The Spanish Acquisition!

Imagine the situation, Mr. and Mrs. Averagely-Well-Off (AWO) are resident for tax purposes in the UK. They own Villa Casa in the outskirts of Marbella, Spain. They keep no other assets in Spain and all their assets are owned jointly. Their wills leave everything to each other.
Mr. AWO gets a hole-in-one at his golf club in Spain. He is over the moon. Then he remembers that he has to buy everyone in the club a drink. He has a heart attack and dies.
What are the Spanish Inheritance and Gift Tax (abbreviated to ISD) implications for Mrs. AWO?
Two particular features of ISD which can surprise the average Briton are:
1. The taxable person is the recipient (i.e. in this case Mrs. AWO).
ISD is a tax on acquisitions, not on transfers. In the UK equivalent Inheritance Tax (IHT), it is the estate of the deceased which is subject to tax. In Spain, the recipient of the lifetime gift or inheritance is the taxpayer.
2. Spouses are not exempt.
Unlike in the UK there are no spouse exemptions from Spanish Inheritance Tax.
If you are a married couple who jointly own a property in Spain (whether or not you are tax resident there), on the death of one spouse, the survivor will be liable to ISD on the deceased spouse's half (assuming that's the way your wills are written).
On Mr. AWO's death, as assets transferring between spouses are not exempt, Mrs. AWO will be chargeable to ISD on the half of Villa Casa received from her late husband. The market value of the property will be established, and the most that Mrs. AWO will be able to deduct is a meagre annual exemption of approximately EURO 16,000, from the value attributable to Mr. AWO's half. The remaining balance will be taxable at anything up to 34%. Ouch!
Beware, the rate at which ISD is applied increases the more remote the relationship between the recipient and the donor, rising to 81% approximately.
The ISD return and payment will be due usually within 6 months of the date of death.
Let's hope Mr. AWO won a lot of money with his hole in one!!

What are the Spanish Inheritance and Gift Tax implications?