Irish people have very liberal, generous views of inheritance. Nearly every older person I meet wants to leave something to their children or grandchildren when the die.
In many ways this is commendable, but perhaps not as realistic as it once was when people didn’t live as long and extended families meant that elder care was frequently provided within the family and not in institutions like public or private nursing homes.
Whatever about the short-term availability of the ‘Fair Deal’ nursing home assistance scheme, in which the applicant only pays a portion of the cost of expensive institutional elder care along with the state, the growing cost of this care to the state as the population ages means that pressure will continue to be put on people (and their families) to pay more and more of the cost from their own assets.
It is this state funding liability issue that the inheritance laws need to be reformed, claims the government. The Law Reform Commission has proposed that section 117 of the Succession Act 1965 should be amended so that parents no longer have a ‘moral duty’ to make financial provision in their wills to their adult, non-dependent children.
The reformed Act will still require them make some provision for children over 18-23 who are still in full-time education or for an adult child who is already dependent due to a health or disability issue or where an item from the parent’s estate may have a particular sentimental value or attachment. This is not expected to include fixed assets like a house, land or family farm, say legal experts, but more likely be items of sentimental (and perhaps monetary value) like a piece of furniture, art, jewellery, or even a coin or stamp collection that, say had always been promised to a particular child.
The notion that a parent has an automatic moral obligation to leave a part of their estate - cash, land, property - to any or all of their adult children, regardless of their financial position or the nature of their relationship, will no longer apply.
The most contentious wills I have ever come across have been ones that didn’t so much as disinherit the adult children, but favoured one or two over the others.
Such settlements often come as a surprise when the will is read - the parent(s) having never discussed their intentions with their children – and it can sew seeds of dissent among the siblings where there were none before.
However brusque this reform proposal may appear, it will be at least be a formal warning that no matter how ‘unfair’ the parents’ decision, there will probably be no point in contesting it since, ultimately, the only beneficiaries will be the solicitors.
Making a will should be a pretty straightforward process where the estate is transparent and uncomplicated. You die owning, say, a bank/post office/credit union deposit account, a family home; some life insurance and maybe even a private pension fund like an ARF (approved retirement fund) which can be passed on.
If there is no surviving spouse to inherit (and who can never be legally disinherited) and no medically dependent children, once your debts are paid you most probably will leave your estate to your adult children, grandchildren and whoever else you want to enjoy a windfall. Good tax planning can reduce the share that the government will collect.
However, up to now under Section 117 of the Succession Act 1965, you needed to be careful about acknowledging the ‘moral duty’ clause, even if you felt you already had a strong moral argument to favour one child over another, or leave nothing to any of them, instead leaving your estate to friends or charities.
(Uncommonly, a wealthy friend of mine, a father of five adult children told me once that he always felt that his ‘moral’ obligation to his children was to love them unconditionally, make sure they had a good education and perfect teeth. Once the latter two were achieved, as independent adults “their financial situation is their own business.”)
Where no will is made, the 1965 Act is perfectly clear. Intestacy could end up as the favoured response by some families if the Dail passes the new proposals, since the Act requires a surviving spouse to automatically receive two thirds of the estate and children (or grandchildren if the child is deceased) to share equally the remaining one third. This won’t change.
Bereavement is stressful enough for any family, and family life in Ireland is getting more complicated. A full and frank discussion between parents and adult children about inheritances and the huge potential cost of elder care is something that shouldn’t be put off indefinitely.
Perhaps you could tactfully begin by raising those sentimental bequests: it’s never going to be worth falling out over who gets the ‘good’ china set.
Please send your queries to Jill or by email: email@example.com
(The new TAB Guide to Money Pensions & Tax 2017 is now out. €9.99 in good bookshops. See www.tab.ie for ebook edition.)