Tipp FM Legal Slot – 28th October 2014 – Wills II
On Tipp FM, Andrea Gleasure, Solicitor, spoke to Seamus Martin on ‘Tipp Today’ about Wills Part II.
Listen to Andrea’s discussion:
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What happens if property is jointly owned with another person?
- Joint tenancy
The words ‘Joint tenancy’ essentially mean that the two or more people involved in the Joint tenancy are joint owners.
If a property is owned by two or more people as joint tenants and one of the joint tenants passes away then the share in the property that the deceased person owns passes automatically to the other owner(s). This is what we call the right of survivorship.
A very common example of this is the family home shared by a husband and wife. If the property is in the joint names of the husband and wife and they own it as joint tenants as opposed to tenants in common, if either of them pass away the surviving spouse becomes full owner.
It is advisable for couples to check that the family home is in joint names. One of the common occurrences we see is the house being registered in the name of the husband – this was common practice thirty years ago – and if the husband dies without making a will (intestate) the family would be entitled to shares in the property:
Surviving wife: 2/3 share in the property.
Children: 1/3 and if there is more than one child they divide that one third between them. So you can imagine the complications that can arise.
- Tenancy in common
If two or more people own a property as tenants in common you don’t have a right of survivorship. If a person passes away and they own a share in a property as a tenant in common the other owner or owners do not inherit the share that the deceased owned. It will be inherited by his nearest next of kin if he died intestate and if there is a will the share in the property will pass to whatever beneficiaries are named in the will.
The other possibility is if there is a co–ownership agreement (which we discussed a number of weeks ago) the surviving co-owners may have an option to buy the property from the executors. If people have bought property as tenants in common they should make sure that they have a co-ownership agreement which will regulate what happens if one or more of the co-owners die.
If a person is making a will and they are leaving their house to somebody, do the contents of the house automatically go with it?
Usually the testator, which is the legal term for the person making the will, will specify if the contents are to be inherited with the house. It is a personal choice, some people will want to leave the house and contents to the same person and others will specify that the contents or personal effects are to go to someone else or be divided between family members.
Can you look for a mortgage with either of these tenancy arrangements?
Yes, you may look for a mortgage with of either of these arrangements. It’s personal preference under which arrangement you look for a mortgage.
What happens if a person makes a will leaving their house to somebody and they subsequently sell that house?
When a person makes a will s/he is not prevented from dealing with their assets, whether it is a house or money or shares that you are talking about. So if a person makes a will leaving their house to somebody and they subsequently sell that house this bequest is said to lapse – the person named in the will does not get anything.
If a person is making a will and they are leaving their house to somebody, do the contents of the house automatically go with it?
Usually the testator, which is the legal term for the person making the will, will specify if the contents are to be inherited with the house. It is a personal choice, some people will want to leave the house and contents to the same person and others will specify that the contents or personal effects are to go to someone else or be divided between family members.
What happens if someone dies without a will or if a will is deemed invalid?
- A person who dies without a will is said to have died ‘intestate’.
- If someone dies intestate, it means the person’s estate, or everything that they own, is distributed in accordance with the law by an administrator.
- In these cases, debts and expenses are firstly deducted, then the estate is distributed as follows if you are survived by:
- A spouse but no children (or grandchildren): your spouse gets the entire estate.
- A spouse and children: your spouse gets two-thirds of your estate and the remaining one-third is divided equally among your children. If one of your children has died, that share goes to his/her children.
- Children, but no spouse: your estate is divided equally among your children (or their children).
- Parents, but no spouse or children: your estate is divided equally between your parents or given entirely to one parent if only one survives.
- Brothers and sisters only: your estate is shared equally among them, with the children of a deceased brother or sister taking his/her share.
- Nieces and nephews only: your estate is divided equally among those surviving.
- Other relatives only: your estate is divided equally between the nearest equal relationship.
- In the absence of a will and of any relatives the estate goes to the state – but this is a very rare occurrence.
Can wills be changed or updated?
- A will can be changed and updated as often as someone chooses. A person can make a will today and change it as often as they wish afterwards. It is important to review the will regularly.
- A will can be revoked in its entirety and an entirely new will prepared
Or
- Specific parts of the will can be altered by making what is called a codicil – which is an amendment to the will without altering or reviewing the entire will.
- It is recommended that people review their wills regularly as their circumstances may change.
Can a will be challenged?
If the author of a will is married and excludes their spouse from the will the spouse is entitled to a ‘legal right share’. That means that a spouse cannot be dis-inherited.
A spouse who has been excluded from a will is entitled to half the estate if there are no children. This share takes priority over all other provisions.
A spouse who has been excluded from a will is entitled to one-third of the estate if there are children. This share takes priority over all other provisions.
Children however, who have been excluded from a will do not have the same entitlements – their circumstances dictate their entitlements.
There are a number of other situations where wills can be challenged.
Will Trusts
Why is it advisable for parents of young children to make a Will Trust?
The main reasons for parents, particularly where they have young children, would be to make provision for guardians of their own choice, to make sure that each child is properly provided for depending on their circumstances and finally to ensure that they have the right people in place to manage the assets over a number of years if both parents pass away when the children are young.
The recommended will for parents of young children is a will trust. The usual form of will trust has some basic features which can be developed, or changed, depending on the circumstances of the family.
Firstly the will trust will appoint Executors. They will also act as Trustees.
What is the difference between acting as an Executor and Trustee?
- The role or function of the executor is to take all the necessary steps to obtain the Grant of Probate.
- The role of the Trustee takes over once the probate has been granted and the trustee manages or looks after the assets until the beneficiaries/children reach the age when they become entitled to the assets in their own right, e.g. 21 or 23.
How do people choose Trustees?
I always say to my clients – choose someone that you know, like and trust. Remember, if anything happens you will be handing over responsibility and authority to them to look after your assets until your children are of a certain age. It is important to make sure that you are happy that the person has the ability to make the right financial decisions for your children.
Once the Trustee is decided on, what next?
The next major decision that has to be made is the appointment of Guardians for your children who are under 18. I can appreciate that this is probably the one of the most difficult decision that any parent will have to make, but the consequences of not doing so make it ever more important for parents to actually take the step.
How do you distinguish between the role of Trustee and Guardian?
It is very simple really – the Trustee can be likened to the money manager and the Guardian’s primary concern is the welfare of the children.
Once parents have decided upon Trustees and Guardians, where do you go from there?
After that you get in to the actual creation of the trust and specifying the powers that you are giving to the Trustees.=
The creation of the trust, at its simplest, happens when the parent directs in the will that their assets are given to the Trustees and are to be held by them for the benefit of the children, and once the children reach a certain age then the trustees must handover the trust property.
Can the money or property be accessed by the Trustee for the children before they reach the age of 21 or 23?
The Trustee can pay out a portion of the capital or the estate or some of the income (deriving from the assets) if it is required for the children.
I always use the example of school or college. If the Guardian needs money to get the children back to school items or money for college then the Trustee has the power to make a payment out to fund those expenses.
While the Trustee can also act as Guardian it might be worthwhile assigning the roles to different people so that you don’t have a Guardian with a potential conflict of interest if they have to make financial decisions.
What happens if you have a child that has a disability and will never be able to manage his/her own affairs?
In that situation a parent would be advised set up what we call a discretionary trust will. The will directs the Trustees to use the money or assets for the maintenance of the child(ren), but the Trustees have absolute discretion how and when the money is used, if at all. The beneficiary of the Trust will never become entitled to the money or assets in this case.
