The first step in succession planning is making a will. This helps to prevent the need for a formal declaration of heirs before a notary in the future and ensures that the inheritance is not automatically limited to those predetermined by applicable law (legal heirs). Among other benefits, a will allows us to allocate specific assets to certain individuals, helping to prevent shared ownership issues and potential disputes among beneficiaries. Furthermore, depending on the nature of the estate, different rules can be established—for instance, structuring unequal financial and decision-making distributions in the case of business assets. A will also enables us to protect minors and individuals with disabilities, adjust the rights of a surviving spouse to prevent potential disputes, and even change the beneficiary of a life insurance policy. Last but not least, it allows us to choose the civil law applicable to the succession and optimise tax efficiency.
The civil law applicable to the succession will determine the heirs in the absence of a will. However, even if a will exists, it will also determine the extent to which we can decide how to distribute the estate. For example, the rights of forced heirs or the surviving spouse—which may vary depending on the applicable regulations—are among the main restrictions on testamentary freedom. In Europe, the applicable succession law will generally be that of the country where the deceased was residing at the time of death, unless they had previously and explicitly chosen the law applicable to their country of nationality. In countries with multiple local legal systems, such as Spain, the applicable law will be that of the place where the deceased has resided for the last ten years, or the last two years if they explicitly opted for the law of their place of residence. This is particularly relevant due to the differing regulations across autonomous communities. For example, in Navarra, there are no forced heirship rights, whereas in Catalonia, they amount to a quarter of the estate, benefiting children or descendants, or in their absence, parents in equal shares.
Additionally, civil succession law provides legal mechanisms to accommodate the wishes of the testator. For instance, it is possible to establish a substitution clause for an heir in case they are unable or unwilling to inherit, allowing the testator to designate an alternative beneficiary. We can also establish a trust to ensure that one or more assets are held by trustee for a certain period, with varying levels of control, before being passed on to a designated beneficiary in the future.
Beyond traditional testamentary provisions, some legal systems also allow for succession agreements. In Spain, these agreements are recognised in all autonomous communities with their own inheritance laws. They serve as contracts for appointing heirs and transferring present assets, often with the option to reserve specific assets for later disposition. This allows us to anticipate the inheritance and plan for taxation, which is known today but may change in the future.
In some cases, effective wealth and succession planning will require combining testamentary provisions with other legal actions, such as gifts, which can take various forms.
Additionally, testamentary provisions can be complemented by other documents, such as family or partnership agreements or even family protocols. Moreover, all testamentary arrangements should be reviewed periodically to reflect changes in financial circumstances—such as the nature of assets or newly acquired wealth—as well as personal circumstances, including new family members or changes in residence. It is essential to stay informed about regulatory changes and evolving case law in tax matters.
Finally, taxation will depend on multiple factors, such as the fiscal residence of the testator and the beneficiary, whether the inheritance or bequest is subject to conditions, the location of the assets, or, in the case of gifts, the residence of the recipient and the location of any property.
If we focus solely on Spain, inheritance tax regulations will also vary depending on the autonomous community. The most relevant factor is the residence of the deceased or the recipient for more than half of the last five years before the death or donation. In the case of gifts of real estate, taxation will depend on where the property is located. Despite the apparent complexity of the factors involved in determining inheritance taxation, careful advance planning provides an opportunity for optimisation, ultimately contributing to the protection of family wealth.
Diari d’Andorra, 20.02.25