June – 2016
There are a great many myths surrounding what the terms probate and intestacy mean. In very general terms probate is required when a person dies leaving a will and an application must be made to the Courts to take out a Grant allowing the transfer of assets as specified in the will.
For example most financial institutions in Ireland will not allow release of funds on the account of a deceased person where there is more than €25000.00 in the account unless a Grant of Probate is forthcoming. It is the job of the Executor named in the will to submit all the required documentation and apply to the courts for such a Grant and it is also essential for the transfer of property where
the person inheriting the property is not already named as joint owner.
Intestacy also involves an application to the court known as Letters of Administration but the main differences with Probate being that with Intestacy the deceased left no will or an element of the will was not properly dealt with and thus the estate goes into partial intestacy.
If an individual leaves a will and we would always advise people to do so then that person can set out how exactly they want their estate divided. If a deceased person dies without leaving a will then under Intestacy rules in Ireland that person’s estate is divided amongst the next of kin. This means that a surviving wife or husband and children will have a preference in the eyes of the law and thus would have the right to make an application to the court to claim the deceased person’s estate.
If however a person makes a will they can determine exactly how their estate is divided. There is no preference on particular individuals unless the deceased person leaves children under the age of 18 or a spouse in the family home subject to a spouse legal right, or an unhappy child’s entitlement to challenge for unfairness.
The benefits of making a will cannot be underestimated. There are huge benefits that can be made in tax planning by making a will and minimising the potential tax your beneficiaries would pay. In 2005 the threshold on the rate of inheritance tax was €456438 from parent to child and any funds a beneficiary received over this figure was taxed at 20%. Threshold to other blood relatives such as uncles or cousins stood at €45644 and inheritance to any non relative amounted to €22822. But this was in the days of the celtic tiger.
Fast forward to 2012 and the recession has brought many alarming changes to taxation in this area. The threshold for an inheritance from parent to child stands at €250000, a more distant relative at €33208 and a non relative at €16604 and all funds received above these thresholds are taxed at 30%. Therefore careful tax planning must be undertaken when deciding to write a will.
It is also important when deciding to write a will to make sure it is done correctly. An incorrectly worded will can lead to certain elements of the will being left out and handled by partial intestacy and thus the next of kin or closest relative being the only people that can apply for whatever was not dealt with under the terms of the will and this clearly goes against the wishes of the person who wrote the will. Make sure your will is worded correctly and this will minimise the chance of a dispute or a mistake being made.
Finally the benefits of taking advice and writing a will is the importance of an executor. When you make a will you have to appoint an executor and this is the person who will ensure your estate is divided according to your wishes. We would always advise that your executor holds a copy of your will and knows where your original will is kept for example with your solicitor or a financial institution. Everyone has the right to privacy in relation to their estate but if your executor knows that your will and your estate information is held together with your solicitor or financial institution it can make the whole process of getting the Grant of Probate easier.
A person who leaves a will and keeps their financial information together makes it so much easier for a solicitor acting on behalf of an executor to collect all the details and look to finalise the Estate as it must be remembered that in order to get a Grant of Probate or Letters of Administration a person will have to prepare all the paperwork for both Revenue and indeed the Courts to ensure
everything is in order.
If a person does not leave a will and the next of kin are unsure of the details in their estate such as what financial institutions they may have held funds in or if they owned property this is what tends to slow down the process and create extra paperwork and costs in trying to get all the information together.
The benefits of making a will and following correct procedure can mean you may minimise an exposure to taxation for your beneficiaries, you can get all the paperwork finalised quicker and most importantly of you can avoid a dispute.
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Accident Claims & Personal Injury Litigation*, Conveyancing, Debt Collection, Wills & Probate and Family Law.
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