Inheritance Tax

[El Pirata]

Hi everyone,

I have a question that is being asked more and more often.

"Can I add my children's name to my title deeds"? The obvious reason for this is that they are looking to avoid inheritance tax. Presuming that the house is a holiday home, and the 7% transmission tax that would have to be paid to sell the property (or part of), are their children any better off being on the title deeds or not?

I understand that they cannot be added to the title deeds other than by sale or donation which both involve a taxation of 7% plus registry and notary costs, but in terms of IHT, would they benefit?

If so, would it a good idea to advise older clients of the savings they could make to put their children on the title deed of the property when they are looking to make the initial purchase?

[katy]

Remember there can be endless complications when/if the kids marry/divorce.

[Beachcomber]

Unless you are 100% sure how your offspring are going to turn out I would forget it. Easy for me to say, I know, because I haven't got any but I have seen instances where parents have purchased property in the name of their children without the protection of usufruct and have subsequently been turfed out of the property as a result of the children having married 'unwisely'.

Anyway, it's not the parents who are saving having to pay IHT it is their children. Just look at it from the viewpoint that the children should be grateful for whatever is left over once the inheritance taxes have been paid.

[Lavanda]

Totally agree, Beachcomber. Inheritance tax is nasty BUT it's paid on an INHERITANCE that might just as easily go to the local dogs home instead!

[El Pirata]

Thanks for the replies everyone. The marriage thing was something I hadn't thought about to be honest! It's inevitable that people will still ask for my opinion on this and try to avoid the IHT for their children so Ilike to be able to give them the possible pro's and con's for different scenarios and allow them to decide.

The usufruct would obviously protect the parents but the financial impact on their child in the case of divorce would obviously be a lot greater than the amount to pay on IHT. Food for thought.

[Retro P]

What you need for this is a lawyer, not some strangers on a website!!

[El Pirata]

I was hoping I'd get some advice from David Searl!

[Beachcomber]

What you need for this is a lawyer

I have yet to come across a Spanish lawyer who gives good advice on anything.

[Jool]

I understood spanish law prevents you from leaving your money or estate to animals - is this correct?

How then can I ensure my dogs will be looked after and found good homes - can I leave money for their care by a designated person? Would that person need to pay IHT or can I leave it in trust for the dog´s care? Or could it only be via a dog rescue charity? What if the dog charity is nearly insolvent when I pass on.......what would happen to the money then or can it be held and protected like a power of attorney for dogs?

I know it sounds mad but I have several much loved dogs who are a happy family together........and I want to ensure they are all properly cared for

[El Pirata]

If you retain an asset in the UK, you can distribute your estate according to UK law. Why not contact those people on the TV adverts that have been on lately?!

How many dogs do you have? Surely it wouldn't be too hard to find a home for 2 or 3 dogs together, but if you have sevn or so....!

[Jool]

Hi, yes but there is the issue of getting the dogs to the UK, they will all have passports which are in process, and there are 5 in total, at the moment, but who pays and how, etc etc?!

I would rather pay someone here all the costs plus a little more to look after them and know they are still in a good home environment in a warm climate.....hence my question.

[El Pirata]

If you pay someone here, then they would be receiving money from your inheritance and have to pay the relevant tax on it. I don't think there is any way around it.

Without meaning to pry, how old are you? Is it likely that the dogs will outlive you?

[El Cid]

Everyone gets an allowance against IHT of about €16000 so if you leave an amount less than that there will be no IHT.

Sid

[El Pirata]

How can you leave that to them and ensure they only spend it on your dogs if times get hard?

[El Cid]

You can't - you will just have to trust them.

Sid

[Jool]

So you CAN legally leave it to dogs in Spain then Sid?

Even if I outlive my current dog family I will doubtless have another one or 5, I´m a magnet for lost dogs........and a soft touch.

[El Cid]

I didn't say that - I meant you have to trust the people you leave it to who will look after the dogs.

Whether you can legally leave it to the dogs is a question for a lawyer. Under Spanish succession law I very much doubt it but foreigners can leave their assets to whoever they like so long as the will complies with the law of their home country.

If UK law allows it then it should be allowable in Spain but the system may not allow for it. Can you imagine the tax man calling on a pack of dobermans and asking them to pay the inheritance tax

Sid

[cameron]

Hi, this is my first post although I have been browsing for some time.

I know this is slightly different but the husband of a friend of mine died recently and only afterwards did she discover that he had left money to the local dogs home. She had to borrow to pay for his funeral and had no way of covering his legacy. Fortunately a good Spanish friend arranged for her to pay it in monthly instalments but it had to go before the notary to be sanctioned. Had she not have been able to make the payments then she would have been in danger of losing the house as the money would have to come out of his share of the property. Just shows that you need to be really careful when making a will as when they arrived in Spain they had savings but with the recession most of it had gone.