(07 Jan 2010)
Start the New Year with a Good Resolution
Questions to Put Your Affairs in Order for 2010
Do I need a Will? Yes. Everyone over 18 should have a Will. A Will is a document in which you can set out what is to happen to your property and who will benefit from it after your death. It is a statement of future intention. Your property is still yours to do with as you please until your death. While someone aged 19 might not be interested in making a will, a 19 year old who has just inherited a farm should have a will.
What will it cost? Some solicitors will make a Will for you for free. Most will charge between Euro 100 - Euro 300 plus VAT for a Will. It depends on the extent of the advice required.
Advertisements saying: ‘basic will for free’ is just that –Basic! Read the small print first. Don’t expect good advice to be free. When it comes to making a Will don’t DIY as such Wills may not be properly drafted and can very often end up in court.
What if I don’t make a will? It’s messy and it can leave a legacy of uncertainty and hatred for generations.
If you don’t make a Will your estate will be divided up among your next of kin, in accordance with the Succession Act as follows.
Spouse and issue (issue are children and grand-children): Two thirds to spouse; one third equally among the children. If a child pre-deceases then their share will pass to their children equally.
Spouse and no issue: Spouse takes all
Issue and no spouse: Children take equally but again, if a child pre-deceases then their share will pass to their children equally.
Parents are next in line, followed by brothers and sisters, nieces and nephews and so on. If no relative can be traced then the State will inherit your property.
Having property divided by law can sometimes cause problems, particularly if any of the children are under 18 or are suffering from a mental disability , or in a farming situation where a son or daughter may have been working on the farm and the other children have gone away to be educated. As all children are automatically entitled to a share in the estate, the child who has been working on the farm may feel aggrieved, which could lead to family arguments. Court and expense.
How do I talk about it to my family? For many people, talking about making a Will is like talking about death. Some think they are tempting fate by making a Will and so avoid it altogether. Never in our experience have we seen a death certificate that stated: ‘Cause of Death – he made a Will.’ People die of a great many things but making a will is not one of them.
Talk perhaps to your family or a close friend and then go and see a solicitor. Some find it easier to speak directly with their solicitor. Whatever you decide, talking will help and it’s not as difficult as you think.
What should farmers watch out for? Think carefully about your will and who you are including or excluding. Is there potential for conflict between the children if you leave the farm to your eldest son? Sometimes children sue their parents’ estates where they feel the parent has not made proper provision for them in their Will. Challenging a parents’ estate in court leads to emotional fallout in the family not to mention the legal costs which will eat into the value of the estate.
What about Death and Taxes? Even after death you are not beyond the reach of the Taxman (the Revenue). If you don’t plan carefully and get the proper advice, the Taxman could take a substantial sum from your estate in Capital Acquisitions Tax (CAT) after your death. The Revenue focus on the people receiving the estate - these are known as beneficiaries. Spouses are completely exempt from CAT on property in Ireland but everyone else has a threshold, which is akin to a tax free allowance. Thresholds are based on the degree of relationship the beneficiary has to the deceased person. The 2009 thresholds are set out below but these change regularly and have dropped (with falling land values) over the last twelve months:
Group A - children - €434,000,
Group B - parents/siblings/niece/nephew/grandchild - €43,400
Group C – everyone else - €21,700
Agricultural relief and business relief are still available and were left untouched by the Government in the recent budget. These can reduce values by 90%- so for example a farm worth €3m becomes €300,000 for tax purposes. This example results in a nil tax liability for a child.
In our view tax advice goes hand in hand with making a will. Don’t pay taxes unnecessarily. Discuss any concerns you have with your solicitor or accountant.