Can inheritance tax be paid out of the funds in the deceased’s account?
Before providing heirs with information on a deceased customer’s account balances and making the related funds available, banks request the documentation required under the legislation on inheritances. Specifically, the customer’s death certificate, the certificate from the Register of Wills and a certified copy of the latest will or, failing that, the certificate of intestate succession.
To access the funds, banks will also request that heirs provide the document on the division and distribution of the estate and proof of payment of, or of exemption from, inheritance tax, as banks have secondary liability for payment of the tax (Article 8 of Law 29/1987Abre en ventana nueva, only available in Spanish).
As regards inheritance tax, it is important to remember that:
- You must prove either that the tax has been paid or that you are exempt in order to access the funds.
- The legislation allows banks to authorise payment of the tax out of the funds in the deceased customer’s account. Requesting the bank do so will suffice.
After submitting the request, the bank will issue a cheque payable to the tax authorities out of the deceased's funds for the sole purpose of paying the tax.
- If the necessary documentation is not submitted, the bank may withhold the corresponding amount to pay the inheritance tax. However, it may not block the entire account balance.
What happens if you request deferred payment of the tax or that it be paid in instalments?
Even if you request this, the bank still has secondary liability for the tax. As a result, the bank may prevent the account balance from being withdrawn and withhold the amount needed to pay the inheritance tax.
For more information on matters related to wills, take a look at our section on Inheritances.