Author: Terry Gorry

Categories
Power of Attorney

An Enduring Power of Attorney-What You Should Know

Have you an elderly parent or loved one? Perhaps you yourself have thought about creating an enduring power of attorney to make provision for a day when you become incapacitated.

If so, the need for a power of attorney may arise at some stage.

A power of attorney is a legal document which allows a person (the donor) to give powers to another person (donee/attorney) to take certain actions on behalf of the donor.

There are two types of power of attorney:

  1. a Power of Attorney
  2. an Enduring Power of Attorney.

A Power of Attorney can only be created by a donor when he is not mentally incapacitated and understands what he is doing. It can grant a specific power-for example, to buy or sell property- or general powers to the donee.

A form to create a general power of attorney can be found here in the Powers of Attorney act, 1996.

An Enduring Power of Attorney(EPA) comes into being when a person becomes incapacitated.

It allows the donee to make personal care decisions on behalf of the donor when the donor becomes mentally incapacitated. Generally, anyone can be appointed an attorney (but there are exceptions eg a bankrupt or person under 18 years), but creating an enduring power of attorney is more complex than creating the general power of attorney.

How to create an enduring power of attorney

Creating an enduring power of attorney will involve a doctor and solicitor.

It can only come into effect when certain procedures have been followed.

The instrument (document) creating an enduring power of attorney must follow a certain format and

  • must include a statement from the doctor that the donor had the mental capacity to sign it at the time it was signed and understood the effect
  • contain a statement from the donor to the effect that he knew the consequences of creating the enduring  power of attorney
  • include a statement from a solicitor that the donor had the capacity to make the enduring power of attorney, and that the donor was not acting under any duress or undue influence.

At least 2 people must be notified of the making of the enduring power of attorney, and these people cannot include the donee (attorney).

One of the notice parties must be a spouse or civil partner; if there is none, a child must be notified. If there is no child a relative must be notified.

The EPA only comes into force when it is registered. This involves an application to the Registrar of the Wards of Court in the High Court and this can only be made when the donor is, or is becoming, mentally incapable. There must be a medical certificate confirming that the donor is incapable of managing his affairs.

The High Court has extensive supervisory powers in respect of the EPA once it is registered. It can give directions about the management and disposal of the property of the donor, and it can revoke or cancel the EPA if it is satisfied that

  • the donor is mentally capable
  • fraud or undue pressure was used in the creation of the EPA
  • the attorney is unsuitable.

An EPA can give general powers, including personal care decisions, to the attorney, or specific powers. All decisions must be taken in the best interests of the donor and the donor’s family, and carers, must be consulted.

Personal care decisions includes things like where the donor should live, their dress and diet, who they should see and not see, and so forth.

In fact, personal care decisions are defined in the legislation as follows:

“personal care decision”, in relation to a donor of an enduring power, means a decision on any one or more of the following matters:
(a) where the donor should live,
(b) with whom the donor should live,
(c) whom the donor should see and not see,
(d) what training or rehabilitation the donor should get,
(e) the donor’s diet and dress,
(f) inspection of the donor’s personal papers,
(g) housing, social welfare and other benefits for the donor;

A donor can revoke an EPA anytime before it is registered; however, if it is registered an application must be made to the Court to have it revoked.

An EPA ceases on death of the donor, and there are also some other limited circumstances where the enduring power of attorney will be terminated.

The relevant legislation dealing with powers of attorney is the Powers of Attorney Act, 1996.

What to do now

If you want to create a power of attorney or an enduring power of attorney contact Terry to make an appointment to discuss.

Categories
Will Trusts

Why Set Up a Simple Trust for a Child?

bare trust

A bare trust, also known as a simple trust, is a tax efficient way to provide a nest egg for a minor.

What is a bare trust? When the ownership of an asset is held by one person-the legal owner-for the benefit of a different person-the beneficial owner. The legal owner is known as a trustee.

This type of structure is useful to allow the holding of assets-real property or money, for example-for the benefit of a minor child until the child reaches the age of majority-18.

Tax benefits

There are tax benefits in bare trusts, too.

Capital acquisitions tax is the tax payable by the recipient of a gift or legacy in a will. However, there is a small gift exemption of €3,000 per person per year and using this exemption on an annual basis does not affect the recipient’s group threshold which is determined by the relationship between the recipient of a gift or inheritance.

In 2019, for example, the group threshold for a child receiving a gift or inheritance from a parent is €320,000.

A bare trust allows a child receive a gift of €3,000 from each parent; over 18 years this amounts to a tax free gift of €108,000-that is, €6,000 X 18 years.

REAL PROPERTY

Real property, which is likely to increase in value over time, can be transferred into a trust when the value of the property is at a low point. CAT is payable when the asset is placed in the trust but this will almost certainly be at the lowest valuation vis a vis future growth and the value of the property when it is being transferred out of the trust to the child on reaching the age of 18.

The current thresholds for CAT are €320,000 (to a child from parent), €32,500 (to a parent, brother, sister, niece, nephew, grandparent, grandchild, lineal ancestor or a lineal descendant of the disponer), €16,250 (strangers).

You will note that a parent can gift up to €320,000 tax free to a child. Remember, however, that capital gains tax may arise on the transfer of the gift into the trust as a transfer of a house, for example, is considered to be a disposal from a capital gains tax perspective.

The donor/settlor needs to remember

  1. he will be unable to take the assets back once they are transferred into the trust and
  2. The recipient, when she reaches the age of 18, can call on the trustees to transfer the assets to her.

The settlor also needs to consider who will act as trustees; although one trustee is all that is required at least two trustees are recommended and one of them can be the settlor.

Contact Terry Gorry if you want to set up a trust for a minor child.

