Probate

 

Death is not a subject that many of us are comfortable discussing, so we may give little consideration to what happens to our estate, or assets, after we die.

But by making a will, you can ensure that your estate goes to whoever you wish. Trusts can make provision for infant children and those with special needs.

A person who dies having made a valid will is said to have died testate. Professional advice in making your will can help to identify tax issues which may arise on your death.

A person who dies without having left a will is said to have died intestate. In such a case, the estate is dealt with in accordance with the terms of the 1965 Succession Act.

The estate may well be divided in a manner not envisaged by the deceased person, resulting in hardship and unfairness for some members of the family, or even the surviving spouse or civil partner.

For instance, a son who worked on a farm all his life, in the expectation that one day he would own it, might find himself sharing it with siblings who left home years before.

As in other areas of law, probate law has its own body of words and phrases which may be confusing.

Here are some frequently-used words and questions which often arise in relation to probate matters. What is a will?

A will is a solemn document in writing executed by a person giving directions as to the distribution of the estate after their death.

What is a testator?

A testator (or testatrix, if female) is a person who executes a will. What is the difference between a grant of probate and a grant of administration?

A grant of probate issues to an executor named in a will. A grant of administration issues to an administrator in the estate of a person who dies intestate.

The executor or the administrator will administer the estate.

What is an executor?

An executor is a person named in a will by a testator, and entrusted with proving the will by grant of probate and administration of the estate.

What is an administrator?

An administrator is a person appointed by a grant of administration intestate to administer the estate of a person who dies without leaving a will.

What is a personal representative?

A personal representative is either an executor to whom a Grant of Probate has issued or an administrator to whom a Grant of administration intestate has issued.

What is a person’s estate?

The estate of a deceased person consists of all of the property left by that person.

Is there any advantage in making a will?

If you die leaving a will, your estate will divided in accordance with its terms as far as possible.

If you die intestate because you have not left a will, your estate will be divided according to the 1965 Succession Act, in a manner which may not reflect your wishes.

I am a married man with three children aged 22, 20 and 18.

All of the property is in my name. What happens if I die without having made a will?

After your death, your property will be divided as follows: two thirds to your wife and one-third between the children, giving them one ninth each. The children – all being over the age of 18 – are entitled to their shares immediately.

This can cause enormous difficulties, particularly if they want their share out of the family home.

Furthermore, if you have left a large estate, your 18-year-old may be in line to receive a large benefit at a tender age.

My mother is an elderly widow who owns the farm. I have four brothers and sisters, all of whom went to live in the US years ago. I have worked on the farm all my life.

What happens if she does not make a will leaving the farm to me?

If your mother does not make a will, you will only have an entitlement to one-fifth of the estate after her death – and each of your siblings is also entitled to one-fifth.

I have been living with my girlfriend for the past ten years in rented accommodation. I am divorced and have four children from my marriage. I have insurance policies and a number of bank accounts.

What happens to my girlfriend if I do not make a will?

If you do not make a will, she will get nothing and your four children will get one-quarter each, assuming that the court extinguished your wife’s succession rights when you were divorced.

What is capital acquisitions tax?

Capital acquisitions tax comprises gift tax and inheritance tax. Gift tax is charged on taxable gifts taken (other than on a death) on or after February 28, 1974, and inheritance tax is charged on taxable inheritances taken (on a death) on or after April 1,1975.

How much can I leave my spouse free of inheritance tax?

There is no limit on what you can leave to your spouse.

How much can I leave my grandchildren, brothers and sisters, nephews or nieces, free of inheritance tax?

Provided that the person inheriting has not received previous gifts or inheritances from similar sources, the amount of the tax-free threshold for 2011 is €33,208.

How much can I leave to an unrelated friend free of inheritance tax?

Provided the person inheriting has not received previous gifts or inheritances from similar sources, the tax-free threshold for 2011 is €16,604.

I will inherit the 100-acre family farm from my parents when they die. It is valued at about €1 million. Will I have to pay an enormous amount of inheritance tax?

No. If you qualify for agricultural relief under section 89 of the Capital Acquisitions Tax Consolidation Act 2003 (CATA), the market value of the agricultural property is reduced by 90 per cent, valuing the farm for inheritance purposes at €100,000, which is below the tax free threshold for inheriting from a parent.

I live with my widowed mother in the family home, which she has willed to me. The house is valued at €2 million. I will not be able to afford the inheritance tax when she dies. Will I have to sell the house?

No. If you have continuously occupied that house as your only or main residence for at least three years immediately before your mother’s death, you may qualify for dwelling house relief under section 86 of CATA.

If you satisfy the conditions in that section, you can take the house free of inheritance tax, but you must continue to occupy it as your main residence for six years or there is a clawback of relief.

(courtesy of sunday business post)

Tim Bracken, a barrister, and Margaret Campbell, a Cork solicitor, are the authors of The Probate Handbook, published by Clarus Press