Benjamin Franklin, one of the founding fathers of the United Sates once said;“There is nothing more certain than death and taxes”. Nothing has changed, except that Wills have become more complex. If you don’t have a Will or you have a badly drafted Will your estate maybe distributed in a manner not consistent with your wishes. The implications for your beneficiaries could be significant –

• Substantial tax liabilities with a significant proportion of assets that you have worked for over a lifetime going to the taxman.
• Expensive litigation over challenges to the Will.
• Yours assets and possessions being distributed to people you had not intended.
• Complex repercussions where an estate is insolvent.
• In recent years there have been a significant number of changes in legislation affecting Wills. It is important that you have your Will reviewed.
• Careful drafting of caveats if you own property abroad and/or have a Will in another country.
Failure to address this issue could lead to your Irish Will being null and void.

Why do I need advice on drafting a Will?
The most basic Will can take up to 4 hours to draft, take instructions, alter and execute accurately. A properly drafted Will ensures that your last wishes are respected. At Malcomson Law our Succession Planning, Wills & Probate expert Sinead Byrne will take you through the complexities of tax, inheritance law and other legal issues ensuring your Will meets your wishes. Badly drafted Wills which are inexpensive or free may not take into account taxation issues, potential claims against the Will and other matters. A badly drafted Will can create significant problems for the administration of your estate when you die. When we draft a Will we consider all the issues; personal, legal, tax and practical matters.

What’s next?
Phone us at 059 913 1745 (Carlow) or 01 87 444 22 (Dublin) and we will set up a consultation. Before this initial consultation we would recommend reviewing the “Wills Check List” we provide and consider how you would like to address the distribution of your assets and personal effects. At the initial consultation we will review your wishes with you, ensuring all legal and tax obligations are considered. Once we have drafted the Will and it meets with your approval it’s signed, you receive a copy and the original is stored in our fireproof Wills safe.

1. Farmers beware – The taxman cometh
Research published at the start of 2013 by Macra Na Feirme found that “48% of farmers have no identified successor”. Most farming families do not plan adequately for succession. Unfortunately you can’t take all your assets and worldly belongings with you when you pass on. This leaves two options. You can leave no Will or a badly drafted Will, ensuring that you leave a legacy of family in-fighting, legal fees and the taxman reaping the benefits of your life’s work. Alternatively you can succession plan. Agricultural relief is available where 90% of the beneficiaries’ assets after taking the gift or inheritance are agricultural in nature. In order to qualify for this relief you have to be a farmer. There have been a significant number of situations over the years where incorrectly drafted Wills or failure to succession plan properly have generated large tax liabilities. There are many considerations that have to be taken into account when drafting a Will for the farm. Some of the many issues that need to be addressed are –

• How to bequest agricultural property together with cash sums to your beneficiaries.
• Does the farm machinery, livestock and bloodstock qualify for agricultural relief?
• The loss of agricultural relief on the farmhouse where land transfers have separated the farmhouse from the agricultural land.
• Do milk quotas qualify for agricultural relief?
• Do single farm payment entitlements qualify for agricultural relief?
• How are farming assets valued for the purposes of tax assessment?
• Do debts or encumbrances have any effect on the above?

Remember agricultural relief must be claimed and does not apply automatically. We have experienced a significant number of people who have inherited a farm, applied for the relief and as a consequence of a badly drafted Will have had a significant tax bill. The key to successful succession planning is to start the conversation with your family early. This avoids any misunderstandings. Plan carefully and engage professional tax and legal advisors.

2. Avoid expensive tax bills.
Dwelling House Relief: Mary was left a house in a Will. Mary with her partner Jack had occupied the house as their main residence for the last three years. Under normal circumstance they would be exempt from Capital Acquisitions Tax. However, Mary & Jack were also left a share in respect of a holiday home which precluded them from claiming the dwelling house relief and resulted in a significant tax bill from the Revenue. This could have been avoided through careful drafting of the Will.

3. Avoid expensive litigation.
Challenging a Will. In the case of Elliot V Stamp, part of the case addressed the litigation costs association with challenging a Will. The case clearly demonstrated the greater than ever need for a comprehensive instruction sheet with clear, concise attendance notes drafted by the solicitor taking the Will. This case illustrated that if somebody challenges the validity of a Will, and the executors of that Will can produce an instruction sheet or/and attendances from the time that the Will was created, then the challenger may be held liable for the full costs of the litigation. Mental Capacity. As people live longer the issue of a person’s mental capacity to sign a legal document including a Will has become an issue. The case of Hawkes v Burgess gives important guidance on the extent to which a Will may later be held invalid on the grounds of lack of mental capacity. The court commented in that case that it would be difficult for a Will to be challenged on the grounds of mental capacity if an experienced solicitor has prepared the Will and assessed their client as mentally capable. In this particular case the solicitor was an experienced drafter of Wills, preparing an average of one Will per week. File notes in relation to the preparation of the Will confirmed that the solicitor was satisfied with the mental capacity of the testator. The solicitor had read over the terms of the Will to the testator, explained them to her and she was happy with, and understood the terms. Medical evidence was produced after the death to conclude that the woman who had made the will was unlikely to have had sufficient mental capacity to make a Will. However, the views of the solicitor were given more weight by the court and it was accepted that there was no issue over the person’s mental capacity when they signed the Will. In this regard it should be noted that taking any litigation against the estate will be done with the extreme benefit of 100% hindsight and therefore 110% foresight is required!

