There is often a mistaken belief as to what happens a person’s property in a situation where they die without making a will. A person’s property, upon death, forms part of what is called their” estate” and it includes real property i.e. house, land, sites etc. and personal property i.e. monies in bank accounts, cash, shares etc. When a person dies without making a will, they are said to have died intestate. The distribution of a person’s property, when they die intestate, is set out in the Succession Act, 1965.
The Succession Act sets out that if a person dies without having made a will or if they make a will but it is invalid, for whatever reason, the rules for division of property on intestacy are as follows:
If the deceased is survived by;
- spouse/civil partner but no children – spouse/civil partner gets entire estate
- spouse/civil partner and children – spouse/civil partner gets two-thirds, one-third is divided equally between children (if a child has already died his/her children take a share)
- parents, no spouse/civil partner or children – divided equally or entirely to one parent if only one survives
- children, no spouse/civil partner – divided equally between children
- brothers and sisters only – shared equally,( if a brother or sister has already died then their children take their share)
- nieces and nephews only – divided equally between those surviving
- other relatives – divided equally between nearest equal relationship
- no relatives – the state
It is important to make a will because a person then gets to choose who they wish to leave their property to. It also allows for a person to consider the tax implications of their proposed will. The tax thresholds for inheritances have decreased significantly over the last number of years and this can be an important consideration in the planning of your property, upon death.
If the value of the inheritance you leave a person exceeds the amount of their tax threshold, the person receiving the inheritance will be liable for inheritance tax at the rate of 33%. The current tax thresholds include the following;
- Child/foster child/minor child of a deceased child/Child of a civil partner etc: €225,000
- Brother/sister/nephew/niece/other lineal ancestors etc: €30,150
- Any other relatives: €15,075
When determining whether a proposed beneficiary will take the inheritance tax free it is important to be aware that any prior gifts/inheritances received by him/her since the 5th December, 1991 will be taken in to account and deducted from their tax threshold i.e. he/she may already have availed of some of their tax exemption amount.
You may therefore have the intention of benefiting a person in your will without realising that any such benefit will give rise to an inheritance tax liability which the person may not have the ability to pay. There are some tax reliefs and exemptions which may apply and this may again influence your decision about how your property should be distributed, upon your death.
Tax planning for your property is only one of the many considerations that needs to be looked at when you are making your will. The importance of making your will is that you get to decide the destiny of your property and you also get an opportunity to think about issues which you probably never thought were relevant.