As an unmarried individual who owns a property, with seven siblings of which four are senior, your concern about distributing your assets fairly upon your passing is fully understandable. Particularly in light of the potential event that some of your siblings may predecease you. Considering this, how can you ensure their share isn’t forfeited? The resolution is meticulous planning of what will happen to your estate post-mortem.
The future of one’s assets and possessions is a significant topic, and it gains additional relevance given the immense number of single individuals over the age of 40. As there would be no opportunity to illuminate or elucidate your wishes after passing, a carefully conferred will becomes crucially significant.
Initially, you must ascertain your exact wishes. If all your siblings outlive you, the process is simple: after settling any pending debts, all would receive an equal fraction of your estate. However, the uncertainty of life may find some predeceasing you. It’s imperative to consider what should happen under these circumstances.
Do you aim for their portion to be inherited by their children or perhaps their life partner? If they lack offspring, what happens? Should their partner benefit, or perhaps another loved one? Each of these represents a possible future scenario that ought to be addressed within your will. Neglecting to provide for these circumstances may lead to the bereaved family of any predeceased sibling losing out due to lack of provision in your will.
Under a legal principle known as the doctrine of lapse, provisions are put in motion in situations where an inheritor passes away before the individual who bequeaths the inheritance. This rule insists that under these circumstances, the inheritance is regarded as lapsed.
A residuary clause is a wise inclusion in a will, acting as a safety net for any unallocated or forgotten elements of an estate. It also concerns an inheritance originally stated to go to a specific individual who happens to pass away before the testator – in such cases, the inheritance is handled under the terms of the residuary clause. It can also account for assets that the will maker obtains or inherits after the will’s creation.
Without a residuary clause, constant updates to your will would be necessary after any change in familial circumstances or assets. This can not only lead to avoidable costs, but also you may forget to amend your will or become physically unable to do so – particularly where you may no longer possess the mental capacity to form a valid will.
In the event your will lacks a residuary clause, any unallocated or forgotten inheritance, or an inheritance intended for a beneficiary who has died before you will be processed by the intestacy laws, provided there are limited exceptions.
The intestacy laws, established in the Succession Act, apply when a person does not have a will or has an invalid one, when an inheritance lapses, or when the will lacks clarity and is subsequently rejected by a court. According to these strict guidelines, your estate will be divided amongst your kin, initially your spouse or children. If you lack either, the estate will be shared equally among your siblings. If any siblings were to die before you, their inheritances would be split among their offspring, assuming they have any.
However, if none of your siblings have children, their portion will be equally divided among the remaining siblings and the children of any deceased siblings.
One key exception to this rule pertains to a person who leaves an inheritance to their child who predeceases them but has children. In such a scenario, under section 98 of the Succession Act, the inheritance is transferred to the grandchildren, unless the will states otherwise. Although this exception may not be pertinent to you, it could be of interest to others.
Although it might not directly impact you, it’s important to note that your choices could have tax implications for the people nominated as beneficiaries of your assets. For example, if siblings are inheriting from your estate, they would come under Category B in the context of tax-free allowances on inheritances or gifts under the Capital Acquisitions Tax system.
The Minister for Finance regularly reviews these limits during budget planning, and currently, the Category B threshold sits at €32,500. Just remember, this isn’t an annual limit; it’s a lifetime cap on, tax-free receipts. And, it’s not solely applicable to siblings but also to other direct lineage relationships.
This means Category B applies not only to the inheritances or gifts your siblings get from you or among them, but also any they might receive from a grandparent, aunt, or uncle. Even inheritances from great grandparents fall under this category, if the lucky few still have them.
However, for larger families, this €32,500 limit can be depleted quickly and, anything exceeding it is subjected to a tax rate of 33%.
The situation becomes more complicated if you decide that a sibling’s spouse or partner should inherit in the event of your sibling’s death or if they don’t have children. Rather than benefiting from the Category B tax-free exemption, such individuals fall into the less generous Category C, which covers “strangers” — essentially anyone outside of direct lineage. Here, the lifetime exemption is only €16,250.