Making a Will is easy to put off doing - in our twenties we're convinced we'll never die, in our thirties we're busy with our lives, in our forties we don't want the party to end. Here I take a look at what making a Will can achieve in terms of financial sense, and where not having a will can devastate your loved ones after you shuffle off. I discussed this topic on RTE1's FourLive show with Maura Derrane on Monday October 18th, 2010.
What is a Will?
Everyone is aware that a Will is an important legal document that specifies your wishes on how your Estate should be divided following your death. What everyone is not aware of, however, is what happens to your Estate if you do not have a Will in place, or if your Will is deemed invalid.
First the basics: a Will is a legal document and so must fulfill legal requirements in order to be deemed valid.
The rules on determining if a Will is valid are:
- the Will must be in writing
- the Testator (the person whose Will is being prepared) must be over 18 years of age
- the Testator must be of sound mind
- the Testator must sign the will (or make their mark if not capable of signing)
- must be Witnessed by 2 people who are not beneficiaries under the Will
- the Witnesses must witness the Testator's signature (or mark) but do not need to know of the contents of the Will
If all of the above requirements are not met, the Will is deemed invalid and the rules under the Succession Act 1965 are implemented. You do not want this to happen, because the law does not then have power to implement your wishes, but rather implements the disbursement of your assets according to a fixed schedule.
What happens if I die but do not have a valid Will?
Many people who are married with children, wrongly believe that if they die intestate (without a valid Will), their spouse will inherit their entire Estate. If you die and you do not leave a Will, or your Will is not valid the law takes over and will split your Estate as follows
If you are survived by:
- a spouse but no children (or grandchildren): your spouse is awarded the entire Estate
- a spouse & children: your spouse is awarded 2/3 of your estate, the remainder is divided equally among your children. If one (or more) of your children has died, their share is awarded to their children.
- Children but no spouse: your estate is divided equally among your children (or their children)
- Parents but no spouse or children: your estate is divided between your parents equally or given entirely to one if a parent has died
- Siblings only: your estate is divided equally between your siblings or their children if a sibling has died
- Nieces & Nephews only: your estate is divided equally among those surviving (note: if a niece or nephew has died, their share is divided among the surviving nieces & nephews and not the deceased niece/nephew’s spouse or children)
- Other relatives: your estate is divided equally between the nearest equal relationship
- No relatives: your estate goes to the state
It is easy to see that if you die without a Will, or your Will is invalid, then your wishes are not considered in any way and the formula above is executed by the appointed Administrator.
When is it appropriate to consider making a Will?
If you are married, have children, co-habit with a partner either same-sex or opposite sex, then you should strongly consider drawing up a Will. There is lots of useful information & advice on www.citizensinformation.ie which helps outline the basics. While is is possible to draw up a Will yourself, it is generally preferable to have a Solicitor draw up a Will on your behalf as this will greatly reduce the likelihood of your Will being deemed invalid, and your wishes not being carried out. The cost to have a Solicitor draw up your Will can vary, however a 'standard' Will should cost no more than €500 to have drawn up. Note: the cost will be a function of how complex your Will may be to draw up and in some cases can be considerably more, but in others can be considerably less.
Does a spouse have any automatic entitlement to benefit if a marriage has broken down?
Yes. A spouse might very well be entitled to an "automatic right share" of your Estate if the rights to succession have not been dealt with in a legal manner. A separating couple should ensure that their right to succession under the law are extinguished, or otherwise dealt with, in order to ensure that a separating partner's wishes are carried out and any new partner is considered when drawing up their Will. There have been a number of high profile challenges to a Will by a separated or estranged spouse, and the law is very clear on the estranged spouses entitlements.
What taxes are payable?
The amount of tax payable (if any) is governed by the relationship between the testator and beneficiary and the type of benefit (gift or inheritance).
The beneficiary will belong to one of 3 groups, A, B or C.
| Relationship groups for tax-free inheritance | |
|---|---|
| Group A | Child, step-child, adopted child, foster child (restrictive terms apply), parent (restrictive terms apply) |
| Group B | Parent, Grandparent, Grandchild, Great-grandchild, Sibling, Nephew or Niece (blood relative) |
| Group C | All other beneficiaries |
| Tax-free thresholds for inheritance | |||
|---|---|---|---|
|
| to 7 April 2009 | on or after 8 April 2009 | 2010 |
| Group A | €542,54 | €434,000 | €414,799 |
| Group B | €54,254 | €43,400 | €41,481 |
| Group C | €27,127 | €21,700 | €20,740 |
What other planning can be possible?
Trusts are a potential to overcoming the burden of CAT on an inheriting beneficiary, or group of beneficiaries. In general, the complexity and administration of the trust would require that the Estate is significant in size. Setting up a trust is a complex undertaking and must be done with professional assistance. Your family Solicitor or Tax Advisor will be able to help in deciding if this is a good choice for you.
Further information?
www.citizensinformation.ie - winner of "Most Useful Website in Ireland", Irish Web Awards 2010
