Making your Will – do it now!
This important material has been made available courtesy of our colleagues in the Cork Branch. If you have not had the opportunity to read this material in the excellent Cork Branch Newsletter you should read it now and make a will if you haven’t already done so.
You don’t need a Solicitor to act as Executor of your Will
It is important that you actually make a will because if you do not, and you die without a will, then the law on intestacy decides what happens to your property. A will can ensure that proper arrangements are made for your dependants and that your property is distributed in the way you would have wished after you die, subject of course to the legal rights of spouses and children.
A person who dies without having made a will is said to have died ‘intestate’. If you die intestate, this means your estate, in other words, everything you own, will be distributed strictly according to the law, by an administrator. This is not a situation anyone should leave their dependants in, if at all possible. It usually results in a longer and costlier process to administer the estate.
In this article we are going to give some information on making wills for persons who would have the normal estate with or without spouse and children or relatives. It is best to go to a Solicitor to make a will in the normal course of events, and especially so, if you think your will could be rather complicated due to certain family arrangements or otherwise. It is best to go to a solicitor and instruct him/her on the way you wish to structure your will, subject to the succession acts of course.
It makes sense to get professional advice in drawing up a will. A solicitor can help you to get the wording right so that there is no ambiguity about your wishes and no scope for legal challenges after your death. The solicitor will be able to ensure that the will is structured so that it does not conflict with the succession acts. The following information applies to the vast majority of people who would have reasonably straightforward family situations.
In some cases it can be worthwhile getting separate tax advice, particularly if the estate is large or complicated.However, many people appoint their Solicitor as Executor of their will unaware of the additional cost of this after death. But there may be no need to appoint your solicitor as executor to your will, and in most cases it may not be advisable to do so, as in many cases that’s a job that can be done just as well, and at a considerable saving in cost, by one or more of the beneficiaries under the will.
Before they were found to be anti-competitive, solicitors had an agreed scale of charges for probate work. It was based on the value of the estate starting at 3.5% on the first £10,000 as it was then. Then there was a 3% charge on the next £10,000 and 2% on everything thereafter – and that was before VAT and expenses or ‘outlays’ as solicitors prefer to call them.Some solicitors may still be using that formula when calculating their charges. Some may even charge more. It is rather unusual though for the charge to be less than 2% of the value of an estate (except for very large estates). But even that represents a significant charge on what nowadays would be regarded as a relative modest estate – €10,000 on an estate worth €500,000 which might comprise little more that a house. A fee of 3%, or more, which would not be unusual, would cost in excess of €15,000. And that may only be the fee for taking out probate, not including ‘outlays’ and transferring the property to the beneficiaries.Taking out probate is not a very difficult or skilled job, and in this article we will endeavour to explain the process involved.
On the average estate, comprising of a house, with contents and some savings, it involves little more than carefully listing the assets and liabilities of the deceased person, and a couple of visits to the probate office. It can also be a lot speedier than having a solicitor on the job and there can be a greater satisfaction from being in control and knowing exactly what is happening – not to mention the saving that is being achieved!
It is essential when drawing up a will to name an executor or executors. There can be more than one Executor, and it very often makes sense to name two or even more, perhaps a spouse, and a son or daughter. It is prudent when appointing executors, if there is more than one, to have a decent age gap between the executors for obvious reasons. Any person named as an executor can refuse to act in that capacity, so it’s important to ask, particularly if naming someone outside the immediate family. Acting as executor can be an onerous task and particularly so, if naming someone outside the immediate family. In such a case, it is normal to provide in the will for payment to be made for the work involved. This payment will be taken out of the deceased estate. If the Solicitor drawing up the will is also named as executer, he or she is sure to make the necessary provisions to enhance their own remuneration, and they will then be there by right, and not easily removed by beneficiaries of the will, even if they suspect undue delay or downright incompetence in the collection and distribution of assets. If, for instance, a spouse is appointed as executor, he or she can always employ a solicitor at any time subsequently if they feel the need for some assistance. But there is then scope for shopping around and the solicitor is answerable to the executor and can he removed, and/or left unpaid if he or she isn’t doing the job. The solicitor may then be paid for the work done, but the crucial thing is, that they are not entitled to a percentage of the Estate.
