spouse and children, the estate is split among them in a certain proportion). Spanish forced heirship does not automatically apply to a U.S. estate. However, if there are assets in Spain (say a holiday home on the Costa del Sol), Spanish law may need to be factored for that property. Spanish authorities, under EU rules, might see the situation as the deceased being habitually in the U.S., so U.S. law would apply to the whole estate – but U.S. law itself might defer to Spain for the real estate. In practice, you might need a separate Spanish acceptance of inheritance deed for the Spanish property, following either the U.S. will or intestate outcome, but conforming to Spanish formalities. It’s wise to get a Spanish lawyer involved early if any Spanish assets are involved, to coordinate with the U.S. side.

3. Spanish Tax Declaration: As a Spanish tax resident heir, you are required to declare and pay Spanish inheritance tax on the assets you inherit, wherever those assets are located. In other words, even if you inherit an American bank account or house in the U.S., Spain considers that part of your taxable inheritance. The obligation is to file Form 650 (the inheritance tax self-assessment) within 6 months from the date of death (the date of passing, not the date you receive the assets). If 6 months is too short (and it often is in international cases), you can request an extension of an additional 6 months, as long as you do so within the first 5 months after death. That can extend your deadline up to 1 year from the death. It’s crucial to respect this timeline because failure to file on time can lead to surcharges and interest, even if ultimately no tax is due.

When filing the Spanish tax, you will list the inherited properties, their values, and calculate the tax applying the relevant Spanish rules. Since you (the heir) live in Spain, you benefit from the regional allowances of the Autonomous Community where you reside (or where the majority of estate assets are, depending on the connection criteria). This often drastically reduces the tax. For example, if you inherit €500,000 from a parent, and you live in a region that has a 99% exemption for children, the actual tax might be negligible. Note: You must file a return even if the result is zero tax due, because Spanish law makes filing mandatory in all cases.

If your U.S. inheritance included any assets that were subject to U.S. estate tax (which is uncommon unless it was a very large estate), you should inform your Spanish tax advisor. Spain will allow a credit for the U.S. tax paid on those assets, preventing double taxation. For instance, suppose you inherited a U.S. house valued at $5 million and the U.S. estate had to pay some estate tax on it; when you declare that house in Spain, you can deduct the U.S. tax (up to the Spanish tax amount on that value). Coordination between a U.S. CPA and a Spanish tax expert may be necessary to get the numbers right.

4. Receiving the Assets: Once the U.S. probate is completed and the executor is ready to distribute assets, you as an overseas heir will receive your share. This could be in the form of bank transfers (money), transfer of ownership of stocks or real estate, etc. Be aware of practicalities: transferring a large sum of money from the U.S. to Spain might require compliance with both U.S. and Spanish banking regulations. Usually, there is no problem, but your bank in Spain might ask for documentation showing the origin of funds (to satisfy anti-money laundering rules) – typically the will or inheritance certificate can serve as proof that the funds are inherited.

Also, if you decide to keep inherited assets in the U.S. (for example, you keep an American brokerage account or you become co-owner of a property there), Spanish law requires you to declare overseas assets if they exceed €50,000. This is done via the Modelo 720 informative form, which is due by March 31 of the year following the inheritance. The Modelo 720 is purely declarative but extremely important: failing to report foreign assets properly can result in very heavy penalties in Spain. In short, after inheriting, speak to your tax advisor about the Modelo 720 and ensure compliance if applicable.

5. Example: HerenciasPlus.com provided a great example of the above: María is a Spanish resident whose father died in California, leaving $200,000 in bank accounts and a house in California. María is the sole heir. She goes through probate via a U.S. lawyer who handles everything. There’s no U.S. estate tax because the estate is below the threshold. María then files Spanish inheritance tax on the ~€180,000 equivalent she inherited (the cash; the house was sold and turned into cash). Because she lives in Andalusia and is a child of the deceased, the regional rules give her a 99% tax reduction – so her Spanish tax is almost nil. She files within 6 months to be safe. She also files Modelo 720 the next spring because at December 31 she briefly had over €50k in a U.S. bank before transferring it. By following the rules in both countries, María successfully inherits without any penalties or double tax.

