Currently 70% of Irish citizens have NOT made a Will. Most are overwhelmed with the legal claptrap and jargon not to mention the morbidity of the subject itself ! But young or old, once you have dependents and / or € 25,000 in assets you SHOULD make a Will – the alternative includes delays, additional legal requirements and costs. 99% of those 70% of those people who do not have a Will are citizens with simple estates ( what they own ) and uncomplicated relationships. Understanding the basics can help you navigate the process with confidence. John Lowe of MoneyDoctors.ie helps break down the key concepts and provides a clear overview of inheritance and the Will process in Ireland.
What is a Will ?
A Will is a legal document that outlines how an individual wishes to distribute their assets after they pass away. It’s a way to ensure that your wishes are respected and that your loved ones are taken care of. In Ireland, a Will must be written, signed, and witnessed by two people who are not beneficiaries under the Will. They only need to witness the signature, not see what is in the Will.
Types of estates
There are two types of estates in Ireland:
1. Testate estate: this occurs when an individual dies with a valid Will. The estate is administered according to the terms of the Will by the executor or executrix
2. Intestate estate: this occurs when an individual dies without a valid Will. The estate is administered according to the laws of intestacy which includes applying to the High Court for Letters of Administration.
Who can make a Will?
In Ireland, anyone over 18 years of age with mental capacity can make a Will. Mental capacity means that the individual must have a clear understanding of their assets, family members, and wishes. Older citizens may have to obtain a doctor’s certificate that they are inter alia compos mentis.. they are of sound mind when signing the Will.
For Enduring Powers of Attorney – a document that gives authority to a nominee of the individual to manage their affairs, financial et al – the certificate may also be required.
Key components of a Will
A Will typically includes:
1. Introduction: the Will begins with an introduction that identifies the maker of the Will and states their intention to make a Will.
2. Appointment of executor/executrix: the maker of the Will appoints an executor or executrix, who is responsible for administering the estate according to the terms of the Will. It can be family or close personal friend.
3. Beneficiaries: the maker of the Will specifies who will receive their assets after they pass away called beneficiaries.
4. Residuary clause: this clause outlines what happens to any remaining assets after initial specific gifts have been made.
5. Codicils: these are legal formal amendments to the original Will which changes to the original Will.
Who can be an executor?
In Ireland, anyone over 18 years of age with mental capacity can be an executor or executrix. However, it’s common for family members or close friends to be appointed.
Benefits of having a Will
Having a Will provides several benefits, including:
A. Control over assets: a Will allows you to control how your assets are distributed after you pass away.
B. Avoidance of intestacy: without a Will, your assets may be distributed according to the laws of intestacy, which may not reflect your wishes.
C. Avoidance of family disputes: a Will can help prevent disputes among family members by clearly outlining your wishes.
D. Tax planning: a Will can be used to plan for tax implications and minimise liabilities.
What happens when someone dies without a Will?
When someone dies without a Will – intestate, their estate is administered according to the laws of intestacy. This means that their assets are distributed as follows:
1. Spouse or civil partner: The spouse or civil partner inherits all of the deceased’s assets if no family. If family the spouse or civil partner receives 2/3rds of the assets in the estate with the children receiving 1/3rd equally.
2. Children: each child receives an equal portion of 1/3rd of the estate.
3. Parents: Parents inherit if there are no children or spouse/civil partner.
4. Siblings: Siblings inherit if there are no children, spouse/civil partner, or parents.
How to make a Will in Ireland
To make a Will in Ireland, follow these steps:
1. Choose an executor or executrix: select someone you trust to administer your estate. Your children, siblings or close personal friends
2. Choose beneficiaries: decide who will receive your assets – what you own – after you pass away.
3. Consult with a Solicitor or a financial adviser: a solicitor can help you draft a valid Will and ensure it meets all necessary requirements while a financial adviser can advise on the financial aspects of a Will.
4. Sign and witness: sign your Will in front of two witnesses who are not beneficiaries under the Will. They only have to see you sign it not what is in the Will. Ensure you have their full names, address, eircode and PPS numbers if you can obtain it.
Tips for making a Will
- Review and update regularly: review your Will regularly and update it as necessary. Things change, people pass on so always check your Will on a yearly basis.
- Include residuary clause: ensure your residuary clause – your remaining assets after you have specified other assets to be gifted to nominated people – is clear and comprehensive.
- Avoid ambiguity: avoid language that could be interpreted a number of ways in your Will to prevent disputes. Disputes mean heavy legal costs which you really should avoid.
- Consider charitable donations: consider making charitable donations in your Will. Not only are you helping the less well off after you pass but the charities themselves will much appreciate same.
Probate
Many people do not understand the process of Probate.
First of all it is the legal requirement to record the passing of a person in the Probate office, state what they own ( assets ) and who will be getting them.
The Probate office send out a form for your completion which basically requires the details of the deceased person and the deceased person’s assets. Another section deals with who is going to benefit from those assets. Debts and tax are also dealt with – inheritance thresholds were raised at the last Budget
There are three Capital Acquisition Tax (CAT) categories…over which 33% tax is payable..
- A .. parent to child € 400,000 ( it was € 542,544 in April 2009 ! )
- B .. aunt/uncle, brother/sister, nephew/niece, grandchild – threshold € 40,000
- C .. anyone else – threshold € 20,000
Remember aggregates count too… e.g. if two Aunts gift you € 40,000 you will pay 33% CAT tax on the second gift – € 13,200.
Once you have completed the Probate form, you make an appointment to see the Personal Representative in the Probate Office – it can take from 30 minutes to a couple of hours if it is complex at all…but ANYONE can apply for the Grant of Probate – it does not have to be a solicitor… you will also save huge legal fees by empowering your executor or executrix to complete the Probate task.
So it is not difficult to understand the whole legal process when a loved one dies…
you can ensure your wishes are respected and your loved ones are taken care of. Finally remember you do not have to die to gift your assets to loved ones.. 7 out of 10 parents are gifting their children lump sums for the first home deposits…
Remember to review and update your Will regularly, and consider engaging with any of the many DIY low cost Will package companies to save money especially if it is not too complex.
Useful Resources:
* The Law Society of Ireland: (http://www.lawsociety.ie)
* The Citizens Information Website: (http://www.citizensinformation.ie)
* The Irish Times: (http://www.irishtimes.com)
* Money Doctors: DIY low cost Will packages ( https://moneydoctors.ie/wills/ )