It is advisable to go to a solicitor to make a will, as a so-called homemade will, if completed correctly is perfectly valid; it can be rejected by the probate office for even simple mistakes that an ordinary individual may not be aware of. Your will must be signed by you and your signature must be witnessed, so do make sure that the witness actually witnesses you signing the document. They must of course be both present at the same time as you sign the will. (When a witness is signing a will, they do not have to see what is written on it. A signature of a witness added afterwards will render the will invalid. It is also important to note that for a will to be valid, the witnesses cannot be persons who will gain from your will. Never attach anything to your will, even with a paperclip, and especially not with a staple, as such things have caused problems in the past. Though, as stated earlier, a homemade will, if properly made is quite valid, we do not recommend them as there are too many possible pitfalls.
As this is the first in a series of 3 articles dealing with wills and probate to be published with our Newsletter, it will be continued in our next 2 Newsletters. Members might therefore like to keep this page for future reference with subsequent articles which will deal again with Wills and Probate – and how to go about it.
How to Go about Taking out Probate
As stated in our last Newsletter, there is no great difficulty, or the need for legal training in taking out probate. In this document we will describe the process of administering a deceased person’s estate in Ireland.
After you die, somebody has to deal with your estate, by gathering together all your money and possessions, paying any debts owed, and then distributing what is left to the people who are entitled to it. If you leave a will before you die, one or more of the executers you named, usually has to get legal permission from the appropriate probate office in the area in which you lived at the time of death to do this. Permission comes in the form of a document called a Grant of Administration.
If there is a will and an executer has been appointed, then the executer deals with the estate, including the rights of spouses and family members.
It is not within the scope of this article to deal with the situation where there is no will, or with situations where there are complicated issues of relationship to be resolved. We will deal with situations which would apply to the vast majority of situations where there is a surviving spouse with or without children.
Taking out Probate, basically means having the probate office or the appropriate local probate Registry certify that the will is valid and that all legal, financial and tax matters are in order, so that the executer can get on with the job of administrating the estate.
Before this can happen, however, there is a very simple form to be filled out.
It can be obtained from any of the 14 Probate Offices around the country, or from:
Probate Office, Personal Application Section,
First floor, 15-24 Phoenix Street North,
Smithfield, Dublin 7
Telephone No.01-8886179 or 01-8886181.
In Cork City, the probate Office is located in the Washington Street Courthouse.
The hardest thing in filling out the form is gathering the information required, such as Bank account details, any other savings or investments, Insurance policies, motor car, etc. Generally, the financial institutions or Insurance companies will readily supply these details to the Executor. You have to list details of the assets owned by the deceased at time of death, and all his or her debts. Even if you employ a solicitor, you’ll probably end up doing a lot of this yourself anyway. Of course it would be prudent and advisable for everyone with or without a will to make such a list, detailing bank accounts, credit union, investments etc. and update it at least annually. This of course would alleviate the burden on the executor considerably.
It is important to note that joint bank accounts, Credit Union accounts etc. or joint ownership of property, insurance policies etc., are valid ways of deciding the fate of your assets during your own lifetime, as on death, the asset would usually pass automatically to the survivor. At this stage it is necessary to submit the will to the appropriate office, also the death certificate, bank statements, title deeds of the house, land certificates with property, estimated values of non cash items, such as a motor car, and also details of any bills outstanding, and expenses incurred by the executor.
More often than not, the documents will not be completed at this stage. However, the Probate Office official will be able to pinpoint what, if anything, is missing, and explain where the information can be obtained. It may even require a further meeting — or more, before Probate is granted, but once it is granted, the Exchequer (The Taxman!) has the right to gain access to all the deceased person’s assets and to distribute them as dictated in the will.
There is a responsibility on the Executors if there is more than one for ensuring that the assets are protected, that any outstanding debts are collected, and bills paid. The debts may in certain cases include taxes. (It is extremely important to note, that any underpayment of tax by the deceased during their lifetime, especially income tax, whether due to ignorance of the law or deliberate, will usually be collected by the Revenue at this stage, most likely with interest and penalties.) More about this later.Under the succession acts, the Executors of the will have the responsibility for ensuring a spouse and children are aware of their rights under the act, i.e., the proportion of the estate they are legally entitled to under the succession acts, so that they don’t accept less from the estate than is their legal right.
