Inheritance Pact - Jesús Benavides Notary Office
Inheritance and donations

Inheritance pact

Step 1

What is a succession pact?

A succession pact is the notarial document by means of which a person decides to organize his inheritance during his lifetime, allows, on the one hand, and with the same freedom and amplitude as would be done in a will, to institute heirs and, on the other hand, to give them certain assets at the time of the execution of the pact and to allow the remaining assets to be acquired at the time of death. Therefore, the succession covenant should be understood simply as an alternative to a will/inheritance or a gift.

Step 3

How much does it cost to execute a succession agreement before a notary public?

See indicative budget - Real estateSee indicative budget - Money, vehicle or other

This is a merely informative and non-binding estimate. It is calculated on the basis of two criteria: 1) our knowledge of the Notarial Tariff and 2) our daily experience in the preparation of this type of notarial document. (Royal Decree 1426/1989, dated November 17, 1989). and 2) our daily experience in the preparation of this type of notarial document. However, any variation (upward or downward) will be duly justified at the time of issuing the final invoice for the notarial service rendered.

Step 4

More frequently asked questions

What does a succession agreement consist of?

Traditionally, when most people think of the way in which their succession can be ordered (from the point of view of the deceased) or become heirs or, as the case may be, legatees (from the point of view of the beneficiaries of said inheritance), they resort quasi instinctively either to the figures of the will or, alternatively, in the absence of a will, to the declaration of intestate heirs.

This general conception of most citizens is corroborated by what is announced in a generic way in article 658 of the Civil Code, by virtue of which succession is granted by the will of man manifested in a will (which is called testamentary) and, in the absence thereof, by disposition of the law (which is called legitimate or intestate).

Thus, when a person dies, in order to determine the manner in which his inheritance will be distributed, it will only be necessary to refer to the will that he may have executed or, in the absence thereof, to the legal rules established for intestate succession in order to determine, by means of the corresponding act of declaration of intestate heirs, which persons will be the heirs of the deceased.

The taxativity of the aforementioned precept is also reinforced by the provisions of Article 1.271.2 of the Civil Code, which establishes that no other contracts may, however, be entered into regarding the future inheritance than those whose purpose is to carry out the division of an estate and other partitioning dispositions between living persons. Thus, in the scope of the common civil law, it is not allowed to enter into contracts whose object is the inheritance, so that it is not possible to carry out business in which it is a question of disposing or trading with the inheritance rights of a person.

This generic prohibition is nevertheless qualified by certain specific exceptions that can be found in the Civil Code, as for example in its articles 826 and 827, related to the improvement, which establish respectively that:

  • The promise to improve or not to improve, made in public deed in marriage contracts, shall be valid.
  • The improvement, even if it has been verified with delivery of goods, will be revocable, unless it has been made by marriage contracts or by onerous contract celebrated with a third party.

Or in its article 1.341, which establishes that future spouses may donate to each other before marriage, in capitulations, future assets, only in case of death.

This general prohibition of the common civil law (except for the few exceptions mentioned above), nevertheless collides with the provisions on this matter in certain foral or autonomous legal systems, since the civil law of certain autonomous communities does allow the execution of contracts whose object is the inheritance rights of one or even several persons, which will be called inheritance agreements.

One of these foral civil laws that allows the existence of succession agreements is undoubtedly the Catalan civil law, which, in its article 411-3 of the Civil Code of Catalonia, establishes that the foundations of the succession vocation are the inheritance (or succession agreement of institution of heir), the will and what is established by law.

Therefore, in the following, we will try to describe the main characteristics of this institution of inheritance law, and given the location of this notary office, focusing on the regulations of the civil law of Catalonia, whose specific regulation can be found in Title III of Book IV of Inheritance of the Civil Code of Catalonia, articles 431-1 to 432-5.

What is the purpose of a succession agreement?

In accordance with the Civil Code of Catalonia, by means of a succession agreement, two or more persons may agree on the succession by death of any of them, by means of the institution of one or more heirs and the realization of attributions in a particular capacity.

