Managing the sale of foreign property
Common questions arise when speaking to clients regarding cross-border estates. Beneficiaries are understandably worried concerning the foreign side of an estate; property, bank accounts, vehicles, pieces of art, personal effects).
We spoke to our Spanish partners to find out more about what to expect when dealing with assets in Spain.
Caring for loved ones in the case of diminished capacity
Lasting Powers of Attorneys (LPA) are well known legal documents in the United Kingdom. They are used when a person, the ‘donor’, decides to appoint someone as his/her attorney. This appointment allows the attorney to make decisions on behalf of the individual in the case of diminished mental capacity or mobility. LPAs come with important responsibilities for the attorney, who can end up making difficult decisions about a person’s finances, health and welfare, for example, moving the donor into residential care.
Lasting Power of Attorney in Spain
Under Spanish law equivalent legal documents exist which can be granted by a donor who owns property, bank accounts or other assets in Spain. These are known as “Poder Preventivo”, or ‘Preventive Power of Attorney’.
‘Preventive Power of Attorney’ must be signed before a Public Notary, a public officer constituted by law to serve the public in non-contentious matters, in Spain. The Preventive Power of Attorney will become effective when the donor is declared incapacitated by a Doctor, and it will allow the appointed proxy to deal with the financial affairs of the donor with immediate effect. This means that if the Preventive Power of Attorney considers the sale of assets, for example in a situation where a donor needs the proceeds of the sale for its maintenance and care, the proxy will have the legal authority to do so.
Selling property in a case of diminished mental capacity
A very common situation that we see is that of a UK based owner of a foreign, Spanish, property suffering from a degenerative disease which impairs mental capacity. Selling the holiday home in Spain may well be the only solution to raise funds to pay the costs associated with care in the UK.
Ideally the property is sold before loss of mental capacity, however this is commonly not the case. Once the owner suffers diminished mental capacity, they are no longer able to proceed with a sale or to delegate such a property transaction via power of attorney to a relative or lawyer in Spain.
The importance of making the necessary arrangements whilst the donor has full mental capacity
If a Preventive Power of Attorney is not signed when the donor was in full capacity, then the only option left for the family, to convey the property, would be to enter into a two-level Court proceeding that would ultimately result in a court order allowing the family to deal with the sale.
Needless to say, this is a long, time-consuming and expensive proceeding before Spanish courts which can take up to 2 years, during which, the property is off the market and the Donor’s critical needs may not be catered for.
Every case requires a special examination and a tailored solution. We always recommend to look into the particular case and obtain legal advice from an expert Spanish lawyer.
Frequently Asked Questions …
We can help
Is this scenario familiar to you?
Might you or your loved ones have property in another territory?
Our links with professional partners in foreign countries enable us to work closely both with you and with professionals to ensure your property situation is managed closely.
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