NATIONAL WILLS OR INTERNATIONAL WILLS?

Index

• International Wills

• Planning an inheritance with assets abroad

  1. Succession laws in foreign countries

  2. Legal formalities for transferring assets

  3. Tax implications

• Why we do not recommend an international will

• European Union Regulation 650/2012 of 4 July 2012

• What happens if a Spaniard dies while resident abroad? And in the case of a foreigner resident in Spain?

• Nationality and habitual residence

• Civil domicile

• Choice of succession law different from habitual residence

• Deed of Variation

• The issue of language in wills

• Brief summary on inheritance abroad or of a foreign national

• Practical advice

International Wills

When drafting a will, there are several options, such as granting a single international will or drafting multiple wills.

If the goal is for a single will to take effect in multiple jurisdictions, it is essential to contact professionals in all relevant jurisdictions to avoid surprises regarding the validity of the will when it is too late. However, it is crucial that each will reflects its existence and compatibility with the others, as each will should govern the assets of the country for which it is made.

In many cases, however, it is better to have multiple wills—one for each country or jurisdiction where assets are located. This ensures that each will is valid in the place where it needs to be executed.

Planning an Inheritance with Assets Abroad

To avoid complications, several key issues must be considered when planning succession with assets abroad:

1. Succession laws in foreign countries

Different countries have different succession laws, such as forced heirship rules, which obligate certain family members to inherit part of the estate. Estate planning must take these rules into account to ensure that assets are distributed according to the testator’s wishes while complying with local laws.

2. Legal formalities for transferring assets

Transferring assets in a foreign country often requires compliance with specific legal requirements, such as notarization, registration, or documentation in the local language. Estate planning must ensure that all formalities are met to avoid delays or complications in the transfer process.

3. Tax implications

Countries may impose various taxes on assets abroad, including inheritance, estate, or capital gains taxes. Understanding these taxes is essential to avoid unexpected liabilities and ensure beneficiaries do not face excessive tax burdens.

Clients’ primary concern with international inheritances is usually the potential tax burden and possible issues with tax authorities in multiple countries. Ideally, tax planning is carried out during the testator’s lifetime, consulting with an international law firm to plan the succession and avoid fiscal surprises. One key principle is avoiding double taxation, ensuring that the same assets are not taxed twice—once in the country of the property and once in the country of the beneficiary.

Many countries have double taxation treaties that prevent the same asset from being taxed twice. It is essential to check whether any such treaty applies to the inheritance and to understand its content. Where no treaty exists, one must review each country’s tax obligations based on the deceased’s residence, the heirs’ residence, and the nature of the assets. Each type of asset may have specific rules, and possible exemptions should be carefully examined. Estate planning should take these treaties into account to minimize cross-border taxation.

Why We Do Not Recommend an International Will

Some law firms recommend international wills that apply to all worldwide assets of the testator. However, we believe it is crucial to explain the differences between an international will and a separate will for each country where assets are held, to avoid significant delays, high costs, and problems in the execution of the inheritance.

Different jurisdictions have their own laws regarding what can and cannot be included in a will—for example, whether a spouse or adult child can be disinherited (this varies even within U.S. states or Canadian provinces) and how real estate is handled. There are also different rules regarding legacies to minors and the definition of a minor.

For instance, drafting a single international will in Spain to manage worldwide assets may require the inheritance process in Spain to be completed before any other country can execute its part of the estate. This could cost heirs hundreds of euros in translation and legalization fees for documents to be valid in other countries.

EU Regulation 650/2012 of 4 July 2012

Entered into force on 27 July 2012, this regulation establishes rules on jurisdiction, applicable law, and other matters concerning succession. Article 21 stipulates that the law governing the entire succession is that of the state in which the deceased had their habitual residence at the time of death.

Thus, the law applied to the estate of a Spanish citizen habitually resident in France will be French law, not Spanish law, and vice versa. Exceptions include:

• If the person chooses before a notary that their succession will be governed by their national law.

• If the deceased had a clearly closer connection to another state than to their habitual residence state.

Examples of Validity of International Wills Abroad

United States

An international will is valid in the U.S., but only in states that have adopted the UNIDROIT Convention. The Convention provides a standardized will form recognized in all member states. States like California accept international wills if they meet legal requirements under state law and the convention. However, not all states recognize international wills, so it is important to verify local regulations.

United Kingdom

An international will is valid in the UK. The UK has adopted the UNIDROIT Convention, meaning international wills meeting the convention’s requirements are recognized as valid. If the will follows proper formalities (signed in the presence of two witnesses and an authorized person), UK law respects it for cross-border inheritance.

Spanish Residents Abroad or Foreigners in Spain

The regulation applies to all testators, whether nationals or foreigners, when Spanish authorities must determine the applicable law for a succession opened on or after 17 August 2015. Article 9.8 is displaced by EU law and applies only in interregional conflicts.

Key variables:

• Nationality and habitual residence

• Civil domicile

• Effective residence

• Existence of a will or public document choosing applicable law

Nationality and habitual residence
The succession law will generally be that of the country where the deceased had habitual residence at death, unless:

• The deceased chose to apply their national law in their will

• The deceased had a clearly closer connection to another country

Civil domicile
Spain has both common law (Civil Code) and regional law (foral) in certain autonomous communities:

• Catalonia, Basque Country, Navarra, Galicia, Aragón, Balearic Islands
  The applicable law depends on civil domicile, not residence.

Exceptions and choice of law

• The deceased may choose a law different from habitual residence (Article 22, EU Regulation)

• The “closer connection” exception applies if there is a stronger link to another country

Public policy
Article 35 allows exclusion of a law contrary to public order. For instance, laws discriminating by sex may be excluded in Spain.

Example
A French citizen dies in Spain without children or spouse, leaving a surviving parent. Spanish law could require half of the estate to go to the parent, whereas French law might give only a quarter.

Deed of Variation

A deed of variation is mainly used in the UK and not widely recognized elsewhere. It allows beneficiaries to alter the distribution of an estate after the testator’s death. Changes only affect the signing beneficiary unless all other beneficiaries consent.

Common reasons:

• Beneficiary does not need full inheritance

• Charitable donations

• Inclusion of children or grandchildren born after the will

• Equalizing distributions

• Tax optimization

Professional international tax planning is essential to avoid adverse tax consequences.

Language in Wills

It is recommended to draft a will for each jurisdiction where assets are held. Non-native speakers may need wills in both their language and the local language. Law firms can prepare bilingual wills.

Brief Summary: Inheritance Abroad or of a Foreigner

For EU citizens, the applicable law is that of habitual residence unless the testator chooses their national law (Article 21.2, EU Regulation). Regional laws may apply in Spain depending on civil domicile.

Inheritance tax follows the law of the relevant autonomous community. Non-European heirs may pay through the national tax office, even if local law applies.

Practical advice

• Consult an international inheritance law firm

• Draft and update wills to reflect changes in assets and jurisdictions