Making a Will is something that most people agree is an important thing to do but many people simply put on “the long finger”. There are very good reasons for making a will which are discussed below.
A person who makes a will is known as “a testator”. By making a will a testator will be able to appoint a person or group of people he or she wishes to act as his executor.
The role of an executor is an important one. The executor is responsible for carrying out the terms of the testator’s will and completing the administration of the estate. The person chosen is usually done so for their trustworthiness or professionalism.
In the absence of a will the law determines who will be responsible for the administration of the estate and this person will be known as the administrator.
Because the deceased does not choose the administrator the law treats him (or her) with caution. The estate is obliged to obtain an insurance bond insuring double the value of the estate against any loss occasioned to it by virtue of the fact that the deceased did not make a will.
Insurance bonds can be expensive and can take approximately one month to obtain and consequently, delay the administration of the estate and add to the costs thereof.
The testator has, subject to some statutory restrictions discussed below, full control over who receives what from the proceeds of his or her estate. This means that the testator may be able to structure the will in such a way as to minimise any inheritance tax that may arise for the beneficiaries. Please consult your tax advisor regard the available tax free thresholds.
By making a will the testator may also seek to avail of business and/or agricultural relief, favourite niece/nephew relief or co-habiting property relief.
It should be noted that the testator’s freedom to deal with his estate is restricted by statute. For example, a testator cannot exclude his lawful spouse from benefiting under the will. A spouse is statutorily entitled to a 1/3 share in the testator’s estate. This is called “the legal right share”. You should note that any assets or property, which are jointly owned by the testator and his spouse do not form part of the estate of the testator.
Generally, the legal right share of a spouse can be renounced by agreement but we would recommend that full legal advice is taken. However, a spouse retains a residual right to seek provision out of the estate upon the death of his/her deceased spouse.
A child of a testator does not have any automatic entitlement to a share in the estate. However a child can pursue a Section 117 action against the estate on the basis that the testator has failed in his/her moral duty to provide for the child. The court in determining the case will take all factors into consideration such as the number of children, their stage in life and financial prospects, the education received by any children and also any benefits already received by any children during the lifetime of the testator and the needs of the applicant child. Where a will is not made by an individual then the child’s/childrens’ share is determined by statute and, consequently no child/children can bring a Section 117 application.
If no will is made then in addition to the deceased having no say in who should administer the estate the law will determine who the beneficiaries will be and what their entitlements are. For example, where a deceased not having made a will is survived by a spouse and children the spouse inherits two thirds of the net estate and the remaining one third is divided equally between the children.
By making a will you are ensuring that:
- Your estate is administered as you would wish,
- Tax planning opportunities can be availed of,
- The safe guarding of business assets,
- That you estate is administered in a timely and cost efficient manner.
If you need assistance with the tax effects of the choices you wish to make in your will, email us for an appointment at tax@fixmytax.com