Thus, by means of a succession agreement, two or more persons may enter into a contract whose object is the succession of both or any of them, being able to name in such contract heirs or grant particular attributions in favor of the persons they wish (similar to legacies), by virtue of which the beneficiary of such attribution will be assigned the ownership of a specific property or right of those contained in the estate of the deceased. 

These succession agreements may establish conditions in favor of the grantors, even reciprocally, or in favor of third parties, which allows two or more persons to order their succession without having to resort to the institution of the will or to abide by the rules of intestate succession, determining which persons and in what way will become owners of their estate (i.e., of all their assets, rights and obligations) upon their death.

In practice, the figure of the succession agreement (through mutual and preventive inheritance) opens the door to grant a sort of joint will between spouses.

Likewise, it is often used to organize the succession of family businesses, since among all the members of the family owning the economic activity, the succession of the owners of the company can be agreed upon in a global and joint manner, determining the ownership of the shares or productive assets of the company, and even imposing burdens or obligations on the heirs(such as, for example, determining which member of the family should hold the administration of the company, demanding the indivisibility or alienation of the company, ensuring a certain level of income to relatives of the pre-deceased partner, etc.). ).

This instrument can also be used by extended families of high economic capacity who consider it necessary to distribute the family assets in a joint manner.

Who can grant a succession agreement?

Undoubtedly, the first issue necessary for a succession agreement to be entered into is that all the grantors must be of Catalan citizenship, as this will logically be an indispensable condition for the application of the provisions of the autonomous community regulations on the matter.

Said these, in accordance with the Civil Code of Catalonia, succession agreements can be granted only with the following persons:

  1. The spouse or future spouse.
  2. The person with whom you live in a stable relationship.
  3. Relatives in direct line without limitation of degree, or in collateral line within the fourth degree, in both cases both by consanguinity and affinity.
  4. Relatives by blood in direct or collateral line, within the second degree, of the other spouse or cohabitant.

Thus, as can be seen, a succession agreement can only be granted by persons who are related to each other to the degree required by the law just described. 

However, the succession agreements may also involve third parties not included in this family circle, since in accordance with the Catalan regulations, in the succession agreements it is possible to make inheritances or particular attributions of assets or rights in favor of third parties not included in this family circle of possible grantors, taking into account however the following particularities:

  • In the first place, these third parties in favor of whom the inheritance or particular attribution has been made do not acquire any rights until the moment of the death of the deceased.
  • Provisions in favor of third parties become ineffective if the favored party predeceases the deceased, unless the succession agreement provides otherwise (i.e., unless otherwise provided, the rights of the favored third parties are not transmitted to their heirs in the event of the predecease of the deceased).

What capacity is required to be able to grant a succession agreement?

To be able to grant a succession agreement it is necessary to be of legal age (which implies being eighteen years old) and also to have full capacity to act, that is to say, to be in full exercise of his natural capacity to understand and want his acts and the consequences of these.

However, it is necessary to specify that with respect to the grantors who have the status of simple favored third parties, if no burden is imposed on them, they may consent to the succession agreement to the extent of their natural capacity, through their legal representatives or with the assistance of a guardian.

What is the purpose of the succession agreement?

As already indicated in the preceding questions, by means of the succession agreement two or more persons can dispose of their succession by death of any one of them, through the institution of one or more heirs and the making of attributions in a particular capacity.

In this sense, the Civil Code of Catalonia establishes that in the succession agreement the succession can be ordered with the same amplitude as the will, so that the grantors can make particular inheritances and attributions, even of universal usufruct. Likewise:

  • The provisions made in the covenant, whether in favor of the grantors or third parties, may be subject to conditions, substitutions, trusts or reversions. 
  • Executors, administrators and accountants may also be appointed to distribute the inheritance among the named heirs.

Likewise, it is necessary to indicate that it is also possible to impose burdens on the beneficiaries, which must be expressly stated in the agreement, as well as to express in the succession agreement the purpose to be achieved with the grant, if it is of a determining nature.

