Inheritance agreements: how to pass on wealth during your lifetime in Spain

Most families wait for the inheritance to pass wealth to the next generation. In Spain, though, some territories allow an alternative little known outside the country: to agree the succession during life and transfer assets to the heirs with immediate effect. Used well, it is one of the most efficient planning tools in the Spanish system.

What an inheritance agreement is

An inheritance agreement is a contract by which a person organises their succession during life, with effects that are already present, instead of leaving everything to a will. The common civil law does not allow them, but the civil laws of several territories do: Catalonia, Galicia, the Balearic Islands, the Basque Country, Aragon and Navarre.

The forms vary by territory, but they come down to three ideas:

• Naming an heir by contract, during life.
• Allocating specific assets to a person on account of their future inheritance.
• Delivering an asset now to the beneficiary in anticipation of the succession.

They are always executed in a public deed. To use them, the person must have the civil neighbourhood (vecindad civil) of the relevant territory (in some cases, where the assets are also matters). That should be checked first, especially in families of foreign origin.

The main advantage: no income tax on the gain

When a parent gives a property to a child by an ordinary gift, the parent pays personal income tax on the whole gain built up since they bought it. When the transfer is made by an inheritance agreement, the transferor does not pay tax on that gain, just as in an inheritance. The Supreme Court confirmed this in 2016, and the rule is national: it applies in every territory that allows these agreements.

Property bought for €100,000 that is now worth €1,000,000	Ordinary gift	Inheritance agreement
Parent’s income tax on the €900,000 gain	~€250,000	€0
Tax paid by the child	Gift tax	Inheritance or gift tax, depending on the territory and the form
Condition	None	Keep the asset for 5 years, or until the parent’s death

The tax paid by the recipient depends on the autonomous community, which sets its own rates, reductions and reliefs. In several of them, a transfer to children or a spouse can have a very low cost, especially if it is a family business.

The limits worth knowing

• The asset must be kept. If the beneficiary sells it within five years, or before the transferor’s death, the advantage is lost: they are taxed as if they had bought it at the original value. The Constitutional Court upheld this rule in 2023. The agreement is for assets that are meant to be kept.
• Civil neighbourhood. Without the neighbourhood of the territory that allows the agreement, the figure is not available. A recent change of residence is not always enough.
• Form and drafting. The deed must record the elements of the agreement correctly; otherwise the transfer can be recharacterised as an ordinary gift.
• Do not strip the estate. It is often sensible to reserve a usufruct, or the income from the asset, so the transferor’s standard of living is secure.

Who it suits most

An inheritance agreement is especially useful for:

• property bought many years ago and heavily revalued;
• shares in the family business when succession is being prepared;
• families who want the inheritance settled during life and future disputes avoided.

For cash, or one-off help to children, a gift using the regional reductions is usually simpler. The best plan often combines both.

The international dimension

In families with members or assets in several countries, the inheritance agreement has to fit the European Succession Regulation (which decides which law governs the estate), the tax of each heir’s country of residence, and the applicable treaties. An agreement that is valid and efficient in Spain can have unexpected effects in another country if it is not coordinated.

At Altura we design succession planning as a whole: civil law, personal income tax, inheritance tax, wealth tax, the family business and the international dimension. If you are thinking about succession, let’s talk.

This article is for information only and is not advice. The rules and case law cited are those in force in October 2026; each case needs its own analysis.