A Will is the only way of safeguarding the future of those whom you care for. Within this article, we answer the very important question as to whether you should consider making a will.
Why Should I Make a Will?
When you die your affairs must be wound up. There are likely to be outstanding bills to be paid as well as property that needs to be distributed.
Making a Will simplifies this. It allows you to decide who gets what, with minimum delay and hassle. Without a Will, the distribution of assets will be determined by law – the law of intestacy (see below) – and therefore people outside your family will not receive what you would have wished. A Will can also be used to exempt your next of kin from paying tax.
It is very important for you to make a Will if you have children under 18 or any long-term dependents. You can also draw up a document to appoint a testamentary guardian to a child or include a term to this effect in your Will. This is a trusted person who will be responsible in part or full for the welfare of any children under 18 in the event of your death.
What Happens if I Do Not Make a Will?
If a person doesn’t make a Will, after they die the Law provides that their spouse or civil partner is entitled to their entire estate. This is only the case if there are no children, however.
In the event there are children surviving a person’s spouse or civil partner will get 2/3 of their estate, and 1/3 will go to their children.
If a person’s spouse or a civil partner is dead or if they did not have a spouse or civil partner, then all of the estate will go to their children.
Should any of the children be under the age of eighteen years, trustees will need to be appointed.
In the event that any children of a deceased person had predeceased them then their share may go to their children if they have any.
How Do I Make a Legally Valid Will?
There are very strict guidelines as to what makes a will valid. These are:
- The testator (person who makes the will) must be over 18 years of age.
- He/she must act of his/her own free will – not under pressure from another person.
- He/she must be of sound mind and memory and understand that he/she is making a will.
- The testator must know the nature and extent of his/her property and be capable of naming all of the people who may expect to benefit from his/her estate.
- The will must be in writing.
- The will must be signed at the end by the testator. If the testator cannot sign it then he/she must direct someone else to do so in his/her presence. The ‘signature’ can be the initials of the testator or, if the testator is physically unable to sign or illiterate, then it could be a mark made by him/her.
- That testator’s signature must be made in the presence of TWO witnesses who are both present at the same time.
- The witnesses must sign their signature in the presence of the testator, ideally in the presence of each other but not necessarily so.
- A witness or his/her spouse cannot benefit under the will.
Where these formalities are not respected, the will may fail and, if so, the law in relation to intestacy will then determine how your property is distributed.
Can I Draw Up the Will Myself and Save Costs?
Due to the complex rules for making a will, you should seek the advice of a solicitor. All too often a will can fail due to one of the rules not being correctly carried out which means that the dead person’s wishes may not be respected. Your will is open to challenge if it does not meet all the legal requirements. Also, you may not be aware of the full range of issues that your will can cover and provide for. However, it is possible for a non-lawyer to draw up and execute a valid will without legal advice.
What is an Executor?
The executor is the person named in the Will who has the job of carrying out the terms of the Will. Preferably, there should be more than one executor.
Executors can benefit (receive property, money or gift) from the Will. However, no witness to a Will or the spouse of that witness can benefit. They must be over 18 and not suffering from a legal disability: this is when a person is barred from performing certain duties because they may, for example, not be of sound mind or have been declared bankrupt. Otherwise, they cannot get a grant of probate. A grant of probate allows the executor to deal with the deceased person’s assets.
What Do I Need to Include in my Will?
You will need to think about the people who will be affected by your Will – if you have any spouse or partner, current or former, civil partner, any children, grandchildren and so on. You will need to think about any properties you own or co-own, both in Ireland and abroad. Have you made any foreign Wills? Do you have any other interests at home or abroad? What items of value do you own – car, jewellery, shares, unit trusts, furniture, bank accounts and so on? Do you have any pensions or life insurance or endowment policies, and what arrangements are provided in them should you pass away? Joint accounts should be carefully examined as it is not automatic that the other account holder will take over on death.
The following items should be considered and it is important that the full extent of your assets and liabilities are ascertained.
Items to consider include:
- Your assets, their value and where they are located
- Your relatives and immediate family
- Who would you like to act as your executor?
- The proposed division of your estate i.e. where do you want any cash to go, who do you want to benefit from your property either real or personal and do you have any particular requirements?
How to Effectively Plan for your Death
1. Joint Property
Joint property passes automatically on death and often for married couples, this is the recommended practice. Bank accounts, real property, life policies are to be held in joint names and this often avoids difficulties that can arise from one party passes away. These assets usually transfer automatically on the death of one person and very little paperwork is required to regularise the position. Importantly, bank accounts usually are not frozen in these circumstances so that the surviving spouse or civil partner does not face any financial difficulties by being prevented access to bank accounts.
It is important to note however when a bank account is opened that both parties should ideally sign the statement confirming that the account for the purpose of survivorship. In the circumstances where a joint account is owned by an elderly relative such as a parent and the other joint account holder is a child of that person then more than likely the account is opened for the purpose of convenience and this could potentially be disputed by other family members in the event of death of one of the parties.
2. Capital Acquisitions Tax (CAT)
The tax payable on gifts or inheritances in Ireland is called Capital Acquisitions Tax and it has certain group thresholds which apply depending on what type of relative is inheriting or receiving a gift. It is important for the purpose of estate planning that the Testator understands the CAT thresholds so that beneficiaries are not unnecessary burdened with substantial tax liability. A number of tax exemptions apply in respect of CAT in relation to business and farms and certain criteria are required for beneficiaries to be able to avail of these exemptions.
3. Discretionary Trusts
Discretionary trusts are used for instances where a Will is made to provide for a minor child or children. It can also be made to provide for children not yet born.
Discretionary trusts are liable to a once off tax payment of 6% on the death of the person creating the trust. A further payment of 1% is also payable on the 31st of December each year after the initial payment of 6% is made. These payments only need to be paid once all children reach the age of twenty one and if the trust is wound up and fully distributed within the period of 5 years from when the youngest child reaches the age of twenty one a refund of 3% from the 6% amount can be claimed.