Civil and succession effects of foreign trusts in Spain: heirs, forced heirship and the Land Registry

Foreign trusts raise specific difficulties in international succession cases connected with Spain. They are commonly used in common law jurisdictions, especially for estate planning and wealth structuring, but they do not have a direct equivalent in Spanish civil law.

A trust is a common law institution, sometimes translated approximately into Spanish as fideicomiso, although it is not equivalent to the Spanish sustitución fideicomisaria or to the fiduciary succession mechanisms recognised under Spanish civil law.

The relevant question is not simply whether the trust exists under the foreign law that governs it. The more precise question in Spain is what effects that trust may produce on an estate, on assets located in Spanish territory, on forced heirs protected by the applicable succession law, and on the registration of assets with the Spanish Land Registry.

Spanish case law does not recognise the trust as an autonomous succession title under Spanish law. However, it would also be incorrect to say that every foreign trust is irrelevant or ineffective in Spain merely because it is a foreign institution. Its effectiveness will depend on the nature of the trust, the law applicable to the succession, proof of foreign law, the existence of forced heirship rights, and the correct adaptation of the structure to the Spanish legal system.

This civil and succession analysis complements our study on the taxation of trusts in Spain. From a tax perspective, the Spanish tax authorities tend to apply a transparent approach between the settlor and the beneficiary. From a civil perspective, however, the problem requires a more nuanced answer: a trust should not simply be ignored, but it also cannot be automatically accepted as if it were a will, a legacy, a Spanish fideicommissary substitution, or a Spanish succession institution.

Quick answer

In Spain, a foreign trust does not automatically operate as an autonomous succession title. If it has a mortis causa purpose, it must be analysed under the law applicable to the succession. If a foreign law recognising the trust is invoked, its content, validity, scope and interpretation must be proven. If Spanish law applies, or if foreign law is not adequately proven, the trust does not by itself displace Spanish rules on wills, forced heirship, partition of the estate or registration.

However, not every trust should be treated in the same way. An inter vivos trust created before death may be analysed as a lifetime disposition of assets or as a separate patrimonial structure, without being automatically regarded as ineffective or fraudulent unless fraud, sham, abuse or actual harm to succession rights is proven.

The practical thesis is clear: a foreign trust should not be automatically ignored or automatically accepted in Spain. It must be legally characterised.

Summary table

Basic terms

Settlor

The person who creates the trust or contributes assets to the structure.

Trustee

The person or entity that administers, manages or disposes of the assets under the terms of the trust.

Beneficiary

The person entitled to receive benefits, distributions or rights arising from the trust.

Trust deed

The document creating or regulating the trust, together with any amendments.

1. What a trust is and why it is not equivalent to a Spanish fideicommissary substitution

A trust is a legal relationship characteristic of common law. In general terms, a person —the settlor— places certain assets under the control of a trustee, who must administer, manage or dispose of them for the benefit of one or more beneficiaries or for a specific purpose.

Spanish Supreme Court Judgment 338/2008, of 30 April, refers to the definition contained in the Hague Convention of 1 July 1985 on the Law Applicable to Trusts and on their Recognition: a trust may be created inter vivos or mortis causa; the trust assets constitute a separate fund and do not form part of the trustee's own estate; title to the trust assets may stand in the name of the trustee or of another person on behalf of the trustee; and the trustee has powers and duties to administer, manage or dispose of the assets in accordance with the terms of the trust.

This structure is not directly equivalent to the Spanish sustitución fideicomisaria. Nor does it automatically fit within Spanish concepts such as executorship, mandate, fiduciary arrangements, modal legacies or estate administration. It may perform partially similar functions, but its legal construction is different.

For that reason, when a trust appears in a succession connected with Spain, the right question is not whether it can be literally "translated" into Spanish law. The correct question is what function it performs: succession, fiduciary, patrimonial, administrative, inter vivos or mortis causa.

2. The trust as an institution foreign to Spanish law

Spanish case law and land registry doctrine start from a common premise: the trust is an institution unknown to Spanish domestic law.

Spanish Supreme Court Judgment 338/2008 states that the trust is widely used in common law countries but is unknown to Spanish law, both in substantive law and in private international law. In that case, the Supreme Court did not reject the trust on the basis of an abstract statement alone. Rather, because the trust was mortis causa, the Court held that the relevant conflict-of-law rule was the succession rule; and because the applicable foreign law had not been sufficiently proven, Spanish law was ultimately applied.

