If making a will in 2021, there are things to consider that we didn’t have to many years ago. There are many principles, however, that remain the same. Here are some of the questions we are frequently asked.
How important is it really to make a will? What happens if a person dies without having made a will?
The State decides what happens to their property. If a person dies without a will, this is called ‘to die intestate’. The State will firstly decide who your next of kin is and then their entitlements, which are:
Surviving Relative Distribution of Estate
Spouse and Children Two-thirds to spouse
One-third equally among children
Spouse and No Children Spouse takes all
Children and no Spouse Divided equally among children
(or their children)
Father, Mother, Brothers and Sisters Each parent takes one half
One Parent, Brothers and Sisters Parent takes all
So, you can see how it’s more important than ever before to make a will. The nuclear family in Ireland has changed and these rules may not be in the best interest of many families.
It’s well over two decades since divorce was signed into law in Ireland. With divorces, come new relationships, second time marriages and blended families. Many families are now made up of full-siblings and half-siblings and we are seeing more challenges in will-making because of this and potentially more disputes. Not only that but stepchildren have no automatic entitlements to inheritance.
In making a will, can a person disinherit a spouse?
In the 1960’s when Charles Haughey was Minister for Justice, he argued that the right to disinherit a spouse was unacceptable under any circumstances. The Succession Act came into effect in 1965 and this allows a surviving spouse to claim a fixed share of a deceased’s spouse estate, even if the will has made no provision for the spouse. There may be instances where a married couple have separated and have new partners but haven’t formally divorced. This certainly can cause problems.
I found a website where I can make my will online quickly and easily. Is this a good idea?
Beware of ‘5-minute’ wills or ‘off-the-shelf’ wills that are being advertised now.
These usually have a disclaimer absolving themselves of all liability if things go wrong.
A will deserves time and attention and should not be made fleetingly, online or otherwise, for the sake of getting it done.
In Ireland, almost 70% of Irish adults don’t have a will.
In the UK the figure is 50%. However, the Law Commission in the UK is looking at softening the rules of will making because of the high number of people without a will. One such proposal is paving the way for electronic wills and there is a concern that changes expressed by voice message or even text could be taken into account by courts trying to decide what a deceased person’s genuine intention was.
While there is no such proposal here to use text messages or similar as an instruction of intent with regard to a will, online and ‘off-the-shelf’ wills have been in existence for some time. While there are many reputable companies out there that provide online wills, there are many where the documents provided are not comprehensive enough, could be open to dispute and could be easily misconstrued. We use our Will Questionnaire as an information gathering exercise and to streamline the process. We still engage in significant communication with the client having received this document. A ‘one-size fits all’ approach does not work when it comes to inheritance.
Traditionally our assets were made up of our home, car, money in the bank, any business interests. We live in a digital age now. Are there assets we should consider because of this?
As part of the process of making your will, you need to make a list of everything you own and many people forget about their online assets. These can be categorised broadly under 3 headings:
- Digital Assets with Financial Value
Examples – online banking, PayPal, online shopping accounts, cryptocurrencies such as Bitcoin.
- Digital Assets with Social Value
Examples – Facebook, Instagram, LinkedIn, Twitter
By 2100, there could be 4.9bn dead users on Facebook!
- Digital Assets with Sentimental Value
Examples – YouTube, iTunes, Spotify
To safeguard these digital assets and ensure they don’t end up in the wrong hands after death:
- Make a digital directory that contains details of all of your online assets and social media accounts. Include logins and passwords for all accounts, update this list as details change and let your solicitor know where this is kept.
- In relation to digital assets with financial value, you have the legal right to pass these on to your chosen beneficiaries as with any other asset.
- What would you like to happen to your social media - should it be closed down or memorialised? Who should sort that out or control it? You have the legal right to manage the deactivation, memorialisation or removal of your digital social life, but you need to specify your wishes in your will so that your executors can implement your wishes. Most social media applications have a function to allow you specify these instructions within them.
- Digital assets with sentimental value can be the most difficult to sort out. Many online applications such as YouTube and iTunes are accessed under licence agreements, so you do not have the legal right to pass them on to your chosen beneficiaries. They are not tangible assets you can pass on like photographs or CDs would be. So, make sure you have back-ups or hard copies of items you want beneficiaries to view after your death. You should also list them in a digital directory.
Are there any universal ‘golden rules’ for making a will?
Every situation is unique and needs to be discussed on its own merits but there is one piece of valuable advice for everyone:
Make your will for today’s circumstances. Review and amend it as your circumstances and those of any dependents change. Don’t make it on a prediction of what your circumstances will be if you live to 90 years of age.
For people who intend leaving their estate to their children, is it always advisable to split everything equally between all children?
People often think this is the fairest option, but it isn’t always so. Imagine a family home is left to four siblings. Three of the four are doing very well for themselves and fancy using the house as a second home, a holiday home. One of the four is relying on the sale of the house to put a child through college. This can certainly lead to disagreement.
Often people leave the house to the dependent who needs it most or who still lives at home or to the son or daughter who is working the farm, if the house is on a farm. The important point to remember is to make the will for current circumstances and amend it as circumstances change. For example, if a dependent became seriously ill and couldn’t work or if a dependent won the lotto, you would probably change your will!
What are the tax implications of inheritance? Is it more prudent to leave the family home in a will or to transfer it over as a gift?
Whether the donor of the family home is dead or alive, inheritance tax must be paid by the recipient above a certain threshold. The threshold depends on the recipient’s relationship to the donor.
Financially, it is slightly more expensive to receive a family home as a gift, as stamp duty must be paid by the recipient in that case. If the value of the home is less than 1 million, the tax payable is 1%. For homes valued greater than 1 million, it’s 2%. Stamp duty usually doesn’t apply on property left in a will.
For the person who is transferring the home as a gift, they may be liable to pay Capital Gains Tax. However, Capital Gains Tax usually doesn’t apply where the house has always been the donor’s principle private residence.
The Dwelling House Exemption allows a child to inherit the family home tax free provided a number of conditions are satisfied, which are:
- The child cannot own or have any financial interest in another house
- The child must have lived in the house for at least 3 years before they inherited it
- The child must continue to live in the house for at least 6 years after they inherit it
If you haven’t yet made a will, complete our Will Questionnaire to start the process. Or contact us to make an appointment.