MENTIONING A TRUST ON A SPANISH WILL OR RELYING ON A U.K. WILL THAT MENTIONS ONE IS ASKING FOR BIG TROUBLE. SOMETIMES WHAT IS LEGALLY POSSIBLE AND WHAT IS PRACTICAL IS NOT THE SAME THING. THIS IS A PERFECT EXAMPLE.
Question:
I had a Spanish will made out for myself and my wife some time ago. We have recently hired a solicitor to handle a conveyance and he has taken a look at the wills and told us that they are not good and that we should make new ones. We are now uncertain of what to do. We have attached the wills for you to take a look at them. Our instructions to our original solicitor where to do in Spain with the Spanish will exactly what we did in the u.k on our English wills. He said that since the Directive 650/2012 this can indeed be done.
Answer.
As my granny would alway say: a little knowledge can cause a lot of damage.
Their is no doubt. The will is dreadful. You must change it. I doubt the person who prepared your will has ever dealt with probate in Spain and in fact I doubt the person is even a solicitor. ( I say this because any solicitor I know would tell you that your will is asking for trouble). The will essentially translates the English will you handed her and sets up a trust to protect your children versus your second wife. Even though Directive 650/2012 allows English law to be applied (by choice of the testator) to how an estate is distributed in Spain, using institutions like trusts will cause endless problems and expenses for your heirs because Trusts are not understood in Spain the same way as in the u.k. so Certifications of English law (which are very expensive) will be required to help wind up the estate (by explaining the content of English law to the Spanish notary and the tax office). To this you will have to add a lot of problems with Spanish Inheritance tax (remember Directive 650/2012 has no effect on the taxation of the estate ).
In Spain it is the beneficiary that pays inheritance tax and not the estate. Descendants and spouse in Andalucía are exempt if they each receive less than 1000.000 euro and above this pay just a symbolical amount as they are entitled to a 99% reduction on the taxable base. In this case the trustee is a non family member and as he has faculty to dispose of assets, the Spanish tax office could interpret that as he is in control of the estate is the person that owes the tax and as he is non family receive a large tax bill. (this could all be battled out but it would be a mess).
Conclusion:
Keep thing sensible and uncomplicated. In this case achieve what you want using methods that are common practice in Spain. (Even though with the Directive it is possible to have the will run under English law you must remember that probate will needed to be obtained in Spain so making a will that nobody understands in Spain is not a good idea as it will be up to your heirs to prove what U.K. law says and I can tell you from plenty of experience that dealing with Trusts in Spain is nightmare scenario). In this case leave the life possession of your property to you wife and the residual value to your children. With the values you have sent me the estate will be exempt in any case , probate will be simple and both your children and your wife will be fully protected as you asked for.
