Worried about my mom

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This topic contains 2 replies, has 3 voices, and was last updated by Profile photo of BeeLazy BeeLazy 2 weeks, 3 days ago.

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  • #194089
    Profile photo of qpon88
    qpon88
    Participant

    Hi,

    I am worried about my mom in case something happens to my dad. My parents live in Galicia. My mom never worked and my dad handles all the financials. I am sure everything is in his name. The will is made out to my mom in case something happens to him. I am not sure of their asset amount, but I am sure it’s tied up in 3 homes, of which one my brother lives in free and the other one was my late grandmothers home that is now vacant but in my dad’s name. All homes in Galicia. What would happen if god forbid something happens to my dad? Would my mom have to pay taxes on the properties before able to sell …even on the home she lives in? Also what would happen if god forbid something happens to both. What are my brother and my tax implications?

    Would it be better to leave things to their grandchildren who are under 21?

    I had never heard of the inheritance tax, until I looked into my dad wanting to send me some money as a gift.

    Thank you for any help you can provide.

     

  • #194131
    Profile photo of Richard
    Richard
    Participant

    Hello,

    I’m a British citizen currently living in the US with dual citizenship and have a similar situation you described.  My Dad has always paid the bills and Mum has very little experience, knowledge or interest in the handling of their estate.Dad is 80, Mum is 76.

     

    I have done extensive research into inheritance tax issues and this is what I have discovered over the last 3 years and what I have put in place should one or both of my parents die. Please understand this information may or may not be completely accurate but it is what I have done as a concerned son wishing to help my parents as they enter their twilight years.

    i) Should either parent die, the surviving parent WILL be subject to a 50% inheritance tax on the entire estate. The tax will be assessed by the value of the estate through property taxes, less exemptions given to Spanish residents which my parents are. My parents own their house outright and have two investment condominiums that both have substantial mortgages. Mortgages are considered liabilities, not assets so they will only be subject to IHT after the mortgages have been discounted. In light of this information, my parents have a fund put aside to cover the 50% IHT the surviving parent would be responsible for. The Spanish govt gives you 12 months after initial death to settle this bill.

    ii) On my last visit to Spain (Oct 2016) I established a power of attorney for my parents through a lawyer and the local Ayunimiento (local authority) which cost around 100 euros. I also made sure I was a co-signer on their Spanish bank account. This is important especially if both parents die at the same time in an accident because then the account goes to Spanish probate which will be frozen until such time as the will is executed. If you’re already on their account, then you will be able to control and disperse the funds for your Mum if she is not familiar with internet banking. This way I would be able to ensure there was enough money in the account for Mum so she will be able to continue to draw cash to pay for groceries, petrol, spending money etc. as well as covering daily costs of running the house. Currently my Dad has three pensions (military, corporate and British govt).  Mum only has the state pension and should he die, she would still receive 1/2 of Dad’s pensions but her income would be substantially less.

    iii) It is very important that not only is a will established subject to British law and not Spanish law. There have been some important changes in Spanish IHT and of last June there was some law passed that made it more difficult for expat Spanish residents to do this. You might have to get professional help on that one.  I don’t know your relationship with your brother, but Spanish IHT decrees that siblings automatically share in the estate despite what the will says. This is the crazy part because I have a sibling who has a financial interest in my parents passing but has never helped them in any other way.

    iv) Both my parents have funeral plans. Each one cost 3,150 euros but when one or both die, a phone call to the company is all that is required for all that needs to happen and they take it from there. Not only are we spared the distress of all the legal and funereal issues, but we are locked into a guaranteed cost.

    v) I have internet access to all of the utility accounts for my parents house. Electricity, water, property taxes etc so if my Dad were to die I could handle the day to day running of the accounts from the US. This spares my Mum from managing these accounts which she wouldn’t be able to do anyway.

    My relationship with my parents is very trusting and setting all this up requires your Dad to reveal intimate detail over their estate and complete trust in you.

    I hope this helps.

     

  • #194138
    Profile photo of BeeLazy
    BeeLazy
    Participant

    Inheritance tax rules changed in Galicia since 1st January 2016. This link will give you all the information you need.    http://advocateabroad.com/legal-answers-spain/spanish-inheritance-tax-answers/changes-to-inheritance-tax-in-galicia-2016/  On matters such as wills and inheritance it is always best to consult a Solicitor/Abogado and particularly one who is familiar with both British and Spanish Wills and Inheritance.  Also note there is a 6 months window for settling up inheritance tax matters and the surcharges on late submissions can be quite hefty if you don’t comply.

    Bee

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