The Spanish Directorate-General for Legal Certainty and Public Faith has also stated that the trust has no proper place in the Spanish legal system and that Spanish institutions may cover some of its functions —fiduciary arrangements, mandate, foundations, gifts and modal legacies, executorship or fideicommissary substitutions— but that this does not allow its effects to be automatically transferred into the Spanish system.

The practical consequence is important: under Spanish domestic law, the trust does not by itself replace a will, a legacy, the institution of an heir, a fideicommissary substitution or the partition of an estate.

3. The applicable succession law as the starting point

In an international succession connected with Spain, the civil analysis of the trust should not begin by asking whether the trust exists or does not exist under Spanish law. The first question must be different: which law governs the succession?

For deaths occurring on or after 17 August 2015, the usual starting point is EU Regulation 650/2012. Article 21 provides that the law applicable to the succession as a whole is, as a general rule, the law of the State in which the deceased had their habitual residence at the time of death. Article 22 allows a professio iuris, meaning that a person may choose the law of the State whose nationality they possess, provided that the choice is made expressly in a disposition of property upon death or is demonstrated by the terms of such a disposition.

This distinction is essential in trust matters. Recital 13 of the Regulation excludes from its scope matters relating to the creation, administration and dissolution of trusts. But it adds a decisive clarification: that exclusion should not be understood as a general exclusion of trusts. Where a trust is created by will or by statute in connection with an intestate succession, the law applicable to the succession under the Regulation will govern the devolution of the assets and the determination of the beneficiaries.

Therefore, if the applicable succession law recognises the trust and attributes succession effects to it, its terms may be relevant for determining the deceased's intention, the position of the beneficiaries, the role of the trustee and the transfer of assets. In such a case, the trust would not operate as a Spanish succession institution, but it should not be automatically ignored either. It should be analysed as a foreign institution integrated into the applicable succession law, provided that its content, validity and scope are adequately proven.

Complementary decisions on international successions

Although they are not decisions specifically focused on the civil effects of trusts, Spanish Supreme Court Judgment 685/2018, of 5 December, and the Judgment of the Provincial Court of Santa Cruz de Tenerife 534/2022, of 31 May, reinforce the importance of correctly determining the law applicable to the succession where foreign nationality, residence in Spain, real estate located in Spanish territory and possible forced heirship rights are involved.

Spanish Supreme Court Judgment 685/2018 is useful for British succession cases prior to the full application of EU Regulation 650/2012. In that case, the British deceased had executed a will in Spain, there was real estate located in Spain, and the existence of financial products was mentioned, including a trust created in Malta. The dispute focused on succession domicile, English law, renvoi and the possible application of Spanish law to real estate located in Spain.

The Judgment of the Provincial Court of Santa Cruz de Tenerife 534/2022, already under the logic of EU Regulation 650/2012, shows the practical relevance of habitual residence, the manifestly closer connection under Article 21(2) of the Regulation, and the protection of forced heirs where real estate exists in Spain. The Court assessed the municipal registration, roots in Spain, the existence of real estate in Spanish territory and the insufficiency of a merely formal foreign residence where no genuine prevailing succession connection with that jurisdiction was proven.

These decisions do not replace the specific analysis of the trust, but they help frame it: before discussing whether a foreign fiduciary structure may produce civil effects in Spain, one must rigorously determine which law governs the succession, whether there has been a valid choice of law, which assets are located in Spain and whether there are forced heirs whose intervention or protection is required.

4. Spanish Supreme Court Judgment 338/2008: the mortis causa trust and proof of foreign law

Spanish Supreme Court Judgment 338/2008 remains the leading civil decision on trusts and succession in Spain.

The case concerned an American deceased who had executed a will and also a trust declaration. The issue was whether the trust should prevail in relation to a property located in Spain. The Supreme Court started from the premise that the trust is a common law institution, unknown to Spanish law, and that Spain had not signed the 1985 Hague Convention on the Law Applicable to Trusts and on their Recognition.

However, the key point is not only that statement. The essential point is that the Supreme Court held that, because the trust had been created mortis causa, the absence of a specific conflict-of-law rule on trusts had to be supplemented by applying the conflict rule for successions. At that time, the directly applicable rule was Article 9.8 of the Spanish Civil Code, which referred to the national law of the deceased.

The problem was evidential. The party relying on the effects of foreign law did not adequately prove its content, validity and scope. As a result, the Court applied Spanish law and rejected the effectiveness of the trust as an autonomous succession instrument.

