Victor Gersten, EA, CFP®, MS, MPAS™

Most Americans with real assets have an estate plan. Usually it is a revocable living trust, a pour-over will, and a set of beneficiary designations. In California it works well.

In practice, very little of that structure survives the move to Spain intact.

This is not a small technical footnote. Spain is a civil law country that reserves part of an estate for certain heirs by statute. It does not recognize trusts as a legal institution. And there is no estate tax treaty between the two countries to smooth the overlap.

I am not an attorney, and nothing here is legal advice. What follows is the planning map: which pieces break, why, and what has to be coordinated with a Spanish lawyer and a US estate attorney before it matters.

There is no US-Spain estate tax treaty

Start here, because a lot of confusion follows from assuming otherwise.

The United States has an income tax treaty with Spain, signed in 1990 and amended in 2013. It does not have an estate or gift tax treaty with Spain. The IRS publishes the list of countries where one exists, and Spain is not on it.

So the practical consequence is that nothing coordinates the two systems. There is no tie-breaker for domicile, no agreed rules about which country taxes which asset, and no treaty credit mechanism.

Relief is unilateral only. The US allows a credit for foreign death taxes, and Spain allows a deduction for international double taxation. Those two often fail to line up, and the reason is structural.

The two systems tax different people

The US estate tax is a tax on the estate of the person who died. Spanish inheritance tax is a tax on each recipient.

So the taxpayer is not the same person on both sides. A credit designed to relieve one taxpayer paying twice does not fit cleanly when there are two different taxpayers. That mismatch is why cross-border estates produce results that look wrong even when everyone followed the rules.

Forced heirship: you cannot fully disinherit

Spanish law reserves a portion of an estate for close family. It is called the legitima, and it is not something a will can simply override.

Under the Spanish Civil Code, descendants receive two thirds of the estate as a matter of right. The law divides one third equally among them. A second third, the mejora, may go unevenly to descendants but cannot pass outside that group. Only the remaining third is freely disposable.

Where there are no descendants, ascendants take half, reduced to a third when there is a surviving spouse. The spouse takes a usufruct rather than outright ownership, and the size of it depends on who else survives.

For an American used to leaving assets wherever they choose, this is the biggest conceptual shift.

The region matters, again

The Civil Code is not the whole story. Several autonomous communities have their own succession law, and the differences are large rather than cosmetic.

Catalonia reserves a quarter, and treats it as a monetary claim rather than a share of the assets themselves. Aragon reserves half, but collectively to descendants and freely distributable among them. Navarre has close to full testamentary freedom. The Basque Country and Galicia each have their own fractions.

Which regime applies turns on a Spanish concept called vecindad civil, which has no US equivalent. That question belongs with a Spanish lawyer, not with a general article.

You can choose your own law, carefully

There is a route around forced heirship, and it is worth understanding before you assume the worst.

EU Regulation 650/2012 governs succession across most of the EU. The default rule is that the law of your habitual residence at death governs your estate. But it also lets you choose the law of a country of your nationality instead, provided the choice is express in a will or clear from its terms.

An American living in Spain can therefore choose US law to govern succession. Done properly, that displaces the legitima.

The problem with choosing US law

But here is where it goes wrong in practice. There is no single national succession law in the United States. Succession is state law.

The Regulation anticipates this. Where a country has several territorial units with different rules, its internal conflict rules decide which one applies, and failing that the unit of closest connection. That is workable, but it is an argument you do not want to be having at a notary’s desk after a death.

So the practical answer is to name the state. A clause choosing the law of California is clean. A clause choosing the law of the United States invites a dispute.

Succession law and succession tax are separate questions

This is the single most common error in expat commentary, so it is worth stating plainly.

Regulation 650/2012 explicitly does not apply to tax. Choosing California law changes who inherits. It does not change who pays Spanish inheritance tax, or how much.

In short, people read about the choice of law, conclude they have solved the Spanish tax problem, and stop. They have solved a different problem.

How Spanish inheritance tax works

Spain charges the Impuesto sobre Sucesiones y Donaciones to the person receiving, not to the estate. Each heir files and pays on what they receive.

Meanwhile, the state scale is progressive, running from 7.65% up to 34% at the top band. Beneath that there are state allowances that vary by how closely related the recipient is, arranged in four groups. Children, spouses and parents sit in the more favorable groups. An unmarried partner usually does not.

Then comes a multiplier that surprises people. A coefficient based on the recipient’s kinship group and their own pre-existing wealth then multiplies the resulting tax. So a distant relative or an unrelated beneficiary can face an effective rate well above the headline 34%.

Region changes the answer more than the state scale does

In fact, regional reductions dominate the outcome. Madrid and Andalusia both apply very large reductions for close family, in the region of 99% of the tax. Several other communities are broadly similar for spouses and children.

So I am deliberately not publishing a region-by-region table. These rules change almost every year, and the figures that circulate online are frequently a year or two out of date. The right figure is the one in force in the relevant community in the year of death.

Non-resident heirs can now use the regional rules

This one improved, though few people know it.

Indeed, Spain used to restrict regional reductions to residents. The Court of Justice of the European Union struck that down in 2014 as a restriction on the free movement of capital. Spain then extended the rules to EU and EEA residents only.

Spanish Supreme Court judgments in 2018 held that excluding residents of non-EU countries was equally unlawful, and Ley 11/2021 extended the provision to third countries. The Agencia Tributaria’s current guidance confirms that residents of third countries may apply the regional rules.

