what will be the benefit?

[wazjulie]

My late husband passsed away 2 years ago in Spain. After a long legal complicated process (there was no will) everything is now nearly on the final phase. I have just received this message from my lawer in Spain.If possible would you like us to prepare the inheritance deed so that you receive a life interest in the property but with your son the legal owner? This allows you to have full rights over the property during your lifetime but it will pass automatically to your son if you were to die (or sell the property).
My question is:What are the benefits of putting the property in my sons name?
Has the lawer ask me the question because of the tax implications when/if we sell?
We are at the moment thinking of relocating back to the UK when my son has finished secondary school. At the moment he is 12 years old. Any help advice would be very welcome?

[Mariposa]

Hi there I think that many people do this as the taxes are less to pay in the end for a" child" in Spain-seems to be graduated according to a definite set of rules re relationship to the person who died. We did it in favour of my daughter eventually as the house is in my name, but with my partner having the right to remain there. It does mean there should be no issues between you and your son as he could put pressure on to sell at some future date (not at the moment I hope) If we decide to move we may change it as it is very low value.If yours is high value it may be advantageous tax wise. Our goal was always for the simplest and cheapest legal option
It is definitely the norm for spanish people , but may have implications in the future if there is family fallings out!

[Jool]

It is called usu fructo and you need to ensure you totally understand what this means before taking this path. As your son is only 12 I think you need to investigate this carefully and perhaps speak with several solicitors before making a decision.

[DavidSearl]

FROM DAVID SEARL

FOR WAZJULIE


Standardly in Spain, when a foreign resident here dies leaving no will Spanish inheritance law is applied, rather than the law of the foreigner's home country.

This means the surviving children inherit two-thirds of the property, but your lawyer's question makes it sound as if you have other options. Perhaps there are circumstances which would in fact allow you to be named the inheritor of the entire estate.

Also, you do not say if the estate to be adjudicated is one-half the house or the entire house.

But let's take your points one by one.

1. There is no difference here in the amount of Spanish inheritance tax. Both surviving spouses and children are Class I inheritors, paying tax at the base rate.

2. There is an option to have the "bare property rights" pass to the child, while the surviving parent holds the usufruct. This usufruct is the lifetime right to enjoy the property, being able to rent it or change it and so forth. So, your son would own the "bare" title to the house, but he could do nothing with it. You would hold the usufruct and could do anything with it except sell it without the son's consent.

3. The tax advantage does not appear until you die. At that point, the usufruct dies with you and your son owns the property free and clear, with no inheritance tax to pay.

4. You say that you may well return to the UK in a few years. If so, it might be wiser for you to own the property in your own name. If your son is still a minor child when you wish to sell, and he is the real owner of the property, problems could arise.

5. You should discuss these points with your lawyer until you fully understand them.

Good luck with it, David Searl