By way of illustration, the aforementioned provision goes on to establish that the burdens may consist of, among others, the care and attention of one of the grantors or of third parties, and the purpose, also among others, in the maintenance and continuity of a family business or in the undivided transfer of a professional establishment.

See more frequently asked questions

What are the main characteristics of the inheritances made in a succession agreement?

As has been indicated, through the succession agreement it is possible, as the most relevant matter, to make inheritances, by virtue of which the person or persons instituted are conferred the quality of universal successors of the heir, with irrevocable character, being in addition the quality of heir conferred in inheritance inalienable and unattachable. Thus, by means of the inheritance constituted in succession pact, the grantors of the same can name their heirs in the same way as they would do it in a will, but with the specific particularities that have already been exposed.

Likewise, inheritances may present the following specific typologies that differentiate them:

  • Inheritances may be simple when only the person being inherited is attributed the quality of heir (which does not prevent the present donation of specific assets in his favor), while they will be cumulative when in addition to conferring the quality of heir, all the present assets of the heir are attributed to the person being inherited, which in practice opens the door to the possibility that through a succession agreement a person may transmit all his assets that he currently owns, without this transmission being deferred to the time of his death, which will have its tax consequences as will be explained later on.
  • Also, as already noted in other sections, the inheritance will be considered mutual if it contains a reciprocal institution of heirs between the grantors in favor of the one who survives (widely used in practice between spouses). Likewise, in this type of mutual inheritance, it can be agreed that when the survivor dies (i.e. when the last of the grantors who subscribed the agreement dies), all the inherited assets will pass to another person (in the example of marriage, in practice, when both parties die, they usually designate their children as heirs).  
  • In addition, the inheritance may also be agreed upon on a preventive basis, which implies that it may be unilaterally revoked by means of a will or subsequent inheritance agreement.

In view of the main variants that the inheritances made in inheritance agreements may present, it is necessary to continue analyzing this figure and other particularities that it presents. Thus:

First of all, it is necessary to note that, in accordance with the Catalan civil law, the heir may reserve assets, amounts of money or the part of his estate that he considers, to dispose of them freely in a donation, codicil, testamentary memorial or subsequent succession agreement. Likewise, the heir will be able to assign to the payment of the corresponding legitimate rights the goods or money that he considers opportune, taking into account, however, that such assignment does not grant to the legitimaries any right on it during the life of the heir.

Another issue of vital importance that is undoubtedly necessary to take into account is that when a valid succession agreement containing an inheritance is granted, it revokes the will, the codicil, the testamentary memory and the donation by cause of death prior to its granting, although they are compatible with it (Thus, if an heir is instituted in a succession agreement, its grantors must take into account that all the dispositions mortis causa related to their inheritance rights, made previously, will become ineffective). However, those made subsequently, if the inheritance is preventive or had been allowed in the same one by means of a reservation of disposition (figure that has just been treated), if they will be effective.

As regards the transferability of the quality of heir, the succession agreement, being an agreement between its grantors, is based on the principle of non-transferability, so that, if the heir instituted in the succession agreement predeceases the deceased, the inheritance becomes ineffective, unless otherwise agreed in this respect.

However, if there is no provision to the contrary, if the heir instituted in inheritance is a descendant of the deceased and predeceases him leaving called heirs to his inheritance, he transmits to them his quality of contractual heir, taking into account that, if there are several children or descendants heirs of the heir predeceased abintestato, the heir may choose one, in irrevocable public deed or in testament, as substitute of the inheritance.

<ejemplo>A modo de ejemplo, para que se comprenda mejor esta disposición, la normativa catalana establece que, si no se dice lo contrario, si en un pacto sucesorio un abuelo llamado Jaime nombra heredero a su hijo Juan (el cual a su vez tiene 2 hijas llamadas María y Ana, es decir, 2 nietas de Jaime), y Juan fallece antes que su padre Jaime, María y Ana devienen herederas contractuales de su abuelo Jaime. Y, asimismo, si Juan hubiere fallecido sin testamento, su abuelo Jaime podrá, mediante una escritura pública posterior o un testamento, designar como su heredera a cualquiera de ellas.<ejemplo>

Finally, it is necessary to indicate that, with regard to the opening of the succession, it is necessary to take into account that once the heir has died, the heirs instituted in the succession agreement cannot repudiate the inheritance (unless the heir is a person who did not grant the agreement), but they can accept it with benefit of inventory.

