Stepchildren and inheritance tax in the Valencia region
When the time comes for your beneficiaries to inherit your estate, you should be aware that stepchildren fall into band 3 for inheritance tax whereas natural or adopted children fall into band 2. The following is an example based upon an estate in the Valencian region, valued at 240,000€, being left to one child:
• A natural child will pay inheritance tax of: 208.70€
• A stepchild will pay inheritance tax of: 84,828.50€
84,828.50€ represents 34% inheritance tax on the gift and each stepchild would pay this sort of % on their inheritance.
Clearly this is a significant difference and in order to mitigate this, all you have to do is “adopt’’ your stepchild.
This may sound nonsensical, given that your stepchildren could well have grown up children of their own, however, by so doing, you will be saving 1000s€ in inheritance tax.
Our legal team has a fluent English-speaking family matters solicitor who is very experienced in organising these types of legal arrangements for our British stepparents who are resident in Spain.
The good news is, neither you or your stepchild/children will ever have to attend court as each court appearance is conducted by our solicitor, and they will complete all the paperwork required for you including obtaining an NIE for the child being adopted and copies/translation of death certificates in the UK where required for a deceased parent.
An initial face to face meeting with you (your stepchildren are not required to attend this meeting) at our La Siesta office near Torrevieja would be arranged or, if distance is an issue, a telephone consultation can be organised.
If the other parent is still alive, they will need to sign a document allowing the adoption to proceed in Spain, however, most parents understand that this process is purely undertaken to save their children 1000€s in inheritance tax in Spain, which usually is enough to combat any resistance they may otherwise have.
The whole process takes 12 months to complete and will include adding each stepchild that you wish to adopt to your Padron and the fee per stepchild requiring adoption is 1445€ including iva.*
We would recommend, if you have not already done so, that you elect us as the executors of your Spanish estate within your Will so that the correct procedures can be guaranteed to be implemented which will ensure the above measures are honoured when the time comes and we would also definitely recommend that you put in place Priority Client Cover, which, among many benefits, not only reduces the fee for probate work, but also means, if you do decide to go through the adoption process in the future, we will be able to update your Will(s) FREE OF CHARGE to reflect the updated status of your current stepchildren.
*A UK notary may be required to organise the apostille of death certificates and while we would be able to organise this with you accordingly, the UK notary fee would need to be paid directly to them which can be up to £400 including v.a.t.
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