I am single and a homeowner. I have six brothers and a sister. Four of the brothers are older than me. I want the house and my possessions shared evenly among them. However I need to make sure those who die before me don’t lose out. How can I make sure their share does not lapse?
Mr CC
Planning is everything when it comes to sorting out what will happen to your estate – your possessions and assets – when you die. And in a state where hundreds of thousands of people over the age of 40 remain single, what happens to their goods and assets when they die is indeed a very relevant discussion.
As you clearly will not be around to clarify your intentions, it is critically important to make sure that you have a will and that it is worded carefully to reflect what you would like to happen.
So, first you have to figure out what that is.
Clearly if your seven siblings do survive you, it is straightforward: each will get a seventh of your estate after any outstanding debts have been settled. But, as you say, four of your brothers are older than you and, in any case, ill-health or death is no necessary respecter of age. So what do you want to happen if any of them die before you?
Do you want your share to go to their children? Or their spouse or partner? What if they do not have children? In such a situation, are you intending that any spouse or partner of your siblings benefits? Or someone else close to them?
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These are all realistic scenarios and you need to make sure that you provide accordingly in your will. If you do not do so, but simply say you want your estate divided equally between your seven siblings, the family of any one who predeceases you could simply lose out because there is no provision for that sibling’s share of the estate to pass on to their spouse/partner or to their children.
This is covered by something called the doctrine of lapse. These are the rules that come into play when someone who was due to inherit dies before the person leaving them the inheritance. It sets down that the inheritance lapses.
If there is something called a residuary clause in the will – effectively a safety net clause covering what you would like to happen to the “residue” of the estate, such as something you forgot to specifically mention or allocate, or something that was due to go pass to a particular person who ends up dying before you – then the lapsed inheritance will be treated under the terms of that clause.
Having a residuary clause in your well is common sense not least because it can also cover assets that you acquire or inherit yourself after your will is drawn up.
The alternative is that you keep updating your will after every family event or change in your assets which is incurring needless expense and may anyway run out of road either because you forget to do so or you fall ill and cannot do so – especially where you no longer have the mental faculty to be allowed draw up a valid will.
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In the absence of a residuary clause, any inheritance that lapses because the intended beneficiary has predeceased you and you have made no specific provision for that eventuality will, with limited exceptions, be treated outside your will under the laws of intestacy.
Under the rules of intestacy applying for those who do not make a will, whose will is invalid, where an inheritance has lapsed or where someone’s will is insufficiently clear and therefore ruled out by a court, your estate would be divided according to strict guidelines set down in the Succession Act.
As you have no spouse or children – the first two priority groups under intestacy – your estate would be divided in equal shares among your siblings. Where they were to predecease you, their share would be divided equally among their children, if any.
But that “if any” is important. If they did not have children, their family would not benefit from your largesse, which would instead be divided among your surviving siblings and the children of any who have died before you.
The main exception to the doctrine of lapse does not affect you but covers a person leaving something to their child who, in the event predeceases them but has children of their own. In this case, under section 98 of the Succession Act, that inheritance passes to the children of the dead child (your grandchild) even where that is not provided for in the will unless specific other provision is made. As I say, it is not relevant to you but possibly of interest to others reading this.
Finally, not that it necessarily need concern you, but your choices will have potential tax implications for the beneficiaries.
For instance, if your siblings benefit from your estate, they will fall into Category B when it comes to assessing tax-free thresholds on a gift or inheritance under the capital acquisitions tax regime.
These thresholds can move up and down, as determined by the Minister for Finance in a budget but, for now, the Category B threshold is €32,500. What they will need to know here is that this threshold is a lifetime limit, not a ceiling on what you can receive tax-free on each occasion. And it refers not just to siblings but to broader linear – ie blood line – relations.
So Category B covers any gift or inheritance your siblings receive from you or each other but also anything they may have received from a grandparent or an aunt or uncle. Gifts or inheritances from great grandparents are also covered here for anyone lucky enough to have those.
In large families, that €32,500 threshold can be reached quickly enough and anything beyond that will be liable to tax at the current rate of 33 per cent.
The issue gets more acute if you decide that the beneficiary in the event that a sibling predeceases you, or has no children, should be their spouse or partner.
In this case, they do not get to benefit from the Category B tax-free exemption; instead they fall into the more modest Category C, covering “strangers – ie everyone outside blood relatives – where the lifetime exemption is just €16,250.
Please send your queries to Dominic Coyle, Q&A, The Irish Times, 24-28 Tara Street Dublin 2, or by email to dominic.coyle@irishtimes.com. This column is a reader service and is not intended to replace professional advice
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