What are the formal requirements for succession agreements?

In accordance with the provisions of the Civil Code of Catalonia, in order for succession agreements to be valid, they must be granted in a public deed, which may also contain family protocol stipulations and other non-succession stipulations, but not last will provisions.

Therefore, in order to execute a succession agreement, it will be necessary to go to a Notary Public to execute the corresponding deed, which must comply with the legal requirements established by the Catalan Law and the notarial regulations, as well as include all the stipulations and covenants that the grantors wish to include.

In this regard, it is also necessary to state that:

  1. In the succession agreements granted with a preventive character (which allows its later revocation unilaterally by any of the grantors), or that contain a reservation to dispose or give, the time of the granting shall be recorded in the deed in question.
  2. The grantors of a succession pact who are not the beneficiaries of the future succession may delegate in a special power of attorney the appearance at the act of formalization of the pact, as long as the public deed of power of attorney reflects the full content of their will.

Are inheritance agreements subject to publicity?

With regard to the publicity of the succession agreements, it is necessary to indicate that they must be recorded in the Register of Last Will and Testament Acts, in the form, term and scope established by the regulation that governs it (see Annex II of the Decree of June 2, 1944, which definitively approves the Regulation of the organization and regime of the Notary's Office). 

To this end, the Notary Public who authorizes the deed by virtue of which the succession agreement is constituted must make the pertinent communication. Likewise, the existence of the succession agreements may enjoy the following registry publicity:

  • The inheritances and particular attributions ordered in the succession agreements may be recorded in the Land Registry, during the lifetime of the deceased, by means of a note in the margin of the registration of the real estate in question.
  • If the inheritances or particular attributions include or have as object nominative shares or social participations, they can be recorded, during the life of the deceased, in the respective entries of the register book of nominative shares or of the register book of partners.
  • Finally, if the purpose of the succession agreement is the maintenance and continuity of a family business, the existence of the agreement may be recorded in the Commercial Registry to the extent and in the manner established by law for the publicity of family protocols, without prejudice to the inclusion of the statutory clauses referring to the same.

Can inheritance agreements be modified or revoked?

One of the issues that undoubtedly differentiates the succession agreement from the will is the possibility of modifying it, since unlike the former, in which the grantor can unilaterally modify or revoke it at any time, succession agreements can only be modified by agreement of all the grantors.

This is clearly and exhaustively established in Article 431-12 of the Civil Code of Catalonia, which states that the succession agreement and the provisions contained therein may be modified and resolved by agreement of the grantors formalized in a public deed.

Having said this, as particular issues applicable to its modification, it is necessary to further specify:

  • That the power to modify and terminate succession agreements by mutual consent is extinguished after the death of any of the grantors (so that it can no longer be modified thereafter).
  • Notwithstanding the above, if more than two persons concurred in the granting of the succession agreement, only the consent of those affected by the modification or termination is required (so that, eventually, the concurrence of all the initial grantors will not be strictly necessary).
  • In order to consent to the acts of modification or termination of the succession agreement, one must have full capacity to act (i.e., be in full exercise of cognitive and volitional mental faculties), except in the case of a modification that favors a minor or incapable grantor, in which case the grantor himself may consent to the modification to the extent of his natural capacity, through his legal representatives or with the assistance of a guardian.

Notwithstanding the aforementioned general rule, there are a number of circumstances in which unilateral revocation by any of the grantors is possible. Such circumstances are as follows:

  1. When there is a cause expressly agreed upon by the grantors that allows it.
  2. For a breach of the burdens imposed on the party favored by the covenant.
  3. Due to the impossibility of fulfilling the purpose for which the agreement or any of its provisions were made (for example, when the purpose of the succession agreement was to regulate the succession of a family business and the latter has already disappeared due to the cessation of its activity).
  4. Due to a substantial, supervening and unforeseeable change in the circumstances that produced its basis.

