We discuss forced heirship rules in Spain as an example
Did you know that local laws in foreign jurisdictions can sometimes override Irish succession law.
How
Well, let’s look, for instance at Spain.
In Spain there are what is known as “forced heirship rules” on inheritances:
- Spanish law stipulates the shares of an estate which must be left to family members
- These laws restrict choices of who should receive assets.
Example
An Irish national taxpayer owns Spanish property.
They stipulate in an Irish will to leave the property to a specific child e.g., to manage CAT thresholds.
“Forced heirship” would prevent this.
So that part of the Irish will would be ineffective, and would not operate as intended.
This could obviously affect the tax position of the beneficiary of the Spanish property.
EU Law
This is covered by the EU succession Directive
The EU Succession Regulation – Regulation (EU) No. 650/2012 (“the Regulation” or “Brussels IV”) applies to all deaths after 17/8/2015.
This offers the taxpayer the option to elect that the governing law of his/her will should be that of their state of nationality.
Remedy
With effective planning this can be avoided:
- The taxpayer must make a Spanish will
- In that will, the taxpayer can elect that Irish Succession Law will govern their Spanish will.
- This allows him/her to leave the property as they intend.
In this article we have looked at Spain, other countries may have different laws.
Legal advice in the foreign state is always essential.
