Author Archives: Colm Kelly

We have been looking at various aspects of will drafting and in particular the issue of what happens if a beneficiary dies before you.  This blog relates to the situation of drafting a will catering for your children dying before you.  One of the options available to a person in drafting a will in these cases is providing that the inheritance which they intended giving to their children that they would give that instead to the children of that child (ie their grandchildren through that child).

This is quite a normal route that people making a will opt for if the question of a child pre-deceasing them is presented to them during a will consultation.  Obviously, no parent wishes to contemplate their child dying before them, but provision does need to be made for this unfortunate circumstance.   Where a person drafting a will takes this option there are two points to note:-

1. There is a generous tax regime in place to cater this circumstance.  Normally a grandchild can only take €32,500 * tax free from their grandparents.  However where a grandchild is under 18 and receiving a payment from their grandparent which arises because their parent is deceased, then the grandchild can take up to €335,000* tax free.
2. If it is the case that a child pre-deceases their parent and the inheritance passes to the granchildren, it may well be the case that such granchildren are under 18 when they receive that inheritance.  A person cannot hold property unless they are over 18.  Therefore it is normal to create a trust in a will to cater for this.  So the inheritance which is going to the granchild will be held on trust for them until their 18.  As the parent of the child is deceased, it is normal that the trustee will be the child’s surviving parent or guardian or another trustee nominated in the will.

It is normal that a person making their will, will want to try and keep the asset in the family.  One of the most tried and trusted ways of doing this is to pass assets down to grandchildren in cases where a child dies before them.  This option is adopted by persons drafting wills in the vast majority of cases.

Hope this is of assistance and if you require any will drafting tips or assistance please contact me on info@kerrywills.ie.  Colm Kelly

* As at the time of writing (June 2024), tax rates may change in the future

In the last number of posts we have been looking at the issue of what would happen if you made a will leaving something to your child but (God forbid!) your child passed away before you.  It is something you have to consider and we have dealt with this issue in the past number of blogs, which we link below.

You have a range of options to cater for this.  This is because you can cater for this eventuality (even though you don’t want to think about it) by drafting appropriate clauses in your will. We call this drafting gift over clauses

One of the options in drafting a gift over clause is that you can leave the asset to the estate of the child.  What this means is that they asset will be dealt with in accordance with the will of the child.

There can be pros and cons to this.

A child in making their will, will not have thought of them pre-deceasing their parent and what assets might arise in that case.  So invariably the asset passing from you, will pass in accordance with the “catch all” clause in the will of the child.  We call this catch-all clause, the “universal” clause or the “residuary” clause.  However the residuary clause is generally a clause where you “dump” any remaining assets that you might not have dealt with in your main will.  So the clause tends to be something that deals with remaining assets and not core assets.  So, items in the residue, could be split various ways or could go one way.  The contents of a residuary clause are various and there are no hard and fast formulations.

In all likelihood if a child is married the residue will pass to either children or a spouse.

If the child is not married, the residue may or may be left to relations.  However it could be left to charity, to friends etc.

So the upshot is, is that while you have the flexibility, not many people pick the option of leaving an asset to the estate of a pre-deceased child.  It tends to be somewhat unknown.

The only additional point to make is that there is a provision in law that states that if when you die, your child has died before you and on the date of your death that child has grandchildren living, then the gift that was due to your child will pass according to the childs estate/will.  So, if you don’t deal with this issue of gift over, the effect could be the default effect, which is that it passes to your child’s estate.

Hope this helps and if you have any questions or queries on will drafting please let me know by contacting me at info@kerrywills.ie.  Cheers. Colm Kelly

Here are the links to previous posts on this.

Why your will should deal with a child pre-deceasing you

If your child dies before you – giving that gift to his or her spouse

When you are making your will, and you are giving a gift to a child, you should think about, what would happen if your child died before you.  Nobody want’s to consider this in will drafting but it is unfortunately something that one must take into account.  In that case one of your options is to say that “The gift that was going to pass to my child will now pass to his or her spouse”.  You certainly have the option of leaving an inheritance that way.

We call the person who makes a will the “testator”.  There may be lots of reasons why the testator would make a will in that way.  They may have a very close relationship with their son or daughter in law.  They may have appreciated the help that a son or daughter in law has given them over time.  The testator may wish funds to go into the hands of a son or daughter in law because they know that they will use that inheritance for their own good and the good of their children (ie the testator’s grandchildren).

There is one very important tax advantage as to why a testator may wish to do this.  That is because there is a special tax relief that applies in these cases.  A child can inherit up to €335,000* from a parent.  A son or daughter in law, is not a child and can only inherit up to €16,250 tax free from their parents in law.  However due to provisions in the tax code, an “in-law” steps “into the shoes” of their deceased spouse and is treated for tax purposes as the child of the testator.  So the spouse can take the inheritance with the benefit of a generous tax provision.

