Domicile

Domicile is often confused with Residency for tax purposes.  

Anyone in any doubt about the two subjects should obtain professional advice.  It is not uncommon for those living in Spain on a full time basis to assume they have aquired, or will aquire Spanish domicile.   Understanding of this subject is fundamental to estate planning.

Spanish Inheritance Tax

Spanish Inheritance Tax can be quite severe (a potential liability between spouses on first death for one thing), therefore the time to start planning for Spanish Inheritance Tax is before you buy your Spanish property.

Spanish Inheritance Tax provides exemptions and allowances to the beneficiary (ies) rather than to the deceased (as for example in Britain).  The extent of the exemption depends on the beneficiary's proximity to the deceased; the closer the relationship, the higher the exemption.  While total relief is possible, this usually depends on beneficiaries being Spanish resident for tax purposes and certain other factors.

It is a complex subject.  We can help clients mitigate the tax and derive expert tax and legal counsel.   Spanish law does not recognise the concept of trusts, therefore alternative means need to be explored.

Offshore Trusts

For those who retain their domicile of birth and who wish to establish an offshore trust to mitigate estate duty in their home country, we offer Guernsey as the offshore jurisdiction for the trust domicile.  

City of London lawyers see Guernsey as second only to Jersey as a good jurisdiction in which to set up trusts for personal clients, according to a recently-published survey.   We have taken note of this and offer a Guernsey based trustee company to provide the appropriate structure.

UK Inheritance Tax

We have over 10 years experience in providing solutions for UK inheritance tax (IHT).   We are up to date on the new legislation for Pre-Owned Assets, and offer the following trust services to mitigate the tax, depending on the circumstances:   Loan trusts, Power of Appointment Trusts, Discretionary Will Trusts, Revertor to Settlor Trusts, and Discounted Gift Trusts.     

There is very little point in those of English or Scottish domicile establishing an offshore trust.