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How can my heirs avoid inheritance tax upon my death?

Inheritance Law

Antonio Flores Vila

15th of September 2004

Q. I am UK domiciled but non uk resident.

I have a property in my own name in Spain (value 1.5m - no mortgage). I am not currently Spanish resident either - although I may become so. (I also have a house in South Africa). I am married.

I am concerned about Spanish Inheritance tax on my Spanish Property if I die. What do you suggest?

    A. Due to the fact that inheritance taxes on the property you own may be very stiff, it may be wise to look incorporating a Spanish limited company and contribute with the asset to the share capital.

    If the property is owned by a Spanish limited company, due to certain exemptions on Transfer tax on shares (7%), it could be possible to establish a calendar to organize the transfer of shares from yourself to your future inheritors, in a given period of time, at almost no cost. Alternatively, you could also split ownership of the shares and allocate your children the bare ownership of the shares, you retaining a life interest on them.

    If you do not wish to lose control over the shares, it is also possible to have the shares sold to an offshore company (which you would own), in a given period of time, which can then be disposed of either in life, of after death, at almost no costs.

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