We were asked to assist in the estate of a Spanish lady (“T”) who lived in London for most of her life. She died without a will. Her Spanish family members, who were inheriting her estate under English intestacy law, did not speak English. T moved to England many decades before her death and died owning a flat (see lease extension article) and bank accounts.
The first thing we had to do was ascertain who would be inheriting under the intestacy. T’s parents had died many years before and she had never married or had children so the estate would be passing to her siblings or to a sibling’s children if a sibling had died before T. The children would inherit their parent’s share in equal shares which is called per stirpes. T had been one of 4 children, one sister died childless, one died leaving 3 daughters and T’s brother survived her. T’s brother would therefore inherit 3/6ths of the estate and the daughters of T’s sister 1/3rd each. It was the brother’s charming son E, who speaks fluent English who contacted us through a recommendation.
What made this case particularly unusual was that the beneficiaries needed to appoint an English speaker as their representative. After some research into the Probate Registry’s requirements, we prepared a bilingual power of attorney in Spanish and English for the beneficiaries to sign. Branch Austin McCormick is fortunate in the number of languages our team speak fluently and Sofia Marques Anaya in our immigration team was of great assistance here.
Being very aware how different the probate process and method of taxation on death is in Spain, we took great care to explain the English system. The deceased’s estate as whole is taxable and the rate of tax is not connected to the relationship of the beneficiary to the deceased – except in the case of spouses or civil partners. This is very different to the Civil Law in Spain.
Inheritance Tax needs to be paid before you can apply for the grant to deal with the estate. In this instance we were fortunate that there was enough money in bank accounts to pay the Inheritance Tax in full. Otherwise, tax on property can be paid in instalments but that attracts a high rate of interest payable to HMRC or the personal representatives must try to obtain a loan and in extremis apply to HMRC for a grant on credit.
There was fortuitously also enough liquidity to apply for a lease extension on the flat which had less than 60 years left on the lease. This was important as it is very hard to get a mortgage on a property with a short lease which means the market value plumets as we would be reliant on cash buyers.
My colleague Sarita Ghere talks about the process in her case study.
