The year 2021 ended with an absolute record both in the number of inheritances processed by the Spaniards and in the number of withdrawals from these transfers. Overall, the year ended with 365,897 inheritance judgments, 22% more than in 2020. Conversely, 55,574 persons who appeared as beneficiaries decided against inheritance, in this case 25% more than in the previous year.
The year 2022 seems to end in the same direction according to the first data compiled by the General Council of Notaries (CGN). There are two good reasons for this, as CGN spokeswoman María Teresa Barea notes. On the one hand, the spillover effect of excessive mortality during the worst of the pandemic. On the other hand, the debts that force many to reject the procedure.
Data for the first half of the year now concluded shows that around 177,200 inheritance cases were processed between January and June, with around 27,200 heirs deciding to refuse their share. According to Barea, the figures for the second semester usually match those of the first, so that the final balance in 2022 is expected to be around 350,000 awards after successor titles and 54,000 exits. These are very similar numbers to 2021 and totally atypical compared to the years before the health crisis.
“There is still an excess of inheritances, which is explained by the number of deaths in 2020 and the delays in processing the estate,” says Barea. In fact, the trend is expected to continue into 2023 and even 2024 “as it is common for heirs to extend the process by two or three years after death”.
The increase in layoffs, on the other hand, is due to other reasons. The most important, emphasizes the CGN spokeswoman, is the existence of debt: “The heir finds that the deceased left more liabilities than assets and therefore decides to reject the surcharge.”
This possibility is much more common, he continues, in times close to economic crises like the one following the outbreak of Covid-19, “when the financial situation of the deceased can be more doubtful”.
The number of resignations from inheritances, Barea explains, shows the number of successors who refuse to transfer them. In other words, since an inheritance can fall to several people, which is very common, the 27,000 resignations registered in the first half of the year do not mean the same number of inheritances rejected, but 27,000 people who choose to discard the transmission due to them.
However, according to Barea, the proportion of quitters recorded year by year is used for trend analysis. From this it can be seen that the share of reluctant heirs is growing slightly every year and reached 15.3% in the first half of this year.
However, fear of possible debt is not the only reason that causes an heir to refuse succession. The other main cause, which Barea says is much less important, is the cost involved in the processing itself. Here, for example, taxes such as inheritance or municipal capital gains on real estate come into play.
These resignations mostly occur with “small liquid inheritances” where, for example, a house is received but no money. According to the spokeswoman, this situation, which is very common, means that many heirs who do not have any liquidity at the time are forced to refuse the succession because they cannot afford the associated procedures.
However, the fiscal quota loses weight when analyzing the percentage of smokers in each community. According to Barea, while the autonomies, where most taxes such as inheritances are reduced, usually have lower numbers, the difference with the rest of the regions “is not so big that the tax aspect plays a primary role”.
For example, the highest bonuses are granted in Madrid, Andalusia or Galicia, where the weight of refusals ranges from 13.2% to 19.7%, a similar range as in the Valencian Community or Catalonia with higher tax rates. Because of this, “the data supports the notion that the most common reason for termination is the existence of debt rather than the fiscal cost,” says Barea.
No liability risk
Notaries are urging heirs to familiarize themselves with the concept of “inventory inspection” as the number of resignations increases, which “can save existing assets from possible debt,” explains Barea.
This formula is intended for those “grey inheritances” where the assets and liabilities to be received are unknown. In this way, the heir reacts to possible debts only with the assets that belong to the estate itself, without risking his previous assets.
However, notaries regret the ignorance of this possibility. In 2021, only 1,300 heirs made use of this number. In the first half of 2022 there were 543 people.