US Inheritance Planning for Spain

Not necessarily because there is a formal decision to relocate here. In many cases, they simply spend more time in Spain, enjoy one of their properties in the country, divide the year between several jurisdictions or visit children who are living in Europe. Their lives, their wealth and their family arrangements are, in every sense, global.

Structures that are entirely familiar and well established in the United States do not always have a direct equivalent under Spanish law. This is often where the client’s surprise begins: arrangements that have worked perfectly well for years in the US can become much less straightforward when a beneficiary lives in Spain, certain assets are located here or a future succession begins to produce consequences in both jurisdictions.

In this matter, we advised on the planning of a high-value US estate with beneficiaries and significant connections to Spain.

This was not simply a question of reviewing a will.

We had to understand the family wealth as a whole: testamentary documents, trusts, companies and investment structures, financial and real estate assets, beneficiaries, distribution provisions and the way in which the overall structure could ultimately be interpreted and taxed in Spain.

The complexity lay precisely in making two legal systems built around very different concepts work together.

A US trust, for example, may have been a central part of a family’s estate planning for many years and yet have no direct legal equivalent in Spain. The same can apply to certain forms of ownership, asset distribution or beneficiary designation. Before addressing tax, it is first necessary to understand what the arrangement actually does legally and how it is likely to be treated from a Spanish perspective.

And then there is the global nature of the wealth itself.

When a family holds investments, real estate, companies and other assets across several jurisdictions, a succession is no longer simply the transfer of a group of assets. Each asset may have a different legal character, be subject to different rules and create tax or succession consequences in more than one country.

Timing is therefore particularly important.

Once a death has occurred, the ability to reorganise certain structures or anticipate particular consequences may already have been significantly reduced.

Our role was to analyse the succession before it became a problem: to understand how the family wealth had been structured in the United States, identify which elements could create friction in Spain and model different scenarios depending on the residence of the beneficiaries, the assets ultimately received and the way in which the succession would take place.

The objective was simple: when the time came, the family should not have to discover how all of this works in the middle of a succession.

Because in international estates of this kind, the greatest problem is often not the tax itself. It is discovering too late that a structure designed over many years in one country does not operate in the same way in another.