Inheritance tax has become a cause of political conflict in recent years, with a PP in some cases using it as a battering batter against certain left-wing formations and putting the debate on its fairness to the table. “I don’t want to attack those who have money and accumulate a good legacy after a working life,” said Isabel Díaz Ayuso, president of the Community of Madrid, last year. The topic came from afar, especially after the gradual but steady increase in family legacies being renounced over the past decade. The figures reveal that tax cuts do not change this constant. in Galicia, Last year was a record 3,213 resignations, and 872 cases were recorded in the first quarter of this year.The highest data in history for that time period.
Six years ago, Xunta also got into this completely due to tax differences between different autonomous communities. In 2016, Galicia approved a tax exemption for inheritances under 400,000 Euros; this was extended to one million euros in 2020, but limited to heirs on ascending and descending lines, i.e. parents and children, grandparents and grandchildren. or spouses except nieces, uncles and others.
There were no so-called palliative effects on the resignations, and they continued to escalate to the point where they were signed in the community last January, February, and March. 872 discloses refusal to assume assets bequeathed by a relative. Since 2008, resignations have increased every year except for 2020, where it fell from 3,134 in 2019 to 2,631, even though it was the year the COVID-19 pandemic emerged and resulted in a three-month jail term that delayed procedures. Like the ones dealing with legacies in notaries across Spain.
Inheritance debts are the main reason for turning away from property when the deceased testifies in favor of a citizen or has a right arising from a family relationship. These liabilities can refer to collateral or loans received and unpaid, mortgages pending cancellation, or even overdue payments to the treasury.
The reasons that determine the heirs’ renunciation or refusal to inherit are not only the assets taken, but also the debts of the deceased,” he explains. José Maria GrainoDean of the Official College of Notaries of Galicia.
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This is not only the tax burden as a second reason, but also but other costs derived from an assumption Real estate. “Another reason that determines that inheritances are not accepted is that heirs cannot afford inheritance-related expenses such as inheritance tax and council tax on the increase in the value of urban land,” he adds. in the latter case it is known as “surplus value”.
The General Assembly of Notaries associates the increase in rejections in 2021 with the “normalization of notarial activity after the health crisis” caused by the coronavirus and reminds that these are not the majority cases.
For example, last year In Galicia, 3,213 people gave up inheritance, but 26,718 people gave up, which represents a percentage of 12%, similar to those in 2020 and 2019. However, this behavior also shows that tax cuts have no effect on the trend. At the start of this year, those rejections are approaching the unprecedented 900-a-quarter barrier.
There is also an increase in the number of citizens who want to solve the distribution of their property in the event of death by signing a will. Last year, Galician notaries approved 51,677 of these documents, compared to 46,462 in 2020 and 48,587 in the last pre-pandemic exercise.
A shield on personal assets: admission “for the benefit of inventory”
Two years ago, when his sister Estrella passed away, Antonio decided to take over his legacy, but for the benefit of the inventory. He did not trust the possible debts he might incur and doubted that no more assets would arise from his death, so he chose to protect himself and meet any possible obligations he left behind with his sister’s legacy. If this does not cover these debts, he will not respond with his personal assets.
This is one way notaries point to it as a mechanism to avoid rejecting an inheritance, but at the same time not expose themselves to the loss of personal assets.
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“A full and faithful breakdown of all assets of the inheritance must be made in accordance with the formalities and conditions laid down in the Civil Code; This means that the heir is no longer responsible for the debts of the deceased, not with his personal assets, but with the assets of the inheritance and up to the point they reach. They can also request that an inventory be made before accepting or rejecting the inheritance to negotiate on this matter”, says José María Graíño, dean of the Galician Official College of Notaries.
Of course, once the inventory is made, the deceased’s pending payments are valid as long as their inheritance is assumed. If the heir or heirs do not comply with this provision, the phrase “for the benefit of the inventory” will be invalid.