Likewise, it is possible to unilaterally revoke the succession agreement when any of the causes of unworthiness of succession occur (see in this regard the specific causes expressed in Article 412-3 of the Civil Code of Catalonia, among which, for example, an attempt on the life of the deceased, serious injuries or crimes against the moral integrity of the deceased, among others, stand out).

As regards the manner in which the unilateral revocation power must be exercised, it is necessary to indicate that such revocation will have to be expressed in a public deed and notified to the other parties to the covenant, and the persons affected by the revocation may oppose it in the same authentic form (i.e. by executing the corresponding public deed) within one month from the receipt of the notification (or, if such notification cannot be given, by judicial means within one year from the revocation). In case this opposition does not take place, the agreement or disposition will remain without effect. 

Finally, with regard to marital or cohabitation crises, it is necessary to specify that the nullity of the marriage, the marital separation and divorce, or the extinction of a stable partnership, of any of the grantors does not alter the effectiveness of the succession agreements, unless otherwise agreed in the deed of incorporation of such agreement.

What events determine the nullity of a succession agreement?

With regard to the nullity of succession agreements, it is necessary to point out that the causes of nullity can be differentiated between:

  • Those that we can call formal, such as, for example, inheritance agreements that do not correspond to any of the types established by the Catalan Civil Code, those granted by non-legitimized persons or those that do not comply with the legal requirements of capacity and form.
  • Of those others that we can call material or substantive, such as when the agreement or its stipulations have been granted with deceit, violence or serious intimidation, with error in the person or object or with error in the purpose or motives.

As regards the term for the exercise of the nullity action, it is necessary to indicate that before the opening of the succession agreed in the succession agreement, only the grantors of the agreement will be entitled to exercise it, while subsequently, that is, once the person in question has died and his succession has been opened, all the persons who may benefit from the declaration of nullity will be entitled to exercise the judicial action of nullity, having a term of 4 years to do so as from the death of the deceased.

In any case, it should be borne in mind that the nullity of an agreed provision does not determine the nullity of the other provisions made by the same grantor or by the others, unless they are correspective provisions or it is clear from the context of the agreement that the provision would not have been made without the provision declared null and void.

How are inheritance agreements taxed?

The constitution of a succession agreement and the subsequent designation of inheritance or of particular attribution generate a patrimonial acquisition in favor of the designated person, which can be materialized during the lifetime of the heir or upon his death, as we have already seen throughout the different questions related to this institution.

For tax purposes, in both cases this acquisition of assets will be considered as a gratuitous acquisition mortis causa, which will determine that it will be subject to Inheritance and Gift Tax. This is established in Article 3 of the Regulatory Law of this tax (Law 29/1987, of December 18) stating that the acquisition of assets and rights by inheritance, legacy or any other inheritance title constitutes a taxable event of the same, as well as the interpretation that the General Directorate of Taxes has made of said regulations on the matter (See binding consultation V1521-14 of June 10, 2014).

As regards the taxation of the inheritance agreement for Personal Income Tax, it is necessary to state that in accordance with article 6.4 of its regulatory law (Law 35/2006, of November 28), the income that is subject to Inheritance and Gift Tax will not be subject to Personal Income Tax.

However, from the point of view of the transferor (i.e., the grantor of the agreement), if there is a transfer of assets or rights, this will cause an alteration in the composition of its assets (i.e., a capital gain or loss for the difference between the acquisition value and the transfer value of such assets or rights), which will be subject to taxation for this tax.

How can I grant a succession agreement?

In order to execute a deed of succession agreement, it will only be necessary to contact the notary's office and make an appointment on the day and time most convenient to the grantors. On the agreed date and time, the grantors will simply have to go to the notary's office with the necessary documentation (see section on necessary documentation) to sign the corresponding deed, which will be drafted based on the minimum legal content required and the forecasts and needs of the clients in question.

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