Wills

Writing a will ensures your wealth is distributed according to your wishes and protects your assets, as far as possible, from disputes, litigation and levies. Getting expert advice in drafting ensures that your will won’t be at risk of failing, which would place your estate in jeopardy. Wills also need reviewing from time to time to reflect changing markets in these troubled times as well as changes to taxation and succession legislation. Changing health needs may also impact existing wills, where people are forced to fall back on the value of the family home to fund their care needs, shrinking the value of that asset. Prospect Law specialises in drafting and reviewing wills to suit its clients, reflecting the nature of their assets and responding to their individual needs.

Making a will

Making a will is the only way to be certain that your money goes to those you want to inherit it. Without one, legal default kicks in, leaving your assets to be controlled by the state under the rules of intestacy set out in the Succession Act. If you don’t leave a valid will, two thirds of your assets will go to your spouse, with the remaining third split equally between any children. It’s also worth remembering that a former spouse whom you never got around to divorcing will stand to inherit, while a partner you are not married to is at risk, unless you own assets jointly.

Making a will may involve tax planning, to minimise tax liability for your heirs. Most of the wealth inherited in Ireland passes from parent to child. The rise in property values, particularly in urban areas, places increases the likelihood of children breaching the lifetime tax thresholds laid down by the state. However, you are allowed to give your children €3,000 annually and this ‘small gift’ is tax exempt. The larger the estate, the greater the tax implications. Rather than getting tangled up in complex tax planning, you may prefer to fund your heirs’ inheritance tax and gift tax yourself under Section 72 and Section 73.

Inheritance

The past fifty years have seen moves towards greater inheritance rights for surviving spouses, children and, more recently, civil partners. The 1987 Status of Children Act has brought about changes in respect of children born outside of marriage as have the 2010 Civil Partnership and Cohabitants Acts for unmarried partners who are living together in an intimate and committed relationship. However, this means that the legal landscape is more complicated.

The rights of others now include not only the rights of spouses, but those of former spouses, civil partners, former civil partners and dependent children of either partner. While ‘qualified cohabitants’, for example, may now apply for orders to be made from the estate of their former (deceased) cohabitant, their succession rights will be tempered by the rights of others.

Whatever your personal circumstances, Prospect Law will give you expert advice. Inheritance issues are both delicate and difficult. Ensuring that disputes do not arise, or should they be unavoidable, resolving them to the satisfaction of all parties takes the kind of skill that only decades of experience brings.

Spousal rights

Special provisions are in place to protect the surviving spouse. If you have lost your spouse, you are entitled to what’s known as a ‘legal right share’ if there’s a valid will in existence. In the absence of children, regardless of what the deceased person may have specified, a spouse is legally entitled to inherit one half of the assets. If there are children, the spouse is entitled to one third as a legal rights share. The executor is obliged to grant this legal right share, which makes it unnecessary to apply to the courts.

Children’s rights

The law treats all children equally, whether they are born inside or outside marriage or have been validly adopted (Stepchildren and foster children do not fall into this protected category, however). Children have no right to a minimum legal right share. Whatever the will states is what they are entitled to. The 1965 Act allows a parent to:

• Leave nothing in their will to any child or children
• Leave two-thirds to one or more child or
• Leave each child the same share

Section 117 of the 1965 Act provides that a child, including an adult child, may apply to courts for a declaration that the parent failed in their ‘moral duty to make proper provision for the child’ while they were alive. A spouse’s legal right share cannot be compromised to increase a child’s share, however this protection does not extend to a civil partner.

Probate

The administration of an estate is referred to as ‘probate’. It need not be complicated or expensive, but, depending on the size of the estate and the drafting of the will, it may be necessary to apply to the High Court. Prospect Law will give you expert advice on the validity of the will. Where a valid will has been made, it falls to the executor to carry out, as far as possible, the wishes of the deceased person. Administrators are appointed in cases where no valid will has been made. If you are an executor or administrator, Prospect Law will advise you on the management of the estate, the valuation of the property or properties, the collection of assets and the payment of liabilities (if any).

Estate management

After carrying out an inventory of the assets, we will advise on court fees, income tax, surtax and inheritance tax, as well as the distribution of shares of the assets to third parties. We also help prepare ‘proofs’ or documents, such as swearings, oaths, bonds certificates, affidavits, ‘reservations’ and ‘renunciations’.

Our services include:

• the recording of all assets and liabilities prior to applying for a grant of probate
• advising as to collection of assets and generally advising as to the discharge of liabilities and the distribution of assets
• dealing with cases where the assets are insufficient to meet specific gifts
• discussing inheritance tax in detail
• advising as to the winding up of the estate and the final distribution to the beneficiaries

Liabilities

The distribution of the assets of an estate carries with it the duty to pay outstanding liabilities. The executor must inform the state of all assets and is not allowed to make any distribution until they receive an assurance that no debts are owing. While expenses such as funeral costs or utility bills may be deducted from the estate, other liabilities may arise.

One area where the state is entitled to recover monies from an estate is the overpayment of social welfare benefits, including non-contributory pension payments. Nursing home charges may also be recoverable if the deceased person benefited from the Fair Deal scheme. Should the deceased person have had private or business debts, there may be further liability facing the estate, which the executor must consider.

Taxation

Taxation is an aspect that often arises in relation to inheritance. Beneficiaries are divided into categories that are determined by their relationship to the testator, or benefactor, for the purposes of Capital Acquisitions Tax (CAT). The tax-free threshold applying to gifts and inheritances to children inheriting from a parent increased to €335,000 from 9 October 2019, while other CAT thresholds remain unchanged. If a beneficiary is also liable for Capital Gains Tax on a property, that tax (CGT) can be offset against CAT, as long as the beneficiary does not dispose of the inherited asset for two years from the date of the gift or inheritance.

Inheritance disputes

Inheritance disputes, sadly, are not uncommon in our experience. Our services at Prospect Law include:

• Reviewing the legislation on inheritance, and scrutinising all aspects of the estate of the deceased
• Reviewing the circumstances surrounding the making of the will to determine whether or not undue influence may have been brought to bear on its making and/or on the testator
• Scrutinising the will for anomalies that might indicate lack of capacity on the part of the testator
• Reviewing medical records and obtaining medical advice
• Advising potential beneficiaries as to whether they have an arguable case for mounting a legal challenge to the will

Appropriation

If a number of beneficiaries inherit a specified amount of money and the estate also includes property, a beneficiary can, under Section 55 of the Succession Act, request to be given the property or part thereof instead of the money. This is termed ‘the right of appropriation’. Particular care must be taken if a beneficiary chooses to exercise this right to ensure none of the other beneficiaries will be disadvantaged financially. As property values rise and fall, expert and timely valuations will be needed. The executor will then need to serve notice on the beneficiaries, as the proposed appropriation cannot go ahead without their agreement. If this is not forthcoming from all of the parties, the matter may have to be decided by the courts.