WILLS and
TRUSTS
Kevin Doughan, BCL, TEP
Head of Probate - Holmes O’Malley Sexton
Solicitors, Bishsopsgate, Henry Street, Limerick
Monday, 2nd November 2015
www.homs.ie
The statistics
• 66% of the Irish adult population do not have a Will
How many people make wills
90
80
70
60
50
40
30
20
10
0
<45 yrs
45 - 64 yrs
>65 yrs
• A will is important- if you don’t have one, put one in place and review your
will regularly
• Focus is to encourage you to make a will if you have not already done so
• Not a DIY Toolkit-always seek professional advice
Advantages of Wills1. Allows you to specify your wishes- disinherit less than loved ones!
2. Creates Certainty- you know who is getting what
3. Tax advantageous- can minimise tax exposure
4. Allows you to appoint chosen executors, trustees
5. Allows you to appoint testamentary guardians- to take care of your children
6. Ensures that adequate financial provision can be made for dependents.
7. Ability to set up discretionary trusts for children with particular needs.
When should you contemplate doing a will
• Everyone irrespective of age should have a will
• It’s a must have if you have children, property, savings or assets
What is a will
• A written document expressing how a
person wishes to dispose of their assets after
their death.
• A will speaks from death
• Change as often as one wishes before death
• It should dispose of all of your assets
• Not all property will pass under a will.
• Assets held under Joint Tenancy will pass by
survivorship automatically to the surviving
joint holder
• Always check the ownership structure
especially if owned by more than one
person.
• Ademption- occurs where property
bequeathed in the will no longer exists at
date of death.
• Abatement- insufficient assets to meet
liabilities- all bequests reduce in proportion.
• A marriage revokes a will, Divorce does notVery important to remember.
Things to do before meeting your
solicitor
• Prepare a note of your personal circumstances- relationship
status and children, next of kin. If divorced/separation bring
Court Orders with you.
• Prepare an asset inventory- list assets held solely and jointly
with others.
• Have an idea how you wish to appoint as executor, Trustee
and Guardian.
• Have reasons for benefiting people, but more so those you are
not.
• Bring money laundering documentation- Passport/drivers
licence and a recent utility bill
• Bring title deeds for inspection- if available.
• For tax purposes- have a rough idea of net worth
Common problems- Why
• DIY Wills
• No Wills/Invalid Will- Intestacy
• Failure to update Wills
• Ensure assets are distributable under the Will- Pitfalls- Joint
property, nominated credit Union accounts, trust property.
• Giving away more that you have- % distribution is a useful
tool- reacts to fluctuations in estate value.
Intestate Estates- Dying without a
Will
• Who are the nearest next of kin? They have priority.
• Spouse- 100% or 2/3 (if children also) and children 1/3
• Children/issue (marital, non marital and adopted)- one third.
• Step child/foster child- no automatic rights.
• Provision can be made for such children in a will
• Per stirpes distribution- children of pre-deceased children take
their parents share.
For your will to be valid-Must ensure the following
1.
2.
3.
4.
5.
6.
7.
Must be at least 18 or has been married
Must be of sound disposing mind
Test for capacity- it’s a legal test rather than a medical test.
Must be in writing- no verbal wills
Must be signed by the testator or by someone instructed by
him while in his presence at the foot or end of the will
Must have two witnesses to your signature or mark.
Any alterations to a will must be made before it has been
signed… any changes made after execution have no legal
effect.
Basic elements of a will
 Name and address of testator- best practice to use name as
appears on birth certificate- avoid use of common names
 Include revocation of previous wills
 Appointment of executor, trustees and guardians (if children
under 18)
 Provision for specific bequests and pecuniary legacies
 Establishment of a trust (if necessary)
 Clear residuary clause- always have one
 Deal with advancement and appropriation
 Schedule of powers reserved for trustees
 The date
 Signature of testator
 Attestation clause
 Signature of witnesses- name, address and occupation.
Types of bequests
Pecuniary bequests- A cash amount
Specific bequest- gift of specific items- property, jewellery shares
Residuary bequest- the remainder of the estate after debts, taxes, and legacies
Tips
Avoid benefits to attesting witness or his/her spouse
Nothing wrong with beneficiaries appointed as executors- careful to avoid conflict
of interests.
