Andrés is 70, lives in Madrid and is married to Carmen, who is 65. They have two children: Laura, who lives nearby and looks after them every day, and Diego, who has been in Singapore for fifteen years and hardly ever calls. Andrés wants to leave "everything" to Laura. His trusted lawyer has told him he cannot. The correct answer is rather more nuanced: he can leave Laura much more than Diego, but not everything, and the way he does it has consequences for the tax.
The legítima: the part of the estate you do not choose
Article 806 of the Spanish Civil Code defines the legítima, or forced share, as the portion of assets the testator cannot dispose of because the law reserves it for the so-called forced heirs. Under article 807, they are the children and descendants; failing them, the parents and ascendants; and the surviving spouse in the manner the Code itself lays down.
The testator cannot deprive an heir of the forced share except in the cases expressly provided for by law (article 813), which is what is known as disinheritance and requires one of the grounds listed in the law (article 848). A child living far away or not calling is not, on its own, one of those grounds.
The three thirds of the Civil Code
When there are children, article 808 divides the estate into three parts:
| Third | Who it can go to | Legal basis |
|---|---|---|
| Strict forced share | All the children in equal parts | Art. 808 CC |
| Improvement (mejora) | One or more children or descendants, as the testator wishes | Arts. 808 and 823 CC |
| Freely disposable | Whoever the testator wishes, family or not | Art. 808 CC |
The surviving spouse who inherits alongside children is entitled to the usufruct of the improvement third (article 834), that is, the lifetime right to use it and receive its income. With no children but with ascendants, the usufruct of half (article 837); with neither, that of two thirds (article 838).
To calculate the thirds it is not enough to look at the assets left at death. Article 818 requires debts and charges to be deducted and the value of gifts subject to collation to be added. What Andrés has given Laura during his lifetime counts when checking whether Diego's forced share has been respected.
Andrés's real room for manoeuvre
Suppose that Andrés's estate, once the community of property with Carmen has been wound up, comes to 600,000 €.
- Strict forced share: 200,000 €, to be divided between Laura and Diego. Diego is guaranteed 100,000 €.
- Improvement: 200,000 €. Andrés can assign it all to Laura. Carmen has the usufruct of that third.
- Freely disposable: 200,000 €. Andrés can leave it to Laura as well.
- Maximum for Laura: 100,000 + 200,000 + 200,000 = 500,000 €, of which 200,000 € remains as bare ownership while Carmen is alive.
In other words: Andrés cannot leave "everything" to Laura, but he can leave her five sixths. If he also wanted to favour Carmen, he could give her the free third, and the division would change.
How that division is taxed
The Spanish inheritance tax (Impuesto sobre Sucesiones y Donaciones, ISD) taxes what each heir receives, not the estate as a block. With the maximum division in Laura's favour, three different acquisitions appear:
- Diego is taxed on 100,000 € in full ownership. As he lives outside Spain, he is taxed as a non-resident on Spanish assets before the State's Agencia Tributaria (the Spanish tax agency), with the right to apply the rules of the Comunidad de Madrid (second additional provision of Law 29/1987).
- Carmen is taxed on the lifetime usufruct of the improvement third. Article 26.a) of the tax law values it at 70 % when the usufructuary is under twenty, subtracting one point for each additional year, with a minimum of 10 %. Counting one point less for each year from twenty, at 65 the figure is 24 % (the practical rule is to subtract the age from 89). Usufruct: 200,000 × 24 % = 48,000 €.
- Laura is taxed on 300,000 € in full ownership (forced share plus free third) and on the bare ownership of the improvement, 200,000 − 48,000 = 152,000 €. Article 26.a) requires bare ownership to be assessed at the average rate that would apply to the full value of the assets.
When Carmen dies, the usufruct ends and Laura acquires full ownership. At that point she is taxed on the extinction according to the title under which it was created, at the average rate applied when ownership was split (article 26.c). It is a second assessment that many families forget.
Article 27 of Law 29/1987 assesses each inheritance as if the division had been made with strict equality and in accordance with the title of succession. If the heirs allocate the assets among themselves differently from what the will says, excess allocations may arise that are taxed as a transfer. A division "by mutual agreement" without compensation can cost a tax nobody expected.
Regional civil law: different arithmetic
The thirds in article 808 are those of the Civil Code. Cataluña, Aragón, Navarra, the Basque Country, Galicia and the Balearic Islands have their own civil law of succession, with forced shares of different amounts and nature; in some territories the forced share is merely formal. If the deceased has regional civil status (vecindad civil foral), the calculation above does not work and you have to start from their rules. This is not a detail: it can completely change the testator's room for manoeuvre.
Watch out too for the frequent confusion between civil status and tax residence. The first decides which civil law governs the succession of a Spanish national; the second, which region collects the tax. They may not coincide.
Foreigners and the Spanish legítima
Many readers of this page are foreigners with assets in Spain. For them, the first question is not how much the forced share is, but which law governs their estate. European Regulation 650/2012 applies, in principle, the law of the deceased's last habitual residence, but allows them to choose the law of their nationality in their will. A British or American national living in Málaga can, with that choice, step outside the Spanish forced-share system. What their national law then says is confirmed by a lawyer from that country; we give no opinion on foreign law. We explain it in which law applies to an international inheritance.
What to do if you want to favour one child
A well-drafted will can arrange the improvement, the free third and the spouse's usufruct so that each heir's tax is known in advance. What is not advisable is to improvise lifetime gifts to "bring forward" one child's share without calculating two things: whether they impair the others' forced share (because of article 818) and how much they are taxed today compared with what they would be taxed on inheritance, which we analyse in whether a lifetime gift is cheaper than an inheritance.
If you are preparing your will and want to know the tax burden on each heir under the division you have in mind, you can describe it in the inheritance form. We point out the risks of each approach; the decision on how to divide is always the testator's.
Andrés made a will leaving the improvement and the free third to Laura, the usufruct of the improvement to Carmen and the strict forced share to Diego. Diego will receive less, but exactly what the law reserves for him.
When one of the heirs lives outside Spain, like Diego, coordinating the Spanish tax with that of the country of residence is dealt with at Salama Tax for inheritance and gifts.