Estate Planning for Retirees in Spain

Why a Spanish estate plan is non-optional

When a foreigner dies owning Spanish property, Spanish probate (declaración de herederos) is required regardless of where the rest of their estate sits. Without a Spanish will, heirs face an 8–18 month process involving apostilled translations of foreign wills, foreign probate grants, and a Spanish judge's reinterpretation — typical cost €4,000–€12,000 and a frozen property in the meantime.

With a properly drafted Spanish will, the same transfer takes 6–10 weeks at a cost of €800–€2,000, and the heirs can sell or rent immediately.

The forced-heirship problem (and the EU fix)

Spanish civil law reserves two-thirds of an estate for children (the legítima) — you cannot freely disinherit them. For most foreign retirees this is unwanted: you may want to leave everything to your spouse, or split equally including stepchildren, or skip a generation.

EU Regulation 650/2012 (Brussels IV) lets you elect the law of your nationality to govern your succession. A British, German, Dutch or Irish retiree can include a single clause electing the law of their nationality, and forced heirship disappears.

Spanish inheritance tax in Valencia

Inheritance and Gift Tax (Impuesto sobre Sucesiones y Donaciones, ISD) is regional. Valencia is one of the most generous regions for direct family — a 99% reduction was reinstated in 2024 and remains in force for 2026.

Lifetime gifting (donaciones)

• ✦Valencia applies the same 99% reduction to lifetime gifts between spouses and parent-child — gifts up to €100,000/year per recipient are effectively tax-free.
• ✦Gift documented in Spanish notary deed (escritura pública). Verbal gifts disqualified.
• ✦Donor must be Valencia-resident or asset must be in Valencia (e.g. Spanish property).
• ✦Capital gains tax still applies to the donor (the gift is treated as a deemed sale) — usually the dealbreaker for gifting appreciated property.

Practical structures

• ✦Joint property ownership with right of survivorship — common-law concept that doesn't exist in Spanish law. Spanish properties are owned in defined undivided shares (proindiviso), which transfer via inheritance, not automatically.
• ✦Usufructo / nuda propiedad split: a popular retiree tool. You transfer bare ownership to your children now (taxed lightly on a low valuation) while retaining lifetime use. On your death, the usufruct extinguishes free of tax.
• ✦Spanish life insurance with named beneficiary: proceeds bypass the estate, taxed under reduced ISD rules with their own allowance.
• ✦Avoid Spanish-property-holding companies for personal use — additional CIT, no main-home exemption, and Modelo 720 implications.

The action checklist

• ✦Make a Spanish will at a notary (€60–€90). Include the nationality-election clause.
• ✦Update your home-country will to mention the Spanish will and confirm the nationality election.
• ✦Register both wills with the Registro Central de Últimas Voluntades (Madrid).
• ✦Keep an updated asset inventory accessible to your executor — including Spanish bank accounts, NIEs, property reference (referencia catastral), and digital access.
• ✦If you have a partner you're not married to: marry or register as pareja de hecho. The tax difference is six figures on a typical estate.