I have a property in Spain bought for 260k euro – worth less now.Jointly owned by myself and my wife. We have Spanish wills leaving our half share to each other.We have 4 adult children. Would myself and my wife minimise our IHT if we both included our children in our Spanish wills ?
Answering to your query, let me confirm you that you are right. As there is a determinate amount of minimum exempted from each of your inheritors from 16.000 EUR approx., (being mainly sons, daughters and spouses), IHT will be reduced as much as you divided your assets between these kind of inheritors.
CASE A.- 1 sole inheritor: your wife (I understand not Spanish resident) Value of the property: 260 K.
1 inheritor reduces 16.000 EUR the tax base, so, the final taxable amount would be 244.000 EUR.
Approximate IHT to pay: 42.500 EUR approx.
CASE B.- 5 inheritors (wife +4 children, all of them not Spanish residents) Value of the property 260 K.
Each inheritor receives 1/5 from 260 K, being 52.000 EUR. Each of them reduces this amount with 16.000 EUR. So, the taxable base will be of 36.000 EUR.
Approximate IHT to pay: Each inheritor should pay something near 3.300 EUR. As they are 5, then, they would be paying finally 16.500 EUR.
There will be then a reduction of 26.000 EUR if the property is divided between 5 related inheritors.
So, yes, Spanish IHT can be reduced if you include in your Wills your sons, to get a part of the inheritance in conjunction with your wife.