Many people when making their will don’t often think of what would happen if their child passed away before them.  However many would also be happy for funds to pass to a surviving spouse.  In other cases it can work the other way and a testator would baulk at the thought of leaving an inheritance to an “in law”.  The main point is that this needs to be catered for in a will, that the testator is in control and can decide and that there are tax benefits in place for a testator who does leave assets to an an “in-law”.

Hope that helps and if you have any will drafting queries please reach out to me at info@kerrywills.ie.  Colm Kelly

• Note.  * Tax figures are given as of June 2024.  They may change over time

In a previous post (see link below) we talked about what happens if a beneficiary dies before you.  This is just a short note letting you know that it is normal when will drafting to cater for this circumstance.  When you make your will, you are naturally thinking about what will happen to your assets when you die.  You don’t normally think about what will happen in the event that some of your beneficiaries die before you.  That is regularly the case with those who makes wills.  However, you should cater for the situation of your beneficiaries dying before you.

In this blog we are focusing on if you are a parent and you have children

So what are your options?

If your beneficiary is your child, then you have a range of options to cater for a child passing away before you.

Option 1.  The gift you were giving to that child passes to your child’s spouse

Option 2.  The gift you were giving to your child passes into his or her estate.  That means, it will be dealt with as part of the residue of the child’s estate.  If the child made a will, it will be dealt with under the terms of the residue clause of the will.  If the child made no will, it will pass in accordance to set rules known as the rules on intestacy.

Option 3. The gift you were giving to your child lapses and so falls into the residue (see article below which talks about this)

Option 4. The gift passes to your other children

Option 5.  The gift passes to your grandchildren.

It very much depends on what you want to do.  The great thing is, is that you get to choose.  So taking time to consider this matter puts you in control.

If you have any will drafting or issues regarding capacity, then please reach out to me Colm Kelly solicitor at info@kerrywills.ie

Here is a link to the previous post

 

What happens if a beneficiary dies before me?

Often times when a person makes a will they are just thinking, naturally, of what happens on their own death.  However, when making a will, it is always advisable to think about what happens if a person dies before you.  The law states that if a person dies before you, the intended gift goes to those that were getting the balance of the estate.  In a will, you leave certain assets to certain individuals.  Then, you will have a final catch all clause in your will that captures any assets that might not have been mentioned previously.  We call this a “residue” clause.  That is because it deals with the residue or balance of your estate.  If a person dies before lawyers say that the benefit falls into the residue.  There is one exception to this.  If the person that dies before you, is a child, and that child has children when you die, then, the gift to that child does not fall into the residue but rather goes to the estate of that child.

We give an example

Sean makes his will where he leaves his house to his daughter Mary.  Mary dies before Sean, but at the time of Mary’s death she had three children.  Sean then dies.   Mary’s children are still alive.  In this case, the bequest of the house does not fall into the residue but passes to Mary’s estate.  If Mary made a will, then the house from Sean is treated as if Mary owned it when she died and it will pass in accordance with the terms of her will.

When a beneficiary dies before a person who made the will, we say that their gift lapses.  The consequences that we mentioned above then occur, but there are ways to tailor your will to deal with this.  We call this drafting a gift over clause and it will be the subject of next weeks blog.

 

A question often arises whether or not you should tell your children what’s in your will.  This is a difficult question with no easy answer.  You could view it in this way.  Would you tell your children how you vote?  Would you tell your children what’s in your bank account?  So, not all private matters are discussed with your children.  There are advantages and disadvantages to disclosing matters to your children.  The advantage is that you have matters out in the open and everyone knows where they stand and there is no potential for disputes or upsets after you pass away.  The disadvantages are that it can lead to children trying to influence you to change your will to suit their own ends.  Further it can disrupt relations now, where a child thought he or she was being favoured is now excluded from a will; thus giving rise to bitterness or a strain in your relationship during your lifetime.  The other disadvantage is that it can mean that children who are very self centre or self motivated decide that it is not in their interest to maintain relationships in circumstances where there is no financial benefit out of a continuing relationship with a parent.  A final disadvantage is that it can make it difficult to change your will.  Your circumstances might change, your relationship with your beneficiaries might change.  However if changing your will, will result in certain beneficiaries losing out, it might make you more reluctant to make that change.

Every family is different.   Some are very open and discuss all matters all of the time.  Others are more closed preferring to keep matters private.  It is always a personal choice but one which needs to be carefully considered before taking the step of disclosure.

And remember if you have any will drafting queries or would like to make your will email us at info@kerrywills.ie