Most families do not talk about inheritance until something urgent comes up. By then there is very little room for manoeuvre on tax: whatever needed doing should have been done years earlier. Succession planning is not a morbid subject, and it is not just for large fortunes. It means taking decisions early enough for them to take effect.
These are the main strategies available, their advantages and their limits.
In this article
What estate planning is
It means deciding during your lifetime how your assets will be shared out, so that your wishes are followed, your family does not fall out and no more tax than necessary is paid. It is not only for large estates: a flat, some savings and two children are enough for a good will to avoid many problems.
It should not be confused with a living will, which deals with medical care at the end of life and does not share out any assets.
What you cannot change: the forced share
The Valencia region applies the Spanish Civil Code, which reserves part of the estate for forced heirs:
- Children and descendants: two thirds of the estate. One third is shared equally and the other, the «improvement» third, can go to one or more of them.
- Parents and ascendants, if there are no children: half, or a third if there is a surviving spouse.
- The surviving spouse: if there are children, the life interest (usufruct) in the improvement third.
The rest, the freely disposable third when there are children, can go to whoever you like. A forced heir can only be disinherited on grounds set by law, such as physical abuse or serious insults, and it must be stated in the will. We explain it in the forced share and forced heirs.
The tools
| Tool | What it does | Watch out for |
|---|---|---|
| Open will before a notary | Share out as you wish within the forced share, name who handles things and avoid a declaration of heirs | The latest will revokes earlier ones: review it when your life changes |
| Division made in the will | State which asset goes to whom and, if needed, pay others' forced share in cash so an asset or business is not split | Each heir's forced share must be respected in value |
| Power given to the spouse (fiducia) | Let the surviving spouse decide later how to share among the common children | Must be in the will |
| Lifetime gift | Help now and bring the division forward | Income tax for the donor and local capital gains tax on property |
| Life insurance | Leave money to a specific person outside the division | It is subject to Inheritance Tax; there is a 100% allowance up to €9,195.49 for spouse, parents and children |
| Family business | Pass the business to the family with a 99% allowance on the tax | Conditions on shareholding and management, and keeping it five years |
| Lasting power of attorney | Let someone you trust manage your affairs if one day you cannot | Granted before a notary while you have full capacity |
Succession agreements, which in some Spanish regions allow an inheritance to be brought forward with tax advantages, do not exist under the common Civil Code that applies in the Valencia region.
What it costs in the Valencia region
| Who receives | Inheritance | Gift |
|---|---|---|
| Children, spouse, parents | €100,000 allowance (more for children under 21) and 99% relief | €100,000 allowance per donor over five years and 99% relief with a public deed |
| Grandchildren and grandparents | According to their relationship group | 99% relief with a public deed |
| Siblings, nephews, nieces, uncles and aunts by blood | 25% relief from 1 June 2026 and 50% from 1 June 2027 | |
| The deceased's main home | 95% allowance, up to €150,000 per heir, if kept five years | Does not exist |
The relief on gifts requires a public document, except for gifts of money or a car for private use that, between the same donor and recipient, do not exceed €4,000 counting those of the previous three years, where a document signed through a qualified trust service is enough. If money is given, you also need proof of where it comes from. More detail in Inheritance Tax in Valencia.
Give now or wait
Between parents and children, Inheritance and Gift Tax comes out similar either way. The difference is income tax: whoever gives away a flat or shares that have risen in value pays tax on that gain, while in an inheritance the gain does not arise. There are exceptions, such as people over 65 transferring their main home, or a family business. We compare it with a worked example in giving during your lifetime or inheriting.
The aggregation rules
- Gifts from the same donor to the same recipient within three years are added together to work out the tax rate.
- Gifts made in the four years before death are added to the inheritance to work out the rate.
- What was given to one child counts later when calculating forced shares and dividing among siblings, unless otherwise provided within what the law allows.
When to review your will
- When you marry, divorce or have a child.
- If one of the heirs you named dies.
- If you buy or sell a major asset, or start a business.
- If you move to another region or country.
- When taxes change, as happened in 2026 for siblings and nephews.
Mistakes we see often
- Giving money without a deed or without documenting where it comes from, and losing the relief.
- Giving away a flat that has risen a lot without working out the income tax first.
- A division that ignores the forced share and ends up in court.
- Naming «my heirs» as beneficiaries of an insurance policy without thinking about who will actually receive it.
- Not granting a lasting power of attorney, so the family has to go to court if one day you cannot decide.
At Equus Capital, Laura Expósito, a lawyer registered with the Valencia Bar, goes through with you what you own, who you want to leave it to and how to do it paying no more than necessary. When the time comes, we also handle the inheritance: inheritance services in Valencia.
Frequently asked questions
What is estate planning?
Deciding during your lifetime how your assets will be shared so your wishes are followed, the family does not argue and the right amount of tax is paid. The basic tools are the will, gifts, life insurance and, if there is a business, the family business rules.
Can I leave everything to one child?
Not entirely. Two thirds of the estate is the children's forced share. Of that, one third, the improvement third, can go to just one of them, as well as the freely disposable third.
What rights does a surviving spouse have?
They are a forced heir. If there are children, they are entitled to the life interest in the improvement third. A will can leave them more, from the freely disposable third.
Is it better to give during your lifetime or leave it as an inheritance in the Valencia region?
Between parents and children, Inheritance and Gift Tax comes out similar. Giving away an asset that has risen a lot usually costs more because of the donor's income tax and the local capital gains tax; giving money costs little.
How many years before death do gifts count?
Gifts made in the four years before death are added to the inheritance to work out the tax rate. Between gifts, the aggregation period is three years.
Is life insurance subject to Inheritance Tax?
Yes. For a spouse, parents and children there is a 100% allowance up to €9,195.49 per beneficiary.
What do siblings and nephews pay from 2026?
They have a 25% relief from 1 June 2026 and 50% from 1 June 2027, on inheritances and gifts. Blood relatives only.
How often should I review my will?
Whenever something important changes: marriage, divorce, a child, the death of an heir, a move or a tax reform like the 2026 one.
This content is for information only and is not binding tax advice. Inheritance and income tax rules change often; have your case reviewed by a professional.