Rachael

If I had known of all the pitfalls and not of any solution before I bought here then I am not sure I would have gone ahead. It's all too easy to make assumptions about similarities in laws and taxes between EU countries - I certainly did - and then find out the hard way that they were wrong .

I like owning though cos we can do all sorts of things to improve the place and get it how we want it - eventually!

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Rachael

Thanks GM - it is a question that is often asked.

In my opinion, a Usufruct is not a solution to Spanish Inheritance Tax. The owners of the property will still leave inheritance tax to be paid by their beneficiaries when they die - it just delays the problem. And what happens if the children predecease their parents? In that case the usufruct is still active because the parents have not died and the whole situation may end up a right mess.

It's a similar scenario to those parents who buy the property in the names of their children. If the child or children die first then the parents owe the tax! You also have to consider family disputes. If your child is involved in a divorce then the house will be seen to be an asset belonging to that child and may have to be sold as part of the divorce settlement, regardless of who lives there or what family agreements have been made.

The solution that Wincham Consultants are offering will not be right for everyone. I believe though that it is the only legitimate way to eliminate ISD for current and future beneficiaries of Spanish property.

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"You can complain because roses have thorns or you can rejoice because thorns have roses."

First Lady Supertonic

I know what you're saying Racheal and totally understand. signy and I have too much Romany in us to put down any permanent roots.

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Janet

I think Rachel's own website is still coming, P. The one that you're talking about is Wincham, which is the umbrella company. For what it's worth, I agree that their approach is too frightening, and such a hard sell would make me doubtful about the whole product.

This would be a shame however, because what is being addressed here is a real problem. I'm doing some text for my own website to deal with the issue, and will be referring any enquiries to Rachel. I think her own dedicated website will have a different approach to that of Wincham, even though it will agree in essential detail.

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Rachael

Well I hope you hang around here for a good long while!

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First Lady Supertonic

What a lovely thing to say, thank you. Yes we will, we have no plans to leave Tenerife but we may move about a bit

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goldenmaniac

Yes but the inheritance tax on the percieved benefit of the remainder of the uso fructo (ie the age at which the person dies) is a lot less for the children to pay. And the inheritance tax is not a problem to the surviving spouse - the main bone of contention I think.

Presumeably the next generation sets up the same thing.

What I really meant were the pros and cons of the two Initial outlays and then with the company system the continued annual outlay for presentation of company accounts etc. I guess the financial logic is on their website I'll have to have a closer look when I get a chance.

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Briz

It is common to launch projects without the infrastructure being in place but Wincham's web site is a problem for me.

I would like some information regarding a recent (last 18 months) death with the Company owning the property and None Domicile children inheriting.

Are there any examples.

Rachael

I am not sure that I understand what you are asking here GM. If a parent dies then no ISD will be owed by anyone because they didn't own the property. If a child dies then whoever their beneficiaries are will be liable for tax. I don't see where the age of the person who dies comes into it. Are you referring to the age allowance children under 21 get against ISD when they inherit?

The costs of the two ways of mitigating tax can be compared by contrasting the 1% transfer tax, the fee for the provision of the service and the ongoing annual costs against the 6.5% transfer tax payable when the property is transferred into the names of the children and the cost of the usufruct itself. The initial cost of the usufruct way will be more (considerably more in some cases) but the annual fees will be less.

The main problems of the usufruct to my mind are that the ISD problem is only ever being delayed unless the property is sold, and that if a child who owns the property dies you have not negated this tax at all.

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Rachael

The Wincham site will not be to everyone's taste, but what it does do is provide free information taken directly from the relevant tax offices. Take a look at the personnel and research them; read the Spanish and UK professional opinions. I think that one of the reasons the information is presented that way is that so many people have no idea of the potential enormity of the costs involved here. I would much rather be alarmed by facts but then be able to take steps to address the problem than be unaware and have to leave my home if my spouse died, or have my beneficiaries pay tens or hundreds of thousands to the Hacienda.

Once somebody has registered with the system (in other words applied for the free personal illustration) and we know who they are, we would be happy to approach some newly bereaved clients and ask them if they would be willing to talk to somebody who was considering shielding their property this way. Of course whether or not they agree to share contact details could not be guaranteed.

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"You can complain because roses have thorns or you can rejoice because thorns have roses."