Let’s suppose a real case without mentioning names. A father of a family has contracted various debts for personal loans, mortgages, credit cards and other banking products throughout his life. His children know that the father is not paying the credits and that when he dies he will surely leave a good “welt” in debts. What is done in this case? Do children inherit their father’s debts? Are all debts inherited?
The law of successions in Spain
In Spain the legislation that deals with inheritances in the first place is the Civil Code (and does it profusely). In Title III, Of the successions, the details are established of how the wills are, how to make them, how to accept them and how to repudiate them, among other concepts. Articles 981 and following of the Civil Code establish the rights and obligations of the heirs, and it is where a successor finds the answer to the question of whether a debt is inherited. The law establishes that inheritance is a right and not an obligation. Therefore, the fact that a person is assigned as a successor does not imply that he will necessarily enjoy the inheritance, attending to his benefits and debts. Once the successor is informed that he appears in the inheritance, he has several options, which he must assess according to whether the testator left debts or not.
What to do when an inheritance has debts
When an inheritance is accepted the debts that the testator had in life are accepted. However, there are acceptance figures that allow you to enjoy the inheritance without having to face the debt. Before a will three attitudes can be taken:
- Accept the inheritance (debts included).
- Reject the inheritance (which would go to the next level of successors).
- Accept the inheritance for the benefit of inventory (enjoying only the remaining part once the debts have been taken care of).
If it is known for certain that the testator did not leave any debt in life, he can choose to accept the inheritance, having to pay the corresponding inheritance taxes, which must be imposed on the Autonomous Communities. However, the inheritance can be explicitly waived. But you have to do it with all the consequences. For example, if the inheritance involves debts, you must express the resignation before a notary and not enjoy any of the assets bequeathed by the deceased: for example you can not live in the house, drive your car, or make use of any property that in life it belonged to the deceased. The use of any legacy implies the acceptance of the inheritance, and with it the acceptance of the debt.
Accept an inheritance without your debts
Accepting an inheritance for the benefit of inventory is an alternative to resignation and acceptance. It means accepting the inheritance with “buts”, in particular what remains of the assets once all the debts have been taken care of. This option is used by the State when it assumes the assets of people who died without heirs. It also happens when someone leaves the goods to the poor. Of course the debts are subtracted and the surplus is what he dedicates to works of charity. This is a right that is included in article 998 of the Civil Code.
Credits and loans are also inherited
Just as the “good” is inherited, the obligations contracted by the testator throughout his life are also inherited. But not all. For example: a successor does not inherit the obligation to pay alimony, but inherits the credits and loans contracted, whether personal or mortgage. Article 1003 of the Civil Code establishes that if an inheritance is accepted simply, without benefit of inventory, the heir tacitly accepts the legacies and debts, having to face with his own patrimony the debts, if any. In the case of accepting the inheritance without further ado, the successor makes an extension of goods, for which he has to pay the corresponding taxes, and with those goods and his own must meet the obligations contracted, such as personal loans.
How to avoid paying bank credits and debts
It is going to be the debts that are going to tip the balance on which option to choose before an inheritance: accept it, reject it or accept it for the benefit of inventory. Although it is necessary to be informed before deciding, especially when the debts contracted are by credits or bank loans. The majority of banking entities “oblige” the holder of a loan to take out life insurance to pay the payment in case of conditions that prevent their collection, such as death. Credit cards also often involve a tacit subscription to life insurance for the same reasons. For that reason, before deciding to reject an inheritance for your debts you must inform yourself well of if you can attend it with the life insurance or policy that surely made to contract the testator. And record everything in writing. On occasion, banks insist on charging fees that do not correspond. Have you had any experience that you want to tell us about an inheritance?