More scare mongering?
 

Whilst leafing through an airline's magazine over France I came across this article by a tax consultant called Win*h*m. I have no idea whether it is accurate or not but if there is half a grain of truth in it, it goes against a lot of advice that has been posted on here.

Common myths

Purchasing/transferring the property into your children's names
Using either of these methods you would need to pay tax to keep your own property should your children predecease you. There are also gift tax implications both in Spain and the UK. You would have to trust your child to make a Will leaving the property to you and hope they do not divorce or fall into serious debt both of which could mean you may ultimately lose your property.

A Spanish Will shields you from Spanish Inheritance Tax
This is not true and a Spanish Will can often complicate matters as it may conflict with an earlier Will prepared in the UK and does not eradicate IHT. A Spanish Will cannot be varied after death and therefore limits the options of the beneficiaries. If there is only a UK Will, then, with an agreement of all the beneficiaries, the Will can be varied to accommodate the inheritor's wishes should this be required. The only requirement of the Spanish authorities before the property can be transferred to the new owner's names is to be presented with a death certificate and Grant of probate from the UK, translated, notarised and apostiled.

There are changes scheduled to take place during August 2015 within the Eu which will mean that a Will should state the intended succession jurisdiction. It will no longer be possible to assume that your place of domicile will dictate where your estate is to be dealt with which could result in your foreign property being subject to Probate in the country it is situated in and therefore you may not be able to leave your assets to whom you wish.

The article also went on to refer to Taking out as mortgage to reduce the tax liability - also a no no and Waiting 4 1/2 years to inform the authorities of the death - a criminal offence apparently.

Now some of this is blatant scare mongering but the news about the proposed EU changes was new to me and would require a change in my current Will.

Re: More scare mongering?
 

You say that it goes against a lot of advice previously posted on this site.

Which particular points are you referring to?

The information about the 2015 law changes are correct and many existing Spanish wills will need to be re-written to comply with the new EU rules.

Re: More scare mongering?
 

The first is (and AFIK always has been) true. It is not scaremongering.

The risks are real and many do not fully understand the implications of signing over their property to children.

Re: More scare mongering?
 

Well, if you earn it, apparently it's their money. :blink:

What our governments too oft forget is that in a democracy, government is supposed to be working for the population, not the other way 'round. But I reckon we get all kinds of "free" stuff (which no surprise, we still have to pay for), so it's OK.

Yet we wonder why people view government as the "enemy" and do whatever it takes to "get around it". Even more ironic is that as governments increasingly drain our pockets in any way they can get away with to support their frivolous spending addiction, we also consider avoidance as somehow "dubious". But really, which is more dubious than the other?

Re: More scare mongering?
 

+1 to those comments

Re: More scare mongering?
 

Over 14 years ago we knew a Swedish couple who transferred the ownership of their Spanish property to their daughter, hoping to avoid inheritance tax. They lived in it permanently, it was not a holiday home. The daughter moved to a village nearby, got into money problems and sold their home out from under them. They had to move out.

Re: More scare mongering?
 

Sure is nice to hear people are still raising kids to appreciate their blessings..

Re: More scare mongering?
 

Not only in Spain. :nod:

Quite a few in their golden years with to transfer properties to kids to avoid paying should they have to go into care homes ............ and end up in a care home much sooner than they thought they had intended.

Re: More scare mongering?
 

Related (but a bit off topic). Interested to know opinions on this....

I can honestly say (and speaking for my wife as well), that we had no thoughts of financially benefiting from our parents. Being independent seemed to be the norm then.

Not so sure the current generation have the same ethics. A case in point - my daughter and her husband give the impression that we (and his parents) are fair game for a few bob - almost like it's their right (and our duty).

Re: More scare mongering?
 

The problem with transferring properties is that it can attract gift tax which is exactly the same as the IHT you are trying to avoid.

Transfers between husband and wife are easier and there are special rules. It often is done when one of the couple has a terminal illness.

Re: More scare mongering?
 

I have had dealings with this company in my previous life as a moderator both on this forum and others.

They repeatedly misrepresented who they were on the forums to lead people into a train of thought that their ideas were a solution to everything. They tried to terrorise people into the view that it was something they had to do to avoid huge tax bills.

If the product is a solution or not .... well, the jury is out on that, but the way the company tried to fool people was not particularly encouraging

Re: More scare mongering?
 

As you say there are tax implications to be considered.

The example I was giving is for those who have gifted property, trying to avoid having the value of their home assessed for care home fees. The upper savings threshold in England is £32,250.

Re: More scare mongering?
 

Hola

My children own my home and I am happy to be a pauper on paper. I sleep well of a night and recommend people look at the idea of not owning their own homes.

It may not be for everyone, but that doesn't mean that it should never be used by anyone. Each to their own

Davexf

Re: More scare mongering?
 

Perhaps I should open a separate thread but I would like more info on this.

A Spanish friend of ours (and her two siblings) have just been gifted their fathers house - in equal shares. A usufruct was set up so the father can still live in the property.

Because the father was 'of an age' there was ZERO transfer tax to pay.

This was all done legally with an abogado and through a notary so that the escritura was updated and then registered.


As this seemingly flies in the face of what I've previously been told, ie transfer tax needs to be paid, can anyone shed some light on the matter. It seems to be a great way around IHT in Spain.

Re: More scare mongering?
 

That's fine if you don't need the money from your home , but most rely on it as an asset to sell should they want to buy somewhere else , or live their life as they want to.
Did you gift/ transfer your home to your children? They have the hassle of taxes, bills etc associated with it.
Snikpoh- there seems to be no way of avoiding IHT , unless you have modest assets and live in a region with generous IHT allowances.