Heirs Residing in the USA of a Person Who Died in Spain

Now let’s flip the situation. Imagine you are living in the United States, and your parent or relative passed away in Spain (perhaps they were a Spanish citizen or an American expat who lived in Spain). What should you expect as an heir in the USA receiving an inheritance from Spain?

1. Spanish Succession Process: If the death occurred in Spain and the deceased was habitually resident in Spain, the Spanish legal process will govern the inheritance. Typically, a Spanish inheritance is settled by a notary rather than a court. The first step is obtaining a Spanish Death Certificate and a Certificate of Last Wills from the Spanish authorities. The Certificate of Last Wills (Certificado de Últimas Voluntades) is a document that shows whether the person made a Spanish will and before which notary. Using that, one can retrieve the will if it exists. If the deceased left a Spanish will, the estate execution is much simpler: the notary will prepare an Acceptance of Inheritance (Escritura de Aceptación y Adjudicación de Herencia) in which the assets are assigned to the heirs as per the will. This document, once signed by the heirs or their representatives, allows transfer of property titles (e.g., changing land registry entries, releasing bank funds to heirs, etc.).

If no will exists, a process called declaración de herederos abintestato is required. For a foreign heir, this typically involves a notary (or court, in some cases) formally declaring who the legal heirs are under Spanish intestacy law. Spanish intestacy rules would give priority to children and spouse of the deceased. This declaration process can take some time and requires evidence of kinship (birth certificates, marriage certificates, etc., often with apostille and translations if foreign). Once the heirs are officially recognized, the inheritance can be distributed accordingly.

As a U.S.-based heir, you do not necessarily have to travel to Spain to handle these steps. Spanish law allows heirs to act through power of attorney (POA). You can grant a POA to a Spanish lawyer or a trusted person in Spain to represent you in the inheritance proceedings. This POA can be done at a Spanish consulate in the U.S. or via a U.S. notary plus Apostille, and it will specify the powers (e.g., to accept the inheritance, sign deeds, pay taxes on your behalf, etc.). With a valid POA, the appointed representative can sign the acceptance of inheritance deed for you, meaning you don’t have to be there in person. This is very convenient – many heirs abroad choose this route.

2. Applicable Law and Rights: If the deceased was Spanish or habitually resident in Spain, Spanish law likely applies to the succession by default. That means forced heirship could come into play: if you are a child of the deceased, Spanish law reserves a large portion of the estate for you and any siblings. If the deceased was a foreigner living in Spain (e.g., a U.S. expat in Spain), they might have opted for their national law (U.S. law) in a will, which could alter the distribution. You should clarify this with the local attorney: was there a choice-of-law or any special clause in a will? Generally, though, as a direct heir you will be entitled to your share either way – Spanish law would never exclude a child unless there was a very particular disinheritance cause.

3. Spanish Inheritance Tax: Spain will impose inheritance tax on the assets located in Spain that you inherit. As a non-resident heir (living in the U.S.), you are only taxed on assets in Spain, not worldwide assets. So if your parent had a bank account in Spain, Spanish tax applies to that; if they also had a bank account in the USA, Spain would not tax the U.S. account for a non-resident heir. (The Spanish resident heirs, if any, would declare worldwide assets, but you as a U.S. resident declare only Spanish situs assets.)

The good news is that, as of recent years, non-Spanish residents get the same tax breaks as residents for inheritance. This was established after court rulings that it was discriminatory to deny those breaks to non-EU heirs. Now, when you file the Spanish tax (yes, you still have to file a Spanish tax form even as a foreigner inheriting Spanish assets), you typically can choose the most favorable regional tax regime. Usually, the applicable region is where the asset is located or where the decedent was resident. For example, if your parent lived in Madrid or the asset (like real estate) is in Madrid, you can apply Madrid’s generous tax exemptions (which for children and spouses is effectively a 99% tax reduction). Many regions have a near zero tax for descendants, meaning you might owe little or nothing in Spain. However, you must file the return within 6 months (extendable to 12) after death, just like residents. The practical challenge is that often the inheritance deed might not be ready that quickly, but even if you haven’t physically received assets yet, the tax clock runs from the date of death. You or your representative in Spain might file an estimated return or seek an extension while the estate is being sorted out.

