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There is a common misconception that there is little or no merit in making a Will and it is easier to leave it to the laws of intestacy to decide how an estate is to be distributed.
However, a Will is the final chance of the testator (person who makes the Will) to ensure that their loved ones are provided for in the manner they wish. A Will is the only means by which control can be retained over the estate. Where someone dies leaving a Will they are said to have died “testate”.
Where there is no Will in place, the person is said to have died “intestate” and their estate is distributed in accordance with the provisions of the laws of intestacy. The law divides the estate among the next of kin. Where the deceased is married the current law provides that their spouse takes the whole estate where there are no children. Where there are children, the spouse will take two thirds and the remaining one third will be divided between the children.
A Will, however, will allow the testator to make specific provisions to certain people, allow them to plan their estate in a tax efficient manner and provide for a wider circle than intestacy. The following are some of the main points to consider before making a Will:
Assets and liabilities
Before making a Will you should take the time to briefly assess the approximate value of your estate but also bearing in mind this will fluctuate throughout your lifetime. You should also be mindful of gifting a specific asset in your will that is subsequently disposed of. Ultimately, if the gift is no longer there it will fail.
It is extremely important to note that any property held jointly such as real property or bank accounts, will automatically transfer to the joint holder at the time of your death (e.g. where the family home is held in joint names of a husband and wife it transfers automatically to the survivor). Therefore, joint property will fall outside the Will and cannot be gifted in your Will. Accounts and policies nominated in favour of another person (e.g. Credit Union Accounts, Life Insurance Policies are often nominated in favour of a particular person) will also fall outside the Will. While such assets will fall outside the Will, this will not eliminate the exposure of the beneficiary to tax. Inheritances from spouses are tax free.
Who should I give it to?
As the testator, who have complete freedom to divide your Estate however you wish. The exception is where a testator is married. A spouse is automatically entitled to one third of the value of the estate where there is a Will in place. This applies even if no provision is made for your spouse in the Will. This right is automatic and the spouse does not need to take any legal action against the estate for this to apply. This value of anything held jointly with the spouse is not included in the one third as this vests automatically.
There is no obligation on a testator to provide for their children in the Will but a child may take an action against the Estate (S117 Application) where it can be shown that the parent failed during their lifetime in their moral duty to make property provision for that child. The child has twelve months from the date of issue of the Grant of Probate to take an action against the estate.
You should also think about specific bequests you wish to make of sentimental value, jewellery etc.
Minor children
It is vital for parents of minor children to have a Will in place which provides for guardians and trustees of their minor children in the event both parents die leaving minor children. If appointing guardians and trustees, it is important to have a discussion with them first, to ensure they would be happy to carry out the duty should the need arise. Trusts can be set up according to the parents’ wishes of how their children should be provided for after their death. At least two trustees should be appointed and it is important to choose people who will work well together to carry out the provisions of the trust.
Tax efficiency
Wills can be drawn up to make best use of the current tax thresholds applicable to the three classes of beneficiary for a Will and limit exposure to tax. The most basic example of this is dividing the estate between children and making provision for grandchildren to the value of the tax threshold in place at the time of the Testator’s death. This can be availed of for all classes of beneficiary.
Executor
You will also need to appoint an executor. It is most common to have one or two executor’s appointed. The executor is the person who will be responsible for ensuring that the provisions set out in the Will are complied with and the testators wishes are complied with. The executor will be responsible for making application for the Grant of Probate and for collecting in the assets of the estate, ensuring debts, liabilities and taxes are paid and the beneficiaries receive their bequest under the Will.
The above is a brief synopsis of some of the main general points to consider when making a Will. A person can make as many Wills as they wish during their life time and it will be the most recent Will that will take effect on their death.
For more information on Wills and Estate Planning, contact us on 01 644 5800.