Estate Settlement on the Balearic Islands

Which Body of Law Governs Estate Settlement on the Balearic Islands?

Whether the inheritance law of Mallorca, Menorca, Ibiza, or Formentera applies depends on the following two factors. Firstly, according to the European Succession Regulation, the inheritance law of the Balearic Islands applies if the deceased person’s social centre of life was on the Balearic Islands, where they passed away.

The second scenario occurs in the event that the deceased was a Spanish citizen or had been a resident of the Balearic Islands for at least 2 years, having thus obtained local citizenship. In this case, Balearic inheritance law will also apply. If, however, local citizenship was not obtained, Spanish inheritance law may apply instead.

What Inheritance Certificates are there on the Balearic Islands?

For beneficiaries to be able to prove their inheritance rights on the Balearic Islands, a corresponding public document is usually required. This is particularly important when real estate is being registered in the Land Registry. Among the documents that are recognised as proof of inheritance are:

• A Spanish inheritance contract that specifies the distribution of the deceased person’s assets.
• A Spanish will that documents the last wishes of the deceased.
• In the case of intestate succession: a notarial deed identifying the legal heirs or an administrative certificate confirming the legal heirs.
• The European Certificate of Succession, which is valid across the EU.
• A will drawn up in the presence of a German notary or a registered handwritten will.
• German inheritance certificates, such as a certificate of inheritance or a court ruling on the determination of heirs.

Do Heirs on the Balearic Islands Need to Declare Acceptance of Inheritance?

For beneficiaries to be able to inherit under Spanish law, the inheritance must be formally accepted. For purposes of registration in the Spanish Land Registry, a legal document certifying the acceptance of inheritance is required – typically a corresponding notarial deed serves as such. In the event that there are multiple heirs, a division of the inheritance and an allocation of assets are also necessary. These are often settled within a single deed.

Which Notaries are Authorised to Conduct the Acceptance of Inheritance?

Any notary in Spain can notarise the acceptance of an inheritance. This can also be done in Berlin by the consul at the Spanish Embassy. It is also possible to be represented by a person with one’s power of attorney, thus avoiding the necessity of travelling to Spain personally.

What Documents are Required for the Acceptance of Inheritance?

The following documents are usually required for the notarisation to occur:

• Proof of inheritance confirming the heir’s entitlement
• Death certificate officially certifying the passing of the deceased
• Certificate of testamentary dispositions providing information on existing wills
• Bank certificate confirming the deceased person’s existing account balances
• Notarial purchase contract ‒ if real estate forms part of the estate
• Evidence of the cadastral value of the property, which allows to determine its value
• One copy of the current Land Registry statement for purposes of clarification of ownership rights
• Spanish tax number for foreigners or Spanish nationals for purposes of legal identification

Must Documents Always be Translated into Spanish and Legalised?

Documents drafted in other languages must be submitted with a translation by a sworn translator. To be recognised in Spain, foreign documents may also require an apostille or legalisation.

When and how is the Property Transferred to the Heirs?

Once the deed of inheritance acceptance is issued and ownership is allocated, the application for registration in the Land Registry can be submitted. This registration is essential as it allows the heirs to officially confirm and legally secure their ownership rights.

Do Banks Require Supporting Documents?

Spanish banks generally require the same proof of inheritance as the Land Registry. However, they reserve the right to make exceptions in special cases and will at times deviate from the strict requirements.

Heirs will typically not receive access to the money from the deceased person’s bank accounts until it has been verified that the inheritance tax has been paid. Not infrequently heirs are only capable of paying the inheritance tax from the deceased person’s bank account. In these cases, it is possible to request that the tax debt be paid directly from the deceased person’s bank assets. Beneficiaries are therefore advised to contact the respective bank at an early stage so as to clarify the exact requirements.

Should the Equalisation of Accrued Gains or the Dissolution of Joint Marital Property be Carried out Simultaneously with the Division of the Estate?

Beneficiaries are advised to dissolve the community of heirs at the time of accepting the inheritance in Spain. In the case of a community of acquisitions or a community of property, the joint marital property must be dissolved. The equalisation of accrued gains should also be conducted as part of the process involving the division of the estate and the acceptance of the inheritance, as the claim for equalisation of accrued gains is not subject to inheritance tax, and therefore high tax dues can be avoided. On the Balearic Islands the legal marital property regime is separation of property, which means that there is no joint marital property.

Must Inheritance Tax as well as Capital Gains Tax be Declared?

Before applying for registration with the Land Registry, beneficiaries are advised to declare and pay the Spanish inheritance tax so as to avoid getting a cautionary notice. Additionally, the municipal capital gains tax will be payable, which shall take into account the increase in value of the inherited real property as of the time of purchase.

Att. Ernst Scharr