It’s worth noting that Spain’s tax filing for non-residents is done online or through a specific form and typically paid to the central government (with credit for regional rules). A Spanish fiscal representative might be needed if you’re dealing with Spanish tax authorities from abroad.

What about U.S. taxes for you as the heir? The United States does not tax you for inheriting assets from abroad. Inheritance is not income, so you don’t report the value as income on your U.S. tax return. If you receive cash and it earns interest, that interest later would be taxable, but the act of receiving an inheritance is tax-free in the U.S. (There is one exception: if the inheritance includes certain U.S. retirement accounts or U.S. trusts, there could be some income tax implications, but that’s beyond the scope here and would depend on specific circumstances). By and large, you won’t owe the IRS anything on a straightforward inheritance from Spain.

One thing to be mindful of is if the deceased owned substantial U.S. assets or was a U.S. citizen, there might be a U.S. estate tax requirement. But if the deceased was Spanish with no U.S. ties, you as an heir just deal with Spanish taxes. If the deceased was an American living in Spain, their estate above the threshold might file a U.S. estate tax return. Still, that does not impose a tax on you, and if any U.S. estate tax was paid, it can usually be credited against the Spanish tax (and vice versa) as explained earlier.

4. Receiving the Inheritance: Once the inheritance deed is signed in Spain and taxes are settled, the assets can be transferred to you. If it’s money in a Spanish bank, you can instruct the bank to wire it to your U.S. account (after providing proof of tax payment). If it’s real estate, you will become the owner and you might decide to sell it or keep it. If you sell Spanish property as a non-resident, note that Spain has a capital gains tax for non-residents (19% for EU citizens, and slightly higher for others, around 24% – Americans pay 24% on net gain unless a tax treaty reduces it). That is separate from inheritance, but something to plan for if you intend to liquidate property you inherit.

Also, ensure you get multiple official copies of the inheritance deed and any court documents (if any) with Apostille, as you might need them in the U.S. to show your entitlement. For example, if you inherit a Spanish bank account, the U.S. bank might want evidence of where that money came from for large deposits – having the inheritance documents translated could be helpful for your records.

5. Example: John, living in Florida, inherits an apartment in Barcelona from his uncle who was a resident of Spain. John is the only heir and he’s a non-resident. The Spanish notary, using the uncle’s will, prepares the acceptance of inheritance. John gives a power of attorney to a lawyer in Barcelona to act for him. The lawyer signs everything, pays the Spanish inheritance tax (which, thanks to Catalonia’s allowances, turned out to be minimal on the €200,000 property). John owes nothing in U.S. tax. Now John owns the apartment. He decides to sell it – upon sale, 3% of the sale price will be withheld as an advance of capital gains tax for non-residents, and he’ll file a Spanish non-resident tax return to calculate the exact gain tax. But the inheritance itself was straightforward: just Spanish paperwork and tax, with John never having to leave the U.S.

Deadlines, Costs, and Next Steps (USA–Spain Inheritances)

Deadlines: The key deadline to remember in these cases is the Spanish inheritance tax deadline. It is 6 months from the date of death, extendable to 12 months upon request. Mark that date as soon as the death occurs, and if the estate is complicated, ensure an extension request is submitted within 5 months of the death. Missing the deadline can lead to penalties: Spain imposes a surcharge on late payments (5%, 10%, 15%, or 20% depending on how late, plus interest). Even if no tax is due, failing to file the informational tax form on time can result in fines. In the U.S., there isn’t an “inheritance tax deadline” for heirs, but if a U.S. estate tax return is needed, the executor must file it within 9 months of death (with a possible 6-month extension). That is typically the estate’s responsibility, not the heir’s, but heirs should be aware in large estates.

Another timeline consideration: probate duration. A U.S. probate can take anywhere from a few months to over a year, depending on complexity and state law. A Spanish inheritance process can also take several months, especially if dealing with international elements and any required court procedures. It often helps to start both processes simultaneously. Coordination is key if assets in one country depend on documents from the other (for example, transferring a Spanish property might require showing what the U.S. probate determined about heirs if no Spanish will exists).