Four practical rules may be drawn from this judgment:

• the trust is not a Spanish succession institution;
• if it is invoked as a foreign succession instrument, the applicable succession law must first be identified;
• the party relying on foreign law must prove it adequately;
• if Spanish law applies, the trust cannot by itself operate as a succession title equivalent to a will, legacy, fideicommissary substitution or institution of heir.

Spanish Supreme Court Judgment 338/2008 does not declare a general invalidity of all foreign trusts. It rejected the effects of the trust in that particular case as an autonomous succession instrument because, being a mortis causa trust, the content and scope of the applicable foreign law had not been sufficiently proven.

5. Inter vivos trusts and mortis causa trusts: an essential distinction

Not every trust with succession implications should be analysed as if it were a mortis causa trust.

A trust may have been created during the settlor's lifetime, years before death, with a prior transfer or allocation of assets, administration by a trustee and rules for distributions to beneficiaries. In that case, the issue may not be whether the trust replaces a will, but whether it constitutes a lifetime disposition of assets, a separate fund or a fiduciary structure governed by foreign law.

The Judgment of the Provincial Court of Madrid 226/2015, of 8 June, is relevant in this respect. The Court analysed a trust created during the deceased's lifetime over shares in González Byass and distinguished it from the case examined in Spanish Supreme Court Judgment 338/2008, where the trust was mortis causa. In the Madrid case, the trust had been created as an inter vivos act of disposition, it remained in force, and no actual harm to forced heirship rights or succession fraud had been proven.

The practical doctrine is clear: an inter vivos trust should not be automatically considered ineffective or fraudulent merely because it has an indirect impact on an estate. It may be relevant as a patrimonial transaction, without prejudice to a possible challenge if fraud, sham, abuse or actual harm to succession rights is proven.

6. The trust as an instrument for interpreting testamentary intention

It may happen that the trust does not operate as an autonomous title, but is nevertheless relevant for interpreting a testamentary disposition.

The Judgment of the Provincial Court of Jaén 72/2010, of 25 March, dealt with the case of a Spanish deceased who executed a will in Illinois and simultaneously created a living trust. The will provided that, if the trust was not in force at the time of death, the disposition of the deceased's assets would follow the terms of that trust.

The Court did not make the living trust operate as an autonomous Spanish succession title. Starting from the formal validity of the will, it used the testamentary reference to the living trust to identify the testator's intention and the persons called to receive the estate.

This approach matters. In certain cases, the effective succession title may be the will, while the trust may help identify beneficiaries, distribution rules, the deceased's intention or the patrimonial structure contemplated by the foreign law.

A technically prudent position is therefore not to reject every reference to the trust, but to determine what value it has within the applicable system of succession sources.

7. Forced heirship, public policy and the rights of forced heirs

Where Spanish law applies, or where the applicable succession law protects forced heirship rights, the trust cannot operate outside those rights.

The Resolution of the Spanish Directorate-General for Legal Certainty and Public Faith of 21 May 2024 illustrates the practical importance of this point. Although it did not resolve a trust case, it is relevant for succession trusts connected with Spain because it reflects the strict approach to professio iuris and the intervention of forced heirs where Spanish law applies.

In that resolution, because no valid choice of British law was found and Spanish law applied by reason of the deceased's habitual residence, the inheritance deed could not ignore the non-favoured forced heir. The Directorate-General confirmed that forced heirship under Spanish common civil law requires the intervention of forced heirs in the partition or distribution of the estate where appropriate.

In practical terms, if the trust seeks to organise the transfer of assets located in Spain and the applicable law imposes forced heirship rights, trustee instructions or foreign documentation will not be enough. It will be necessary to determine:

• which law governs the succession;
• whether forced heirs exist;
• the nature of their rights;
• whether they must intervene in the deed;
• whether they have received, waived or consented;
• whether the trust affects the quantitative or qualitative integrity of their rights.

A trust may be an estate planning tool, but it should not be used to bypass mandatory rules of the applicable succession law.

8. Proof of foreign law

Proof of foreign law is one of the critical issues.

It is not enough to state that the trust is valid under the law of Arizona, Florida, England, Jersey, Guernsey, the British Virgin Islands or any other jurisdiction. The content, validity, scope and interpretation of that law must be proven, especially if the trust is intended to produce effects over assets, beneficiaries, heirs or registrable rights in Spain.

Spanish Supreme Court Judgment 338/2008 is clear on this point: although the conflict rule referred to foreign law, insufficient proof led the Court to apply Spanish law.

From a procedural perspective, foreign law must be proven as to its content and validity under Article 281.2 of the Spanish Civil Procedure Act. In addition, Law 29/2015 on international legal cooperation in civil matters regulates proof of foreign law in Article 33.

