This information has been prepared by Sykes Anderson Perry Limited as a general guide only and does not constitute advice on any specific matter. We strongly recommend that you seek professional advice before taking action. No liability can be accepted by us for any action taken or not taken as a result of any information or advice given or omitted
Tom and Lynne retired to Mallorca in 2002 and rarely came back to England. Tom died in 2016 and Lynne has recently died. They have two children in England who are their heirs. Lynne did not take any legal steps after Tom’s death. They owned a flat in Mallorca jointly worth £400,000, a buy-to-let in England worth £450,000 and cash and investments of £350,000. They both had a Spanish Will which states that English law is to apply and leaves everything to each other and then to the two children in equal shares. The two children want to sell all the assets and divide the cash between them.
The first point will be to determine the parents’ domicile at the dates of their deaths as well as considering the contents of their Wills. We should be able to wind up both estates simultaneously. They should act fast because of the potential penalties levied by the Spanish tax authorities for late payment of Spanish Inheritance Tax.
The children are in contact with a local estate agent who has a potential buyer for the Mallorca property. It is important that they do not enter into any contract until the property is registered in their names. Otherwise there may be penalties for not completing on time.
Once we have the relevant information about the estate we can proceed with the English and Spanish formalities involved in winding up the estates.
We have brought to their attention the fact that there may be potential Spanish tax liabilities if their parents failed to disclose their UK assets to the Spanish tax authorities. We will need to contact their tax advisors in Mallorca.
We often come across with cases where the civil law practitioners confuse the English concept of domicile with tax residency and that can have serious tax consequences when winding up an estate. We also see cases when rogue estate agents pressure clients into signing private sale agreements when the property is still not registered in their name.
It is important in cases like this that the client either instructs a law firm qualified to deal with both jurisdictions or instructs two firms one in Spain, the other in the UK that work closely together.
It is easy for the winding up of international estates to go wrong as people are dealing with an unfamiliar legal system. Do not assume that it will be similar to the law of your own country, this is unlikely to be the case. In addition, the regulation of professionals differs from country to country. Therefore, we recommend that your use a firm who can provide services in both jurisdictions and have experience liaising with professionals in the UK, Spain and other countries.
Álvaro Aznar Azcárate
Solicitor and Spanish Abogado
Sykes Anderson Perry Limited