Costs: Handling an international inheritance involves several types of costs:

• Legal Fees: It is highly advisable to hire a lawyer in Spain and likely one in the U.S. if there’s a probate there. Spanish lawyer fees for a straightforward inheritance might be a percentage of the estate value or a fixed fee. U.S. probate attorneys might charge hourly or statutory fees (some states have recommended percentages). Discuss fees upfront. While it’s possible to do some steps without a lawyer, cross-border cases are tricky, and professional guidance usually pays off in avoiding mistakes.
  
  

• Notary and Court Fees: In Spain, notary fees for the inheritance deed and associated paperwork are regulated and usually based on the estate value (they might be a few hundred euros for a moderate estate). There may also be fees for obtaining the death certificate, wills certificate, etc., though those are minor. If a court declaration of heirs is needed (intestate cases), court fees and possibly publication fees (for edicts) could apply. In the U.S., court filing fees for probate vary by county (ranging from perhaps $200 to $500 commonly).
  
  

• Translations and Apostilles: You will likely need official translations of key documents. For instance, a U.S. death certificate and will (if one exists) might need to be translated to Spanish for use by the Spanish notary. Likewise, the Spanish inheritance documents might need to be translated to English for U.S. purposes or simply for your understanding. Each document that crosses borders may need an Apostille (a form of international certification) to be recognized by the other country’s authorities. Obtaining apostilles on public documents (like death certificates, powers of attorney, court orders) is an extra cost (usually modest, like $20 per document in the U.S., €15 in Spain, plus any service fees if using a facilitator).
  
  

• Taxes: The inheritance tax itself can be a cost, though as discussed it may be reduced or zero in many cases. If tax is due in Spain, it must be paid when filing the return (within that 6-month window, unless you obtain an extension or installment plan). In the U.S., if estate tax is due, the estate typically pays it before distribution. It’s rare for an heir to have to personally come out of pocket for U.S. estate tax – usually it’s handled by the estate’s executor from estate funds. So focus on the Spanish tax as the one you might need liquid funds for. If the inheritance includes illiquid assets (like property) and tax is due, Spain does allow an heir to pay the tax using those assets (or even defer payment) in some circumstances, but it’s bureaucratic. Better to secure funds to pay any expected tax by the deadline.
  
  

• Miscellaneous: Travel costs if you choose to go to Spain for any reason (many heirs might combine it with a personal visit, but it’s not strictly required). Also, if selling property, real estate agent fees, etc., but that’s beyond the inheritance itself.
  
  

Next Steps / Call to Action: International inheritances between the USA and Spain involve navigating two legal systems and tax regimes. To ensure everything is done correctly and efficiently:

• Consult with Specialists: Engage a Spanish lawyer who specializes in international inheritance cases. Likewise, consult a U.S. estate attorney or tax advisor if the U.S. side has complexities. Professionals can clarify which documents you need, handle filings, and communicate between jurisdictions.
  
  

• Gather Documents Early: Obtain multiple copies of the death certificate. If the death occurred in the U.S., get it apostilled for use in Spain. Find any wills (both U.S. and Spanish, if the person had wills in both countries). Locate asset information (bank statements, property deeds) so that nothing is overlooked in the estate. The more information you have, the smoother the process.
  
  

• Plan for Funds: If you anticipate a Spanish tax bill, plan how to pay it (Spanish banks, or via transfer). If you’ll receive a large sum in the U.S., think about consulting a financial advisor for handling those funds and reporting any required information (like filing FinCEN Form 114 (FBAR) if you temporarily hold a foreign account over $10k, etc., or Spanish Modelo 720 as discussed for Spanish residents).
  
  

Navigating a cross-border inheritance can be challenging, but you don’t have to do it alone. Our law firm specializes in USA–Spain inheritance matters and can guide you through each step – from coordinating with U.S. probate lawyers, to handling Spanish notary procedures, to optimizing the tax outcome in both countries. Contact experts at internationaltaxlegalspain.com for a personalized consultation. With professional help, you can honor your loved one’s legacy and secure your rightful inheritance with minimal stress and maximum protection. We are here to make sure that no legal detail is overlooked, so you can focus on moving forward.

(This article is intended for general informational purposes and does not constitute legal or tax advice. For advice tailored to your situation, please consult a qualified attorney or tax advisor licensed in the relevant jurisdictions.)