In the notarial and land registry context, this requirement has an additional practical dimension, although it is not identical to procedural proof before a court. It is not enough to invoke a foreign law recognising the trust; it must be proven sufficiently so that the notary, registrar or court, each within their respective functions, can assess its effects.

In practice, that proof may require:

• a certificate of foreign law;
• a legal opinion from a foreign lawyer;
• notarial or judicial documentation from the foreign jurisdiction;
• the trust deed and any amendments;
• probate, grant of representation or equivalent succession document;
• proof of the trustee's powers;
• sworn translation;
• apostille or legalisation;
• explanation of how rights are attributed to the beneficiaries.

Proof of foreign law is not a formality. It is the bridge that allows an institution unknown to Spanish law to produce effects that are understandable and verifiable before a notary, court or Land Registry.

9. Access to the Spanish Land Registry for real estate linked to a foreign trust

The civil effectiveness of the trust is tested especially clearly when real estate located in Spain is involved. A trust may be valid under its foreign governing law, but that does not mean that it can automatically produce real or registrable effects under the Spanish mortgage and land registration system.

The Spanish Directorate-General for Legal Certainty and Public Faith has stated that the trust is a common law institution, unknown and without a proper place in the Spanish legal system, although Spanish institutions may perform some analogous functions —fiduciary arrangements, mandate, foundations, gifts or modal legacies, executorship or fideicommissary substitutions. Therefore, when a trust structure seeks to produce effects in Spain, the general rules of Spanish civil, mortgage and notarial law must apply.

From a land registry perspective, the consequence is important: the trust may explain the transaction, the trustee's role or the beneficiary's position, but it does not by itself replace the registered owner, the transferor, the acquirer or the formal registrable title.

Article 3 of the Spanish Mortgage Act requires a public document for registration. Article 18 gives the registrar authority to review the legality of the external form of the document, the capacity of the parties and the validity of dispositive acts. Article 20 imposes the chain-of-title principle, meaning that the person who transfers, or on whose behalf a transfer is made, must be previously legitimised in the Land Registry. In succession matters, Article 14 of the Mortgage Act defines the succession titles capable of registration, including a will, succession agreement, declaration of heirs and European Certificate of Succession, without the trust appearing as an autonomous Spanish succession title.

Where the trust has a succession function, the registry analysis requires determining the law applicable to the succession first. For deaths subject to EU Regulation 650/2012, the general rule is the law of the deceased's habitual residence —Article 21— unless there has been a valid choice of national law —Article 22. The applicable succession law governs, among other matters, the transfer of assets, the determination of beneficiaries, forced heirship rights, the powers of executors or administrators and the partition of the estate —Article 23.

The Resolution of the Spanish Directorate-General for Legal Certainty and Public Faith of 21 May 2024 is especially relevant. In the succession of a British citizen resident in Spain, the Directorate-General confirmed the negative land registry decision because the will did not contain a sufficient professio iuris in favour of British law. It stressed that it is not enough for the will to be materially consistent with English or Scottish freedom of testation: the choice of law must be express or arise from the terms of the mortis causa disposition, and a merely presumed or conjectural intention is insufficient. It also noted that the will contained no appointment of an executor, no reference to a trust and no other features characteristic of Anglo-Saxon legal systems.

If Spanish law applies, its succession rules must be respected, including forced heirship. In that same resolution, the Directorate-General confirmed that, because the Spanish Civil Code applied, the inheritance deed could not disregard the rights of the non-favoured forced heir, whose intervention or waiver was necessary for registration.

In addition, EU Regulation 650/2012 does not remove the requirements of the Spanish Land Registry. Even if the foreign succession law recognises the trust, the registration of rights over real estate and the effects of registration remain subject to the law of the State in which the register is kept. Article 31 of the Regulation allows unknown rights in rem to be adapted to the closest equivalent right in rem under the law of the State in which they are invoked, but that adaptation does not convert the trust into a Spanish registrable institution or allow title, chain of title, capacity, authority and documentary form requirements to be bypassed.

In a non-succession case, but one that is relevant from a registry perspective, the Resolution of the Directorate-General of 24 March 2021 confirmed this logic: although a foreign structure close to a trust was invoked and foreign documents had been provided, translated and apostilled, the Directorate-General did not accept that invoking the structure allowed an essential element of a registered real right to be modified without the required formal title and consents. It also recalled that the true nature of a notarial instrument depends on its content: where there is a declaration of intention, contractual consent, transfer, rectification or modification of a real right, the proper formal channel must be used, pursuant to Article 144 of the Notarial Regulations.

