Estate planning in Spain:
the cross-border considerations for UK nationals moving to or living in Spain
By Paul Montague, Partner, Blevins Franks
928 433 411 | canaryisles@blevinsfranks.com | www.blevinsfranks.com
Estate planning is essential for UK nationals living in or moving to Spain, to ensure that your assets are protected, distributed according to your wishes, and managed efficiently across borders.
Strategic estate planning helps you navigate the complexities of Spanish inheritance laws, mitigate potential tax liabilities in both the UK and Spain, and avoid unintended consequences such as forced heirship rules or unnecessary taxation. By putting a clear plan in place, you can safeguard your family’s financial future, maintain control over your estate, and reduce administrative burdens during emotionally difficult times.
Protecting your legacy for your loved ones begins with how you manage your wealth during your lifetime. It’s about striking the right balance between growing your assets, generating income and shielding your wealth from unnecessary risks. At the same time, careful structuring is essential to keep your tax liabilities to a minimum, so more of your wealth stays where it belongs: with you and your family.
Equally important is planning how your wealth will be passed on. You need to decide how you want your assets divided amongst your chosen heirs, when the transfers should take place, and how to structure them to ensure the process is as smooth and tax efficient as possible. With the right planning, you can help ensure your heirs benefit fully from your estate – rather than seeing a significant portion lost to the taxman.
Why estate planning matters more when you move abroad
Moving from the UK to Spain introduces a new layer of complexity to estate planning. You’re no longer dealing with just one set of laws and tax rules – you’re navigating two. Spanish succession laws, including forced heirship and regional tax regimes, can dramatically affect how your estate is distributed and how much Spanish succession tax your beneficiaries will pay. At the same time, UK inheritance tax (IHT) may still apply if you retain UK assets or haven’t severed long-term UK residency ties.
Without proper planning, your estate could be subject to both the UK and Spanish tax inheritance tax rules. While your heirs will not pay both taxes, they will pay whichever is the larger amount.
UK inheritance is calculated on your whole estate and charged at 40% on anything above the personal allowance and residential nil rate band. Both these allowances are frozen until 2030, the former since 2009. With property values and asset portfolios growing over time, many are shocked to discover how much of their estate could be lost to tax. Other than your spouse/civil partner, whether your beneficiaries are your immediate family, other relatives or not related at all doesn’t make any difference.
In Spain, however, succession tax is calculated on each beneficiary, with rates and allowances varying considerably across regions as well as on the level of kinship and wealth levels. In very extreme cases it can reach 80%. On the other hand, the Canary Islands (along with some other regions) has virtually eliminated inheritance tax for spouses and children.
If you plan on leaving wealth to your children, living in or moving to one of these Spanish regions now offers a much more welcoming inheritance tax environment than the UK. To fully benefit, though, you need to keep UK assets below the £325,000 threshold, which will prove much more difficult when pensions are added to your estate from 2027.
How you structure your assets, how you position your assets, and what professional advice you take can really make a significant difference to how your wealth passes down to your next generations and how much is actually protected from tax.
Common misconceptions and mistakes
One of the most frequent mistakes UK expatriates make is assuming that UK tax rules still apply once they’ve moved to Spain. This ‘home bias’ can lead to costly errors. For example, UK tax allowances such as the capital gains exemption on your main home, the 25% tax-free pension lump sum, and the tax efficiency of ISAs and premium bonds do not carry over to Spain. In fact, relying on such assumptions can result in unexpected tax liabilities.
Likewise, both the inheritance laws and tax regimes differ considerably between the UK and Spain. Leaving your estate planning untouched after moving to Spain could have unintended consequences for your heirs.
If you have not yet moved to Spain, timing is critical to protect your wealth from tax, both during your lifetime and for your heirs. Ideally, you should begin tax and estate planning at least a year before you relocate. This allows you to take advantage of UK-based opportunities before entering the Spanish tax system. Strategic sequencing – knowing what to do and when – often makes a significant difference in your financial outcome.
Building a cross-border strategy
Effective estate planning for expatriates requires a holistic, cross-border approach. It’s not just about writing a will or setting up a trust – it’s about integrating your tax, pension, investment and succession strategies across two jurisdictions.
Find an adviser who will take time to understand your full financial picture – assets, income streams, pensions, retirement goals and family dynamics – so they can develop a personalised roadmap that aligns with both UK and Spanish regulations. Your plan should ensure optimal tax efficiency and simplify the process for your heirs, reducing the risk of delays, disputes or excessive taxation.
You may be pleasantly surprised by how much tax can be mitigated through strategic planning.
The importance of professional advice
Estate planning is not a one-size-fits-all process, especially when you’re dealing with two countries’ legal systems. Your family is unique, and your succession planning needs to be highly personalised to ensure your wishes are met. Engaging with a specialist cross-border adviser who understands both UK and Spanish tax regimes is essential. The right advice will help you:
- Avoid unnecessary taxation
- Navigate Spanish forced heirship rules
- Structure your assets for maximum efficiency
- Simplify probate and succession processes
- Preserve your wealth for future generations
Ultimately, estate planning is about peace of mind. It’s about knowing that your affairs are in order, your family is protected, and your legacy is secure, no matter where you live.
Final thoughts
For UK nationals living in or relocating to Spain, estate planning is not just a financial exercise, it is a vital step in protecting your wealth, securing your family’s future and avoiding costly surprises.
Don’t leave your planning until it is too late. By seeking expert cross-border advice and taking early, informed action, you can turn a potential burden into a powerful opportunity to protect your wealth and provide for your loved ones.
Keep up to date on the financial issues that may affect you on the Blevins Franks news page at www.blevinsfranks.com
The tax rates, scope and reliefs may change. Any statements concerning taxation are based upon our understanding of current taxation laws and practices which are subject to change. Tax information has been summarised; an individual should take personalised advice.
Blevins Franks Wealth Management Limited (BFWML) is authorised and regulated by the Malta Financial Services Authority, registered number C 92917. Authorised to conduct investment services under the Investment Services Act and authorised to carry out insurance intermediary activities under the Insurance Distribution Act. Where advice is provided outside of Malta via the Insurance Distribution Directive or the Markets in Financial Instruments Directive II, the applicable regulatory system differs in some respects from that of Malta. BFWML also provides taxation advice; its tax advisers are fully qualified tax specialists. Blevins Franks Trustees Limited is authorised and regulated by the Malta Financial Services Authority for the administration of trusts, retirement schemes and companies. This promotion has been approved and issued by BFWML.
