Keogan Law & Tax

MAKING YOUR WILL

While we all know we are going to die, we don’t usually like to think about it, never mind thinking about what will happen after we have gone. Whether or not death comes unexpectedly, how your assets will pass after you have died is dependant on whether you have made a valid will. While a will is a personal matter, the purpose of this note is to briefly outline points you should consider when making a will or reviewing an existing will.

Why make a Will?

If you never make a will, you will die intestate and your assets will be distributed under the terms of the Succession Act 1965. The rules and procedures that apply under the Succession Act will not take into account your individual wishes and your estate may pass to persons you had not intended. In such a case tax may have to be paid which tax might otherwise be avoided if you make a will.

If you die intestate leaving your husband/wife surviving you, it is not necessarily the case that all of your estate will pass on your death to your spouse. Instead, if you also leave children (no matter what age they are), only 2/3rds of your estate goes to your spouse while the balance (1/3) generally passes equally between your children.

This would result in all your assets, including for example your family home, being divided and this can cause practical difficulties for survivors. Indeed if any child inheriting is under 18 years old, it is very difficult for assets to be sold or transferred (for example, to your surviving spouse) until they turn 18.

Value of your estate

Before making your will you should consider what you will have to leave under it. You should list everything as best you can to give a rough idea of your net worth at your death. It is also good to know how you hold these assets e.g. are they owned jointly with your spouse; do you hold only a share of an investment while another person owns the rest. Also significant liabilities should be listed, e.g. your mortgage. A personal assets record is useful for this purpose.

Assets include:

Life assurance (including any mortgage protection policy)
Death in service benefits
The value of your house
Shares or your business assets
Share options
Savings and investments

Once you have a better idea of what you own, you can decide how these should pass under your will. It is important that we know what you own and how you own your assets so that we can best advise you on how they can pass by law and the tax implications of their inheritance.

How should your estate pass?

You should then think of what you wish to do with your assets. Should all pass to your spouse? Would your spouse be able to manage your business or investment assets without protection/guidance? Should your children inherit without restriction on your death? Should you protect against taxes being triggered on your death?

Working together we can establish your wishes and recommend the best method of carrying out your overall intentions. We can advise what you can or cannot do in the context of the legal requirements regarding providing for your spouse and other dependants. We can advise on how to structure your will in the most practical way possible to ensure an effective passing on of your assets and to balance your wishes against taxes that might arise.

What goes into a Will?

Your will can be as short or as long as you like but, as it is a legally binding document, certain formalities must be dealt with to ensure it is effective.

We will tailor your will to ensure your wishes will be legally effective.

Normally wills contain clauses such as the following:

A revocation clause, revoking any other (Irish) wills you may have made (You might note that on marriage your will is automatically revoked, however on divorce there is no automatic revocation).
Clauses appointing your executors, trustees and guardians. Their roles are discussed below.
Clauses providing for the payment of legacies (cash or specific assets)
Clauses providing for the balance of your estate to pass to person(s) or trusts. This is known as the ‘residuary estate’. Typically a will provides for the residuary estate to pass to your spouse but you should also consider what would happen if both you and your spouse were to die around the same time.
Clauses giving your executors and trustees powers to manage your estate and any trusts created under your will. Failure to provide comprehensive powers under your will can leave the persons responsible for looking after your estate relying on outdated legislation or indeed they could be exposed to litigation from disgruntled beneficiaries.
A clause setting out the proper method of signing your will before two independent witnesses.

Executors, Guardians and Trustees

Your executors are the people you appoint to look after collecting in your assets after you die, paying off all your liabilities and distributing the net amount to the beneficiaries under your will. On this basis the role of an executor is relatively short lived, in comparison to that of a trustee, see below.

An executor can be a beneficiary under your will. Usually an executor is a family member, trusted friend or a professional adviser. In many cases, two or more persons are appointed executors and typically a spouse is an executor if the spouse is to inherit all or most of the estate.

Your trustees are the people appointed to look after the assets put into a trust created under your will. Like the executor, a trustee can also be a beneficiary under your will. A trust can be created as a legacy or as part of the residue and is usually created to provide protection to beneficiaries such as young children, children with special needs or indeed a spouse where the assets are complicated and it is intended that they pass in a particular way after the death of that spouse.

The role of a trustee is onerous – there are weighty obligations on a trustee to act in the best interests of all beneficiaries under the trust and to manage the trust assets prudently and sensibly. The role is usually time-consuming as a trust can last many years.

There should always be two trustees appointed where a trust is created under a will. However we often recommend that three trustees be appointed to share the duties and provide balance. Again typically a trustee can be a family member, trusted friend or a professional adviser.

Your guardians are the people to look after children on a day to day basis (housing, clothing and feeding them and sending them to school!). They are responsible for the welfare of the child until he or she reaches the age of 18. Usually the guardian is paid out of pocket expenses by the trustees. Typically the role of guardian is shared by a couple with a family of their own.

What Next?

You should put together a note of what you own and consider who you would like to appoint as the people to take charge of your affairs after you have died. Then think about how you would like your assets to pass and to whom. Please then contact us to discuss how best to put in place a will for you.

Making Your Will