In practice, to register in Spain real estate linked to a foreign trust, at least the following must be reviewed:

• who the current registered owner is;
• who transfers, distributes or disposes, and with what powers;
• which succession or patrimonial law applies;
• whether there is a valid professio iuris;
• whether the trust is inter vivos, mortis causa, revocable, irrevocable, discretionary or non-discretionary;
• whether foreign law has been sufficiently proven;
• whether the trustee, executor, heirs, forced heirs or necessary beneficiaries intervene;
• what the formal registrable title is;
• whether the chain of title is respected;
• whether the foreign documentation is legalised or apostilled and translated where necessary;
• whether the required prior tax formalities have been completed.

10. Trustee, beneficiaries and heirs: who must intervene

A recurring problem is determining who must intervene in the Spanish documentation.

In a trust, the trustee may have powers of administration, management or disposition. But in a Spanish deed of distribution, transfer or registration, it is not enough to state that a trustee exists. Their appointment, current status, powers and capacity to act in relation to the affected assets must be proven.

In addition, the intervention of the following may be necessary:

• current beneficiaries;
• future or contingent beneficiaries, depending on the applicable law;
• heirs;
• forced heirs;
• executors or estate administrators;
• representatives of the trust or estate;
• registered owners;
• creditors or interested parties if required by the applicable law.

Each case must be analysed according to the specific function of the trust. If the trustee is executing a succession disposition, the issue will differ from a case in which the trustee acts as administrator of a separate fund or as fiduciary transferor in an inter vivos relationship.

11. Relationship between civil effectiveness and taxation of trusts in Spain

The civil and succession effectiveness of a foreign trust cannot be fully separated from its tax treatment.

The Spanish tax authorities have built a doctrine of tax transparency for trusts, according to which, because the trust is not recognised as an autonomous domestic institution, patrimonial relationships are analysed directly between the settlor and the beneficiary. This tax approach may be useful to prevent a foreign structure from blocking the taxation of a real transfer of wealth.

However, that approach should not become an automatic rule applicable to every trust. From a civil and succession perspective, not all trusts perform the same function. There may be an inter vivos trust, a mortis causa trust, a living trust, a revocable trust, an irrevocable trust, a discretionary trust, a testamentary disposition referring to a trust, or a fiduciary structure governed by foreign law that attributes specific rights to beneficiaries and specific powers to the trustee.

For that reason, the tax classification must start from the real legal transaction. Article 13 of the Spanish General Tax Act requires tax obligations to be enforced according to the legal nature of the act, transaction or arrangement carried out, regardless of the form or name given to it by the parties.

If the trust operates as a succession instrument recognised by the applicable succession law, the attribution to the beneficiary may have a mortis causa nature. If the distribution occurs during the settlor's lifetime and responds to a present liberality, it may be closer to an inter vivos transfer or even a succession agreement. If what is distributed is income generated by assets, the analysis may shift towards personal income tax. If the beneficiary still has only an expectation and no present economic right, the answer should not be the same as in the case of an actual acquisition of assets.

This study should be read together with our analysis of the taxation of trusts in Spain, where we examine the doctrine of the Spanish Directorate-General for Taxation and the Central Economic-Administrative Tribunal on Inheritance and Gift Tax, Personal Income Tax, Wealth Tax and beneficiaries resident in Spain.

12. Conclusion: the trust must be characterised, not automatically ignored

A foreign trust is not a Spanish succession institution. It does not by itself replace a will, a legacy, the institution of an heir, the partition of an estate or Spanish forced heirship rules.

But that does not mean that it should always be ignored.

In an international succession, the trust may be relevant if the applicable succession law recognises it, if its terms allow beneficiaries or transfer rules to be identified, if foreign law is adequately proven and if its effects can be adapted to the Spanish system without infringing forced heirship, public policy, third-party rights or registration requirements.

The answer does not lie in a general formula. It lies in the analysis of the specific function of the trust.

If it is a mortis causa trust, the applicable succession law must be examined. If it is an inter vivos trust, it must be analysed whether it was a valid patrimonial act, whether it created a real separation of assets and whether it harmed succession rights. If it affects real estate in Spain, it must pass the Spanish notarial and land registration filter. If it produces an economic attribution to the beneficiary, the civil analysis must be coordinated with the tax analysis.

The strongest position is this: a foreign trust should not be automatically accepted or rejected in Spain. It must be characterised according to the applicable law, the function it performs, the available evidence and the specific effects it seeks to produce.