So a US-resident child inheriting a Spanish apartment generally qualifies for the regional treatment now. That can be the difference between a large bill and a small one.

Why your revocable trust does not work here

Spain has not ratified the Hague Convention on trusts. A trust is not a recognized legal form in Spanish law.

That is not a technicality with no consequences. It produces several concrete failure modes.

  • Title. A Spanish notary will generally not authorize, and a registrar will generally not inscribe, property held in the name of a trust or of a trustee acting as such. The trustee has no recognized capacity to sign the deed.
  • The purpose does not apply. A revocable trust exists largely to avoid probate. Spain has no probate to avoid. The inheritance tax accrues at death regardless.
  • Spain looks through it. Spanish tax authorities have generally treated the trust as transparent, so they see assets as passing directly from the person who created it to the beneficiary. A death that changed nothing in the family’s mind can therefore trigger Spanish inheritance tax.
  • While you are alive. For a Spanish-resident settlor, Spain generally attributes trust income to you for income tax and the assets to you for wealth tax. The trust does not shelter either.
  • Funding it can be a taxable event. Spain can recharacterize the move of Spanish property into a US trust as a gift.

The practical rule that follows is short. Do not title Spanish real estate in a US revocable trust.

The US side does not go away either

US citizens remain subject to US estate tax on worldwide assets wherever they live. The exclusion is large, so most households are under it, and portability lets a surviving spouse use an unused amount if a return is filed on time.

Two points matter more for cross-border families than the headline number.

The first is the threshold for people who are not US-domiciled. It is far lower, and with no treaty in place nothing softens it. That is a live issue where a non-American inherits US-situs assets.

The second is the marital deduction. Where the surviving spouse is not a US citizen, the unlimited marital deduction does not apply. Deferral generally requires a qualified domestic trust with a US trustee, and lifetime gifts to a non-citizen spouse are capped at an annual figure rather than unlimited. For a mixed-nationality couple in Spain, this is often the item with the largest number attached to it.

What happens to a Spanish property at death

Overall, the mechanics are worth knowing in advance, because the deadline is short.

Heirs need a Spanish NIE, an apostilled and translated death certificate, a certificate from the Spanish wills registry, and the will itself. A notary then draws up the deed accepting and allocating the inheritance.

The inheritance tax filing is due within six months of the death. You can request a further six-month extension, but only within the first five months. Miss that window and surcharges begin, rising with the delay.

There is also a practical lock. The property registry will not record the transfer until the heirs present evidence that they have paid the tax. So a missed deadline does not just cost money. It freezes the title.

Frequently Asked Questions

Will my California living trust be respected in Spain?

Generally not, because Spain does not recognize trusts. Expect Spanish authorities to look through the trust and treat assets as passing directly to the beneficiary, and expect a notary to decline to deal with a trustee as owner of Spanish property.

Can I leave my estate to whoever I want?

Under Spanish law, not entirely: a reserved portion goes to close family. But EU rules let you choose the law of your nationality to govern succession, which can displace that. You must make the choice expressly and name the specific US state.

Do I need a separate Spanish will?

Also, it is the usual approach for anyone with Spanish assets. A Spanish will covering only Spanish assets, drafted by a Spanish notary, speeds up the process considerably. It must say clearly that it does not revoke the US will, and the two must not contradict each other.

Who pays Spanish inheritance tax, and when?

Each recipient pays on what they receive, within six months of the death. You can request a further six months if you do so in the first five. The rate depends on the amount, the relationship, the recipient’s own wealth and the autonomous community.

Working With a Cross-Border Advisor

Estate planning across two countries is legal work, and the drafting belongs with lawyers on both sides. What it also needs is someone holding both halves at once, because the common failure is not a badly drafted document. It is two well-drafted documents that contradict each other.

The coordination work is concrete. We map which assets sit where and which system reaches them. Anything titled in a trust gets flagged for rethinking before it becomes a problem. We check beneficiary designations, since accounts that pass outside probate in the US are still inheritance tax events in Spain. We model the exposure in the specific autonomous community rather than against the state scale. Then we sequence the work with your Spanish lawyer and your US estate attorney so the documents agree.

Cross Border Wealth Advisors is a fee-only fiduciary firm serving US citizens living in or moving to Spain. I hold both the CFP® certification and an Enrolled Agent license.

Everything above is general information, not legal or tax advice about your situation. Drafting a will, making a choice-of-law election, unwinding a trust that already holds Spanish assets, and qualified domestic trust work all require qualified counsel in the relevant country.

To talk through the sequencing, book an introductory conversation at cbwealthadvisors.com or email info@cbwealthadvisors.com.

Sources

Related reading: Should I Buy or Rent When I Move Abroad? · Modelo 720

Disclosures

This article is general educational information published by Cross Border Wealth Advisors, a company of Gersten Financial Planning Inc., an investment adviser registered with the State of California (CRD 309890). It is not investment, tax, legal or immigration advice, and the firm does not practice law in the United States or in Spain.

Succession and inheritance tax rules differ by autonomous community and change frequently. Figures and rules are stated as of the date above. Cross Border Wealth Advisors is fee-only and receives no commissions. Registration does not imply a certain level of skill or training.

Please read the full article disclosures, which apply to everything published here.