4. Distribution of your assets to people you had not intended.
Benefits in a Will to a predeceased Child. Under Section 98 of the Succession Act 1965 where a bequest is left to a child, and that child dies before the testator, and that child has children, then the benefit to that child does not lapse to the residue but takes effect as if the death of that person had happened immediately after the death of the testator i.e. passes under that predeceased child’s Will or intestacy. In many cases the testator would intend that his grandchildren would benefit and this can be achieved by inserting a gift over to the grandchildren in the Will. In practice this section is frequently misapplied or confused or ignored resulting in a distribution of the assets which are not in accordance with the testator’s wishes. The case of Marley V Rawlings indicated an unfortunate mix up at the time of execution of an elderly couples Wills. The husband signed the wife’s Will and the wife signed the husband’s Will. The intent of both was that in the event of the spouse predeceasing the estate was to be left to the adopted child and not to the two natural children of the parties with whom they were not close and whom they did not intend to benefit. The case raises the question as to how a testator executed the Will of another person if the Will was read over to them or read to them prior to execution. As a consequence of expensive court applications, the Will is to be distributed under the rules of intestacy so that the children who were not intended to benefit will now end up receiving two thirds of the estate.

5. The complex repercussions where the estate is insolvent.
Prior to the Personal Insolvency Act 2012, if a person died insolvent the Succession Act 1965 sets out the order in which the estate may be distributed. However if a person who has entered into a Debt Settlement Arrangement or a Personal Insolvency Arrangement under the Personal Insolvency Act 2012 dies after the agreement takes affect then the impact of that death on the arrangement will depend on the terms that were agreed during the course of that arrangement. In an insolvent estate any transfer of assets from the testator to a third party, into joint names or any nominations on any accounts needs to be reviewed. This review covers five years before the date of death and ascertains that these assets correctly fall outside the hands of creditors. These issues should be considered at the date of creation of the Will if there are insolvency issues. An issue which is of increasing significance and importance in the present economic climate is in an estate where all the creditors have to be paid. Serious and complex issues regarding estate administration can arise if there are not sufficient assets within the estate to meet all the creditors. Care must be given as to how wishes are defined. Definitions may impact upon which beneficiaries may see his or her benefit utilised for the discharge of debt or reduced pro-rata with others. Where there may be potentially insufficient assets in the estate after the payment of the debts and liabilities, careful drafting of a Will can address these issues.

6. Consequences of recent changes in legislation Nursing Home Support Scheme Act 2009.
This act provides for ancillary estate support to be secured by way of a charge on land or property. Section 47 of the Succession Act 1965 provides that unless indicated to the contrary in the Will, if a person dies leaving an interest in the property that is at the time of their death charged with payment of money, then the charge should be repaid out of that property and not as a general debt of the estate. The charge could be created in certain circumstances by an elderly persons committee if they are a ward of court, their solicitor if they have executed an enduring power of attorney which was then registered or their care representative which can be appointed under the terms of the Act. Accordingly the terms of the Will could potentially be frustrated without the testator being aware of the above. Specific instructions need to be taken at the date of the drafting of the Will as to whether there is a charge affecting the property at the date of death, and what assets of the estate are to be liable for the repayment of that charge. The Civil Partnership and certain rights of Co-Habitants Act 2010. Irish society has changed dramatically since the 1965 Succession Act and there are increasing numbers of same sex couples and non married heterosexual couples. The 2010 Act reflects many of these societal changes. The effect of this Act on the law of succession is immense. It means that couples of the same sex are in many cases given the same rights as surviving spouses. A redress scheme was created for couples of the opposite sex involved in an intimate and committed relationship whereby a claim may be made against the estate of a deceased person. The difficulties of advising a testator of their civil partner/co-habitants rights is all too apparent and the fact is that more than one civil status (formerly marital status) can apply to the same testator at any one time. For example, it is possible to have an ex-spouse who may still have certain rights under the family law acts and to have a civil partner simultaneously or indeed an ex-spouse and an ex-civil partner and a co-habitant simultaneously.

7. Property abroad.
It is relatively standard in drafting Wills, unless the contrary is expressed that the Will would revoke all previous Wills in existence. This however may not always be the intention. Increasingly after the Celtic Tiger you will find situations where people own property abroad. In such circumstances they would have been advised to have a Will put in place abroad in relation to that asset. If that Will had a general revocation clause, in circumstances where it only dealt with foreign assets, the Irish Will may be revoked so that the remainder of the property in Ireland would pass on intestacy. This would frustrate the intentions of the testator.

If you have an enquiry regarding succession planning, wills, probate or challenging a will call us on 01 87 444 22 or email us at help@mlaw.ie