Tipp FM Legal Slot – 19th November 2013
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Download our Wills & Will Trusts Review notes
During the past month we have been speaking about Wills. This morning we will review the topic. Do most people have wills and why is having a will so important?
Recent research has shown that only 34% of adults in Ireland have made a will.
The research indicates that 82% of people over 65 years have a will whereas just 51% of people between 45 and 64 and 26% of those aged 35 to 44 years have a will.
Many people underestimate the importance of making a will – or many people put off thinking about the inevitable – but we always say to clients – would you go away for a few months without leaving your keys with a neighbour or your children with a child minder! So why would you leave permanently without settling your affairs?
Making your will is essential if you want to make sure that your assets will be divided according to your wishes. People can quickly and discreetly arrange their affairs so that there are no disputes, hardships or delays for those they leave behind.
What is a will and what is involved in making one?
- A will is a legal document detailing how someone’s possessions should be divided after their death.
- In other words a will is a letter of wishes or directions for family and friends as to how divide property after a person’s death.
- The person making a will is called a testator.
- A testator may change or revoke a will at any time. In fact, I would recommend that a person regularly review their will.
- A will must be signed and witnessed by two people otherwise it is not valid. Once it is signed properly and witnessed it becomes a legal document.
- There is no requirement to register the will anywhere once it is signed.
- It should be kept safely because it must be proven officially after death.
- In most cases people will leave the original will with their solicitor for safekeeping. If you do this it is advisable to tell the executor where the original will is kept. You can, if you wish, take the will away once it is signed and if you do it should be kept in a very safe place maybe a safe at home or in a safety deposit box. Again in this case let the executor know where you have put the original will.
- A will only takes effect after the death of the author.
This means that the fact that a person has made a will does not prevent them from dealing with their property after the will is made.
Example: A person came in to me to make a will and in doing so left all the money in a particular bank account to a daughter. At a later stage this person decided he needed that money and was concerned that it could not be spent because it had been left in the will to his daughter.
This is not the case – this person is entitled to do what they want with the money during their lifetime. The same applies for any other property be it a car, a house or shares.
Why should someone make a will?
- The author of the will decides what is to happen to THEIR property after their death. If you do not make a will, the law dictates that your property is distributed amongst your closest relatives.
- Many people like to make gifts of money or of particular items such as furniture, clothing, or personal belongings to friends or relatives. These can be included in your will, no matter how big or small.
- You can choose who is to carry out your wishes by appointing EXECUTORS.
- The executor does all the paperwork necessary to transfer the property to the people named in the will and liaises with the solicitor to complete all the legal formalities. The law says that you only need to name one executor, but in most cases people would appoint two executors. It is recommended that a person who is making a will should ask the person whom they are considering appointing if they be willing to do the job.
- A Letter of Wishes can be written for the Executor – it does not have legal effect as such but gives direction to the Executor in the event of certain specified circumstances arising. e.g. child attending college.
- It makes it easier for friends and family if their loved one leaves a will and it is cheaper in the long run.
Who should make a will?
- Everyone should make a will.
- Making a will is not just for wealthy people.
- Everyone’s affairs are better ordered if a will is made. It gives people peace of mind to know that they have organised their affairs.
- A will should be made by anybody with assets, children or other responsibilities.
When should a will be made?
It is appropriate to make a will on reaching certain stages in life, such as:
- becoming the owner of property/cash
- getting married
- going abroad
- getting divorced or separated
- buying a house
- having children
- Inheriting property (or winning the Lottery!)
- retiring, getting older or suffering illness
- NOW! As they say there is no time like the present.
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.
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 is 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.
