The New EU Regulation

The Inheritance of Spanish assets, owned by foreign citizens, is an international inheritance as are all those which have some kind of foreign connection.

In an international inheritance there may be several different countries’ regulations involved. The problems that arise on the different laws to be applied, and the possible conflict between them, are resolved by the so called conflict-of-laws rules within a system called Private International Law (PIL). Each country has its own Private International Law system.

The EU countries ( except Ireland, Denmark and UK) approved a common system of Private International Law with the new EU regulation 650/2012 which entered into force on 17th August 2015.

The EU Regulation will be applied if the jurisdiction to deal with the inheritance falls to the Spanish court, regardless of which law is applicable to the succession.

The regulation changes the traditional principal of basing the applicable law on the nationality to basing it on the last residence of the deceased. That notwithstanding, it opens up the possibility of making a choice of the law to be applied to that of the nationality, either at the time of choosing or at the time of death, rather than the one of the last residence.

The regulation means that all EU members have a common system of conflict-of-laws rules and creates a new instrument, the European Certificate of Succession, (Certificado Sucesorio Europeo) as proof of the status and rights of heirs, legatees, administrators and executors of the will and other issues related to the inheritance, within member states.

This regulation will be applied whatever nationality the deceased was and whatever law is going to regulate the inheritance as a whole, independently of whether the law is that of a member state of the EU or not.

The problems regarding international inheritance will now, for successions opened after that date, arise mainly with States not bound by this EU Regulation and, mainly, with those which split the regulation on successions in different laws, depending on the type of assets (movable or immovable), as happens with British Law.

The British system establishes the succession of movable assets to be governed by the law of the residence of the deceased and the succession of the immovable assets by the law of the place where they are located.

This results, when immovable assets located in Spain are involved, in the application of Spanish Law to the succession, and therefore:

.-The need to respect the reserved share.

.-The need to name those close relatives in the will to avoid its invalidity or «pretericion».

.-The need to observe the rights of the children of the first marriage if there is a «reserva».

.-The avoidance of Trusts

.-The avoidance of naming successive beneficiaries of the same assets according to the limits of «sustitución fideicomisaria»

All the above aspects conflict with the complete freedom to dispose of the assets after death, which is a feature of the British system.

The problem can appear:

In the Land Registry: when at the time of recording the acquisition of the inherited property, the Land Register states that the heirs with a reserved share must sign the deed along with the beneficiary (whoever that may be, wife, step children or anyone else designated by the deceased as beneficiaries).

In Court: when some, or all, of the persons with a right to a reserved share claim on the grounds that, as Spanish law is applicable, their reserved share must be respected claiming the reserved share from the beneficiary, or even claiming the complete invalidity of the will for not having been mentioned in the will as it is ruled in the so called «pretericion».

These two problems have never been completely resolved and can still arise if the deceased does not arrange the correct estate planning.

The origin of the problem was that Spanish Law prior to EU Regulation 650/2012 stated that the Law to rule the succession was the Law of the nationality of the deceased and the so called “renvoi”. The renvoi means that the law which is applicable under the acting authority regime, considers differently, and another law is applicable.

Spanish Law does not accept the renvoi before EU Regulation 650/2012 unless the renvoi was to Spanish Law.

That meant, for Spanish Authorities in dealing with the succession ( Courts, Land Registry), that, as the law to be applied was the law of the nationality of the deceased ( British Law in this case) and this law “renvoi” to others ( domicile of the deceased; or location of immovable assets; Spanish law in this case) the Spanish law should be applied with all its special institutions ( reserved share, preterición, reserva, lack of Trusts etc.)

Therefore the “renvoi” could lead to a completely different outcome from that desired by the testator who, for example, wanted the will to benefit the members of his or her second family rather than their children from the first marriage, or even his or her partner over his or her children.

To resolve that problem, The courts and also Land Registry and Notary Authority did not accept “ Renvoi” to Spanish Laws on the grounds that one of the main principles of Spanish Law ( and now EU Regulation as well) is universality and unity of the succession so it can not be ruled by more than one Law, as would happen to British nationals who have immovable assets in Spain and movable assets elsewhere.

Now, the renvoi will be excluded in all cases where there is a choice of law made in the will

That will be of extreme importance for the future and advises foreigners residing in Spain, as well as non- resident foreigners with immovable assets in Spain, to make a disposition of property upon death and choose the Law of their nationality to rule their succession if they want to avoid Spanish regulations ruling their will (either common Spanish law or Foral Law of the territory of their residence) even if the Law of their nationality renvois to Spanish Law

That was the gist of the Tribunal Supremo’s resolutions 15-11-1.996; 21/5/2015 and 5/12/2018 in cases in which children with a right to a reserved share claimed it from their mother who was the sole beneficiary named in the will.

The above mentioned court resolutions were used by the Central Authority of Notaries and Land Registry ( DGRN) in resolutions of 15/6/2016 ; 4/7/2016 and 10/ 4 /2017 stating that there is no need for the heirs with a reserved share, if any, to intervene for the inheritance deed to be valid if they were not named in the will. Also, as above, regarding the intervention of the children of the first marriage if there was a “reserve” (in resolution 13/8 /2014 DGRN). In the above cases, as the testator was a British national (actually the first case relates to a US citizen from the State of Maryland, which has the same regime as Britain), British Law was the only applicable.

However, these resolutions were all based on the necessity of not dividing the succession between two different ruling laws, so the doctrine that resulted would not be applicable in cases in which there was no division between the two laws either because there were no other assets than immovable assets located in Spain, or other kinds of assets did exist but the deceased had his or her domicile ( residence art 40) in Spain. This is the doctrine that arose as a result of the «Tribunal Supremo’s» resolutions of 15/1/2019; 12/1/2015 0r 23/09/2002.

The entry into force of the EU Regulation 650/2012 on Succession changed the above regime almost completely in these main aspects.
.- The Law of the last habitual residence of the deceased will rule the succession

.-The possibility for the testator to choose the law of their nationality to be applied to their succession, even in cases where this law does not allow for a choice of law ( as happens with British Law).

.-The renvoi is now mandatory when the law of a third State ( this includes EU members not bound by EU Regulation 650/2012 , U.K. Ireland, Denmark) renvois to the Law of a member state bound by Eu Regulation ( Spain)

.- BUT The renvoi will not be applied if there has been a choice of law.

For the future: We must distinguish between estate planning and successions already opened, and within the successions already opened, between those which were opened before 17th-8-2015 and those opened on or after that date. The following cases refer to British nationals, but can be used as a reference for any foreign legislation that splits a succession on the nature of the assets (movable -domicile or immovable-location).

For successions opened before 17th-8-2015

.-If the deceased was a British national whose last residence was abroad, with assets in Britain or somewhere other than in Spain, but with immovable assets located in Spain, British law will be applied.

.-If the deceased had his or her last residence abroad and there are not any other assets apart from those located in Spain, Spanish law will be applied.

.-If the deceased had his or her last residence in Spain and there are immovable assets located in Spain, Spanish law will be applicable.

For successions opened after 17th-8-2015

.-If the deceased had made a disposition of property upon death choosing the law of his or her nationality, British law in this case, British law will be applied.

.-If the deceased made a last will before 17th-8-2015 without any choice of law, but in accordance with the law of his or her nationality (e.g. using British figures like an executor of the will, gifts or residue of the estate, etc) British law will be applied.

This regulation shall not affect the application of international conventions to which one or more member states are party. In particular, the Hague Convention is still applicable in Spain with regard to the formal validity of wills.

Since the new EU regulation came into force, certain questions should be taken into account by foreigners living in or with residence in Spain.

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