American Nationals Inheriting in Spain: Probate, FBAR and the Spain-US Estate Tax Treaty
For an American family inheriting a Spanish property, bank account or business interest, the procedural complexity is doubled. Spain has its own six-month inheritance tax deadline, its own notarial deed of acceptance, and its own forced-heir rules. The United States has probate in the state of the deceased’s domicile, federal estate tax for estates above the lifetime exemption, the FBAR reporting requirement for any foreign account briefly held by the heir, and Form 3520 reporting for the receipt of a foreign inheritance over the threshold. The two systems run in parallel but on different timetables, and the heirs are responsible for synchronising them. This article explains how the Spanish file is built for an American family, the role of the Spain-US estate tax treaty (which is narrower than many heirs expect), how the choice-of-law clause in a Spanish will protects testators with US connections, and the FBAR and Form 3520 obligations that arise on the US side. We also cover the practical points for heirs in New York, Miami, Los Angeles and Chicago who need to settle a Spanish inheritance without travelling, with the help of a dedicated inheritance lawyer in Spain.
The two parallel systems: Spanish and US
A Spanish inheritance for an American family runs simultaneously in two jurisdictions. In Spain, the heirs sign a notarial deed of acceptance, file inheritance tax within six months, and register the property at the Land Registry. In the United States, an executor opens probate in the state of the deceased’s domicile, the executor administers the estate, and the executor files federal Form 706 if the gross estate (worldwide) exceeds the federal estate-tax exemption. The two procedures are independent: neither court relies on the other; neither tax authority shares its file with the other; neither set of deadlines defers to the other.
The practical problem for the heirs is that US probate routinely takes between six and eighteen months, while the Spanish file must be completed in six months from the date of death. The Spanish procedure cannot wait for US probate. The solution, used in every file we handle, is to decouple the two procedures: build the Spanish file directly from the death certificate, the Spanish or US will (apostilled and translated), and the heirs’ identification documents, and run it on the Spanish timetable, regardless of where US probate stands.
The Spain-US estate tax treaty: what it does and what it does not
The 1990 Spain-US Convention on the Avoidance of Double Taxation covers income tax in detail but is silent on estate, inheritance and gift tax. There is no bilateral estate tax treaty between Spain and the United States. The closest provision is article 25 (non-discrimination) of the income tax convention, which has limited bearing on inheritance. The practical consequence is that the heirs cannot invoke a treaty to allocate taxing rights between Spain and the US; each country applies its own internal rules, and double taxation is mitigated only by the unilateral credit mechanisms in each system. The detailed treatment of US-Spain succession files is covered in our guide on American nationals inheriting in Spain.
The Spanish unilateral credit (article 23 of the Spanish Inheritance Tax Act) allows the Spanish-resident heir to credit US estate tax paid on Spanish-situs assets against Spanish inheritance tax due on the same assets. The US unilateral credit (Internal Revenue Code section 2014) allows a US executor to credit foreign estate tax against US estate tax in defined circumstances. The two systems do not match exactly, and the practical risk of unrelieved double taxation is real for estates above the US federal exemption. For estates below the federal exemption (currently approximately $13.6 million per individual), the US side imposes no estate tax, and the Spanish-side tax is the only inheritance tax exposure.
Choice of law in a Spanish will for an American testator
Spain applies EU Regulation 650/2012 even to non-EU nationals. An American national resident in Spain can therefore make a Spanish will choosing the law of any state of which they are a national. The choice can be of US federal law (in practice, there is no US federal succession law, so the choice is of the law of a specific state — typically the state of the testator’s domicile, such as New York or California). The choice is given full effect in Spain: Spanish forced-heir rules do not apply, and the testator’s wishes are respected as drafted, subject only to the local law of forced shares in the chosen state (which, for most US states, is much more permissive than Spanish legítima).
For an American national resident in Spain who has not made a Spanish will, the default rule applies: the law of habitual residence governs, which is Spanish law, with its two-thirds legítima for descendants. Many American expatriates living in Marbella, Mallorca or Madrid are unaware that their existing US will is overridden in Spain by these forced-heir rules unless a choice clause has been added. The cost of adding the clause — a single notarial appointment in Spain — is modest, and the consequences of not adding it can be substantial.
FBAR and Form 8938 obligations for the US heir
A US person who inherits a foreign bank account becomes the owner of that account and is subject to the US foreign-account reporting regime. FBAR (FinCEN Form 114) must be filed annually with the US Treasury for any year in which the aggregate value of all the heir’s foreign accounts exceeds $10,000 at any time during the year. Form 8938 (Statement of Specified Foreign Financial Assets) is filed with the heir’s US tax return when the value of foreign assets exceeds the relevant thresholds — $50,000 single/end of year for US residents, higher for joint filers and for taxpayers living abroad.
The reporting is informational, not tax-generating, but failure to file carries severe penalties (up to $10,000 per non-wilful violation, up to $100,000 or 50% of the account balance per wilful violation). The simple rule is: if you have inherited a Spanish bank account, file FBAR for the year of inheritance and every subsequent year you continue to hold it, and file Form 8938 for any year in which the threshold is exceeded. The heir’s US tax preparer must be informed of the inheritance in good time to include the new account in the year’s reporting.
Form 3520 and the receipt of a foreign inheritance
Form 3520 (Annual Return To Report Transactions With Foreign Trusts and Receipt of Certain Foreign Gifts) must be filed by any US person who receives more than $100,000 in a calendar year as a gift or inheritance from a non-US person. The form is informational: it does not generate any US tax. The threshold is per calendar year per recipient. An heir receiving $200,000 from a Spanish parent in 2025 must file Form 3520; an heir receiving $80,000 the same year is not required to file. The form is filed separately from the heir’s annual tax return and has its own April 15 deadline (extendable to October 15 with the heir’s personal extension).
