Two deaths, two estates: why the order matters (and so does the tax)

This situation reaches me very often: one parent dies, the family leaves the inheritance 'for later' because the other parent is still living in the property on the Costa Blanca, and years later the second parent dies too. Then the children come to see me convinced they have 'an inheritance' to deal with. And I have to explain something they almost never expect: there are TWO estates, not one.

This is not a trivial technicality. It determines who inherits what, which law applies to each succession and — this is the part that hurts most — how many times Spanish Inheritance Tax (Impuesto de Sucesiones) is paid. Let me walk you through it step by step, focusing on what really affects a foreign family with a property in Spain.

Why there are two estates and not one

Each death opens its own succession. When the first parent dies, their assets pass to their heirs at that moment. When, years later, the second parent dies, an entirely separate succession opens over whatever that second parent held in their own estate. These are two events separated in time, with two sets of assets that may not coincide and, often, heirs who receive different things in each one.

The figure that causes most confusion is the surviving spouse. In many estates, the widow or widower does not keep full ownership of the home but a usufructo (life interest): the right to use and enjoy the property (to live in it, to let it) for life, while the children receive ownership 'emptied' of that enjoyment — what we call nuda propiedad (bare ownership). In practice the home is split into two rights over the same thing.

When the surviving spouse later dies, that life interest is extinguished and the children come to hold full ownership: this is known as consolidación del dominio (consolidation of title). Here it pays to be cautious, because the tax treatment of that consolidation follows its own rules, which depend on how the life interest was valued at the time; it is exactly the kind of calculation that should be confirmed case by case before filing anything. The key point to keep: the order and timing of each death change the outcome.

Which law governs each succession

For a foreign family the first question is: does Spanish law apply, or the law of my own country? That is decided by the European Succession Regulation (Regulation EU 650/2012). Its general rule is that each succession is governed by the law of the country where the deceased had their habitual residence at the time of death (Art. 21). If your parents lived in Germany, France or the Netherlands, each estate will usually be governed by the law of that country, even though the property is in Spain.

And because there are two deaths, this analysis is done twice, once for each succession. It is not automatic that both will be governed by the same law: if the surviving parent's habitual residence changed between one death and the other, the law applicable to each estate may differ. That is why the order of the deaths is not a detail: it sets the legal map for the whole matter.

The tax: two accruals, not one

Here is the point that surprises people most. Spanish Inheritance Tax accrues on the day of the deceased's death (Art. 24 of Ley 29/1987). Two deaths at different times mean two independent accruals: two taxable events and therefore two tax assessments. The first parent's estate is taxed under the rules and values of its date; the second parent's, under those of its own.

If the heirs do not reside in Spain, they are taxed by obligación real (limited liability): they pay Spanish Inheritance Tax on assets located in Spanish territory, such as a property on the Costa Blanca (Art. 7 of Ley 29/1987). Living abroad does not exempt you from the Spanish tax on that home; it simply determines which assets fall within the tax base.

The Valencia relief that changes the outcome

The good news is that the Valencia region (Comunitat Valenciana) has one of the most generous reliefs in Spain. For the closest relatives — spouse, children, parents (the so-called groups I and II) — the Inheritance Tax liability is reduced by 99% (Ley 6/2023, of 22 November). In other words, of every 100 euros of tax that would be due, 99 are forgiven. This applies to each of the two estates, provided the relationship falls within those groups.

If the heir is a more distant relative — siblings, uncles, aunts, nephews, nieces (the so-called group III) — the position is different and worth being clear about: the relief is 25% in 2026, rising to 50% in 2027 (Ley 5/2025). It is not the 99% of the close groups. So in a family with crossed successions, correctly identifying the relationship in each estate is decisive if you want to avoid surprises.

And can a non-resident take advantage of these regional reliefs? Yes. For years the Spanish tax authority denied them to those living abroad, until the Court of Justice of the European Union declared this contrary to EU law in its judgment of 3 September 2014 (case C-127/12). After that judgment and the subsequent reform of the law, non-residents can apply the relevant regional rules — for a Valencia property, those of the Comunitat Valenciana — on the same terms as a resident. This is one of the most important advantages for foreign families, and often the one that saves the most tax.

If you are facing a situation like this — two deaths, a home in Spain and the feeling of not knowing where to start — write to me before filing anything. I order both successions, determine the law applicable to each, calculate the tax with the relief you are entitled to and coordinate with your country so you do not have to travel. A badly handled inheritance is paid for dearly twice; handled well, it is resolved calmly.