Published April 2025 · 10 min read · By International Inheritance Spain
If you are based in Indianapolis, Indiana and you are a beneficiary — or settlor — of a trust that holds Spanish assets, or if you are inheriting from a trust that included Spanish property, you face a specific set of legal and tax obligations that most US attorneys are not equipped to advise on. Spanish law does not recognise trusts as legal entities, and the Spanish tax authority (AEAT) treats trust assets as if they were owned directly by the settlor or beneficiary.
This guide explains the specific obligations and risks for Indianapolis-based trust beneficiaries and what steps to take to protect yourself.
The trust is a cornerstone of common law estate planning — but Spain is a civil law country that does not recognise the trust as a legal institution. Spain has not ratified the 1985 Hague Convention on the Recognition of Trusts. When AEAT encounters a trust structure, it applies a fiscal transparency doctrine:
This applies whether your trust is a UK family discretionary trust, a US Revocable Living Trust, an offshore trust from Jersey or the Cayman Islands, or any other common law trust structure.
Indianapolis families with Spanish connections — whether through emigration, holiday property ownership, or international business — are increasingly encountering the challenge of managing Spanish assets held within US or foreign trust structures.
A particularly common situation: a Indianapolis family whose parent or grandparent emigrated from Spain decades ago but retained Spanish property now holds that property inside a US estate plan (often a Revocable Living Trust). When the US settlor dies, the Spanish property must be inherited through the Spanish legal system, even though it was "inside" the US trust for American purposes.
We regularly advise Midwestern families on precisely this challenge: unwinding the trust structure from a Spanish perspective, accepting the inheritance, paying Spanish ISD, and registering the property in the beneficiaries' names — all without leaving the United States.
When a trust makes a distribution to a beneficiary with Spanish connections, Spanish ISD applies:
The tax varies significantly by the Spanish region where the assets are located. A distribution of €400,000 in Andalucía (Costa del Sol) attracts near-zero ISD for direct relatives. The same distribution in Cataluña could attract €40,000–€60,000 in Spanish ISD.
As a US person (citizen or green card holder), you have additional IRS reporting obligations when inheriting foreign assets from a trust:
While Indiana may have its own approach to estate and income taxation, these state-level rules do not affect the Spanish tax obligations of Indianapolis-based trust beneficiaries. Spanish ISD and Modelo 720 obligations are determined by Spanish federal tax law and apply regardless of which US state the beneficiary lives in.
If you need to deal with Spanish assets inherited through a trust structure, you can grant a power of attorney without travelling to Spain. From Indianapolis, you can:
We prepare all documents in advance. Once you sign and return the power of attorney, we manage the entire Spanish process on your behalf.
If the trust distribution is triggered by the settlor's death, Spain's six-month ISD filing deadline runs from the date of death — not from the date the trust makes the actual distribution. For many discretionary trusts, this creates a timing problem: the trustee may take months to value, administer and distribute the estate, while the Spanish clock is already running.
Contact us immediately when a settlor with Spanish assets dies. We can file the ISD return on estimated values within the deadline and correct it once the trust distribution is finalised.
We advise trust beneficiaries and settlors across the United States on their Spanish tax and legal obligations. Initial consultation is always free and confidential.
We advise US residents on Spanish trust law, ISD obligations, and the full inheritance process — entirely in English, entirely remotely. Contact us for a free initial consultation.