Failure to file Form 3520 on time carries a penalty of 5% of the amount of the inheritance per month, up to 25% of the total. For a $500,000 inheritance, the maximum penalty is $125,000. The penalty is occasionally abated for reasonable cause, but the safer course is always to file on time. The US compliance side of a Spanish inheritance is therefore not an afterthought — it is a critical part of the file, and the heir’s US accountant should be involved from the start. The interaction of US and Spanish reporting is covered in our guide on FBAR and Spanish inheritance for US heirs.
US probate and its (limited) relevance to the Spanish file
US probate has no direct procedural role in the Spanish file. The Spanish notary does not require US probate documents to accept the inheritance; the Spanish inheritance tax authority does not require US probate to file the tax return; the Spanish Land Registry does not require US probate to register property in the heirs’ names. The Spanish file is built from the death certificate, the will (Spanish or US), the certificate of last will from the Spanish registry, and the heirs’ identification. US probate runs in parallel and is needed for the US assets, but it is not needed for the Spanish assets.
The exception is when the deceased made a US will and the heirs need to prove that the will is valid. In that case, US probate (or, more efficiently, a US grant of letters testamentary issued by the state probate court) is helpful to confirm the will’s validity. The grant can be apostilled and translated into Spanish and presented to the Spanish notary as evidence. But this is a convenience, not a requirement, and the Spanish notary can also accept the will directly if it is properly apostilled and translated and complies with the formalities of US state law.
The mechanics for an American heir not travelling to Spain
The standard remote procedure for an American heir is identical to the British procedure. The heir signs a Spanish power of attorney before a notary public in their home state, the document is apostilled by the relevant US state Secretary of State, and the apostilled power is sent to the Spanish lawyer. With the power, the lawyer carries out all the Spanish steps without the heir needing to travel: NIE application, asset location, deed of acceptance, inheritance tax filing, and property registration. The heir’s only physical involvement is the notarial signature on the power.
The US heir must also obtain a Spanish NIE before the deed of acceptance is signed. The NIE can be requested at the Spanish consulate nearest to the heir’s home (New York, Washington, Los Angeles, Miami, Chicago, Houston, San Francisco, Boston) or through the Spanish lawyer under the power of attorney. Consular appointments are often the bottleneck, and the lawyer-route through Spain is usually faster — typically three to four weeks from instruction.
Heirs in different US cities and their typical issues
Heirs in New York and the New York metropolitan area have ready access to the Spanish consulate in Manhattan and to a strong network of New York-based notaries. The main issue is appointment availability at the consulate, which can be eight to twelve weeks. For heirs willing to use a local notary and apostille route, the New York Department of State issues apostilles relatively quickly. New York-resident heirs of Spanish estates face the additional complication of New York state estate tax (separate from federal estate tax) if the deceased had a US presence.
Heirs in Miami often have closer family ties to Spanish-speaking estates and may inherit from Spanish nationals who had connections to Florida. The Spanish consulate in Miami covers the Southeast US and Caribbean and is often more accessible than the New York consulate. Florida does not impose a state estate tax. Heirs in Los Angeles, Chicago and other major cities have similar issues with their respective consulates. The city-specific issues are covered in our country and city pages, including New York heirs, Miami heirs and Los Angeles heirs.
Currency exchange and timing of asset transfer
Spanish inheritance proceeds are usually paid in euros from the Spanish bank account into a US bank account in dollars. The exchange rate at the date of transfer determines the dollar value received by the heir, which can differ substantially from the euro value declared in the Spanish inheritance tax return six to twelve months earlier. The exchange-rate fluctuation is not normally a tax event in itself (the heir’s US basis in the inherited cash is the dollar value on the date of inheritance, not the date of transfer), but the heir should be aware that the dollars received may differ from the dollar equivalent of the declared euro inheritance.
For inherited property that is later sold, the rules are more complex. The heir’s US basis in the property is its fair market value on the date of the decedent’s death, converted into dollars at the exchange rate on that date. Subsequent appreciation in dollar terms is a US capital gain on sale. Subsequent depreciation in dollar terms is a US capital loss. The Spanish-side capital gains tax (calculated in euros) and the US-side capital gains tax (calculated in dollars) do not match. Each must be calculated separately, with the unilateral foreign tax credit on the US side mitigating but not eliminating double taxation.
Action steps for an American family in the first month
First, instruct a Spanish lawyer and a US tax adviser experienced in international inheritances. Second, obtain the death certificate (Spanish or US) and arrange for apostille and sworn translation. Third, search for any Spanish will at the Registro Central de Últimas Voluntades. Fourth, prepare the Spanish power of attorney and arrange for each heir to sign it before a US notary, followed by apostille. Fifth, request the heirs’ NIE numbers in parallel. Sixth, identify the Spanish assets (Land Registry, bank records, vehicle registry, insurance registry). With these six tracks running in parallel, the Spanish file can be completed within the six-month deadline and the US compliance can be coordinated. To start a file, contact our inheritance team.
For US heirs, the most important early decision is the appointment of qualified advisers on both sides — a Spanish lawyer for the Spanish file and a US accountant for the FBAR and Form 3520 reporting. The Spanish lawyer cannot advise on US tax compliance; the US accountant cannot advise on Spanish notarial procedure. Both are required, and both should be engaged at the same time. The cost of the dual advisory team is a small fraction of the value of a typical Spanish estate and prevents almost all the common errors.