No matter what a will says for example, a wife is entitled to half her husband’s estate if there are children and to two thirds if there are no children. Under Irish law, a will cannot over-ride this basic entitlement.There is also a responsibility for ensuring that any inheritance tax is paid. The liability is on the recipient, but the Executor may be held responsible by the Revenue if the tax is not paid. This may sound rather alarming, however, in the majority of cases there is no liability for inheritance tax. There is no tax between spouses, while a Child (under current limits) may receive a total of €478,155 from parents before attracting a liability for inheritance tax. In our next article, we will deal with other inheritance entitlements as well as situations where an unexpected tax bill could arise and also with some of the simple arrangements you can make now, to reduce some of the difficulties which could arise after your death.
Obtaining Probate – Some Useful Advice
This article is a continuation of the articles on Wills and Probate published in our last two Newsletters.
This means that a child, i.e. son or daughter, can inherit a house in addition to other assets worth €478,155 from a parent — tax free.
If the deceased has been in receipt of a Dept. of Family Affairs pension the Dept. has to be informed of the death — and they then have six months to claim back any overpayments or income tax that was not deducted, should this have occurred.
One situation where this can occur for example is an overpayment by the Dept. on a means tested pension when full details of the deceased’s assets become available on the probate form. The repayment (usually with penalties and interest added) is thus taken out of the Estate.
In this situation, it is the Executor’s responsibility to ensure that monies and property are not distributed — or that sufficient money is held back from distribution, if he/she becomes aware that such a situation may arise.
For this reason, it is strongly recommended that anyone in receipt of an ESB pension for example, and also a pension, or partial pension from the Dept of Social and Family Affairs, (Old age pension) should ascertain during their lifetime, that income tax, if applicable to the individual’s circumstances, is properly deducted from both pensions. It is your responsibility to do so. The Revenue will check on this before clearing the assets for distribution. The consequence of not ensuring that all taxes, mainly income tax is properly deducted from all income (where there is a liability) is that a very much larger sum (again, including interest and penalties) is likely to be demanded from the Estate. Depending on the circumstances, this could double or more than double the amount due in income tax over and above what would have been paid if properly deducted during your lifetime.
We have heard of such cases actually happening — so be warned!
Anyone who thinks they may be in this position now should approach their local income tax office and make arrangements to regularise their income tax. For reasons stated above, it could cost the Estate an awful lot more if the problem arises during probate.
Remember, that in this article, we are mainly pointing out the possible pitfalls—most of which, particularly the income tax situation could occur whether you have a Solicitor as Executor or not. In the majority of cases these problems will not arise.
There are other points which can be dealt with in a will to make your intensions or wishes clear. If for example you wish to leave a particular item or bequest to a specific person (whether a friend or beneficiary) then that should be specified in the will. This is called a residuary clause, and is important because in its absence the bequest can fail (be considered invalid) and then revert to this residuary clause. Your residuary clause could also say that anything not covered in your will would be a gift or legacy to someone and would say some like “the remainder of my estate I leave to my daughter Margaret.”
Situations that involve separation of a couple, can involve legal issues and a best dealt with by a solicitor. Divorce, however automatically ends succession rights. Unmarried partners have no automatic legal right to each other’s estates, although partners can make wills which favour each other. These wills however cannot cancel the legal rights of a spouse if someone is separated but not divorced. If a court finds that the deceased gave away property or disposed of assets before he/she died with the intention of defeating, or unfairly reducing the legal rights of a spouse a court can intervene to rectify the situation.
Having Bank and Credit Union accounts, Insurance policies etc, in joint names, and joint ownership of property such as the family home, are valid ways of deciding the fate of your assets in your own lifetime. Not only that, but it gives the surviving spouse, access to finance immediately, as the surviving spouse will now be the sole owner of the accounts. This is important as assets of the deceased are likely to be tied up for up to a year or even longer during the probate process.
Where joint Bank accounts are opened with a spouse or even a child it is presumed that the surviving party will be fully entitled to the money in the account when the other party dies.
It is also advisable to have all utility bills, such as Electricity, Gas, TV etc in joint names as they can smoothly pass to the surviving spouse after bereavement.
A bereavement Grant may be payable on the death of an insured person or the spouse of an insured person, i.e. a bereavement grant is payable on the death of a person who has been receiving a contributory pensioner on the death of his/her spouse/partner or qualified dependent.
A claim for a death grant must be made within 12 months of the death. You can get a claim form from your local Social welfare office, or from: Bereavement Grant Section, Social Welfare Services office, Government Buildings Ballinalee Road Longford.
Original death certificate and funeral bill are required. The grant is a once off payment of €850.
This article concludes our series of three articles about wills and probate, and we hope it has been of interest to our members..