Lapse- Golden rule of Succession is you have to survive to inherit- always include
a gift-over in case beneficiary dies before you.
Section 98- exception to lapse-only involves children
Spouses
• Spouses- Have a Legal Right Share- 1/2 (if no children) or 1/3 (if
children) of net estate at date of distribution
• Inviolate- cannot be challenged
• If no provision in will- LRS vests automatically
• If Provision in Will- Spouse has right of election
• Time Limit for Election- 6 months from Grant or 1 year from
notification.
• Renunciation of legal right share- Spouse can renounce
• Does not prohibit bequest in a will to a spouse who has renounced.
Civil Partners & Cohabitants
• Civil Partners- Similar to spouse- but may be reduced by children’s claims
• A child can erode the LRS of a Surviving Civil partner but not a surviving
spouse.
• Cohabitants- 2010 Act- must be financially dependent
• No automatic rights- Must be a qualified cohabitant- Relationship of 2 years
(if children) or 5 years ( if None).
• 6 months from date of representation to apply for provision.
• Provision cannot exceed share to which spouse/Civil Partner is entitled to.
• If deceased is married and co-habiting- the cohabitant cannot erode legal
right share of spouse- so leaves very little for cohabitant.
• Cohabitation agreements- An opt out
• Cohabitants- normally strangers- for Capital Acquisitions Tax purposes.
• Any award by court however is exempt from inheritance tax
Testate estates- children
• No automatic rights and no obligation to treat children equally.
• Claims by children of the surviving spouse cannot affect a bequest in
the Will to their parent.
• Section 117 application- application by disappointed child.
• 6 months to institute proceedings- Strict timeline.
• Section 98- exception to lapse- preservation of benefit for child’s
estate
• Minor children- consider trusts- 18/21/25
• Children with disabilities- Discretionary trusts
Divorce & Separation
• Divorce-no longer considered spouses- is there a blocking
order in place (Check Divorce Order)- prevents spouse seeking
further provision from the estate- does not apply if prior
spouse has remarried.
• Separated spouses- always review separation agreementhave succession rights been extinguished- still considered
spouses for succession act 1965.
TRUSTS
• Can be set up while alive or in your Will
• Important consideration for minor children (under 18) or
beneficiaries with disabilities
• Trustees are financial custodians, with responsibility to look
after trust funds.
• When should trust end? 18/21/25.
• Always include provision to allow trustees to discretionally pay
out capital and income to beneficiary for education and
maintenance.
• Trustees responsible to trust beneficiaries.
• Meticulous accounts are necessary
TRUSTS FOR CHILDREN WITH DISABILITES
•
•
Discretionary trust is a must- very
useful
Trustees have discretion, when, if and
in what manner trust fund are paid
out- gives flexibility
Beneficiary has no right to the fundsonly right to be considered
• Emergency plan- are there enough funds there to react
• Can be used as form of protection trust- useful if beneficiary has alcohol,
gambling, addictions, and ensures funds wont be depleted by reckless
management
• Focus for parent is to ensure care and responsibility for the child can
continue after death.
• What about effect on disability entitlements?
• What happens to the trust funds on death of beneficiary- ensure provision
is in the Will.
Contact Details
KEVIN DOUGHAN, SENIOR SOLICITOR, TRUST
PRACTITIONER and TAX ADVISOR
HOLMES O’ MALLEY SEXTON SOLICITORS- Bishopsgate,
Henry Street, Limerick.
P: 061 313222
E: kevin.doughan@homs.ie
Disclaimer
• Kevin Doughan and Holmes O Malley Sexton Solicitors accept
no liability for the content of these guidance notes, or for the
consequences of any actions taken on the basis of the
information provided, unless that information is subsequently
confirmed in writing by Holmes O Malley Sexton Solicitors.
The information contained in this guide, is for general
information purposes only. While the information provided is
up to date, no representations or warranties of any kind,
express or implied, about the completeness, accuracy,
reliability, suitability is given, with respect to the information
contained for any purpose. Appropriate legal advice should be
taken at all times. Any reliance you place on such information
is entirely at your own risk.
• © Kevin Doughan