Categories
Making a Will

17 Ways to Make a Will

types of wills

A will can be drafted to cover any individual, unique circumstance.

Here are some examples of wills:

  1. Gift of an entire estate to one person, making that person executor/trix with a gift over in the event that that person dies within a stated period, for example 30 days, of the death of the testator
  2. Gift of an entire estate to individuals, including children, in equal shares for their own benefit and use absolutely
  3. Gift of an entire estate to brothers and sisters and to the children of a pre-deceased sibling
  4. Gift of an entire estate to parents
  5. Creating a settlement of property on parents by giving them a life interest for their joint lives with remainder over to brothers and sisters
  6. A will settling property on a discretionary trust for the benefit of parents during their joint lives with remainder to brothers and sisters
  7. A will making provision for an elderly brother or sister
  8. A will leaving everything to spouse or partners with substitutional provisions for children in the event that the spouse passes away at the same time in a catastrophic accident eg car crash or airplane going down
  9. A will leaving some of the estate to spouse or partner with residue to children once they reach a certain age eg 18/21/25, but trustees having discretion until the children reach the age
  10. A will leaving everything to spouse/partners and then to Trustees on a discretionary trust
  11. A will leaving everything to Trustees to be held on discretionary trust
  12. A will leaving everting to children after the death of a spouse, with a discretionary trust to benefit a child with a mental incapacity or disability
  13. A will of a single person/divorced/widow/widower with no children leaving all to a large extended family with residue going to grandnieces and nephews who are all under 18 years
  14. A will leaving everything to one person for life with an absolute gift over to someone else
  15. A will leaving everything to a spouse for life with gift over to children
  16. A will for an unmarried couple with minor children, providing that the will is not to be revoked on marriage of the couple
  17. A will leaving everything to children and grandchildren providing for the use of all possible CAT threshold exemptions.

These wills show you what is possible in providing for your loved ones, and they can be adapted easily to match your particular circumstance.

The 17 types of wills above is not an exhaustive list, by any means.

Let me say that again: just because I have listed 17 types of wills does not mean that you cannot have a will made for your particular set of circumstances.

Also, you should also consider changing your will, if you have one, if your circumstances change, as they inevitably will during your life.

You might also be interested in

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Categories
Making a Will

6 Critical Reasons Why You Should Make a Will

 

reasons to make a will

There are many important reasons why you should make a will. Here are 6 of them:

  1. You decide how your assets will be distributed on your death

If you don’t make a will, an intestacy situation arises. This means Your estate will be distributed in accordance with the Succession Act, 1965. This is very unlikely to be as you might want it.

Also, who can administer your estate will be dictated by Court Rules. Again, this may see a situation arise where someone you would not want will be looking after your affairs after your death.

  1. Children-a will allows you to provide for children and the special needs of a loved one

This is especially important when you have minor (under 18) children. Also, with Minor children you will need to consider the need to appoint guardians and/or trustees.

These are people who will look after your children’s assets until they come of age and will make decisions about their health, religion, education etc. if both you and the other parent are involved in a catastrophic accident and pass away at the same time. You may also wish to set up a trust.

  1. Smart tax planning- a will can ensure the minimum amount of tax going to the State, unlike in an intestacy situation where there is no discretion
  2. It is cheaper and faster to administer your estate with a will, rather than an intestacy
  3. You choose who handles your affairs on death rather than having the law decide

The person you choose will be your executor. If you do not make a will the rules of Court will determine who is eligible to administer your estate.

  1. Peace of mind-the peace of mind that comes from knowing that you are not leaving problems behind for your loved ones when you pass away is priceless

This is the most important reason for most people.

Some Important questions to consider

  • Should you appoint more than 1 executor?

It can be a good idea to appoint more than 1 executor (an executor is the person who administers the estate of the deceased)

  • Gift over clause-do you need a “gift over” clause to benefit your grandchildren in the event of your child predeceasing you?

Without this clause in your will whatever you had decided to go to a predeceased child will go to his/her spouse. You may not want this and prefer that it go to his/her child(ren). If that is the case, you need to make provision for this in your will.

Common mistakes when making a will

Some common mistakes when making a will include:

  1. Alternative executors-if you appoint alterative executors your will fails for uncertainty
  2. A witness or his spouse cannot benefit under the will
  3. A will is revoked by marriage, but not by divorce
  4. Lack of clarity causing the will to fail-if a will is poorly worded and the intention or meaning is unclear this can cause the will to fail. And before it fails a dispute may well have arisen as to the meaning or intention of the words in the will and this can lead to an expensive legal dispute with the estate being diminished to pay legal costs.

Trusts

A will trust allows you to put assets into the ownership of trustees for the ultimate benefit of someone else. Trusts can be very useful for different reasons, for example, in protecting assets you wish to pass to a loved one who has had their financial difficulties. Your bequest may be at the mercy of creditors and creating a trust is one way to make provision for this scenario.

Learn more about will trusts here.

Contact Terry now to arrange your will.

Categories
Spouses and Childrens Rights Will Trusts

Children in Wills in Ireland-What You Should Know

children-in-wills

If an under-age child (under 18) receives a bequest in a will and there are no trustees, or if a child inherits on intestacy, the legal personal representative (LPR) faces the difficulty that there is nobody in whom he can vest the asset or from whom he may obtain a receipt.

(The Age of Majority Act, 1985 provides that a person shall attain full age when he/she attains the age of 18 years.)

This is the most critical reason why a trust should be inserted in a will where there are minor children.

However, if this does not occur all is not lost because section 57 of the Succession Act, 1965 helps out:

 

57.—(1) Where an infant is entitled to any share in the estate of a deceased person and there are no trustees of such share able and willing to act, the personal representatives of the deceased may appoint a trust corporation or any two or more persons (who may include the personal representatives or any of them or a trust corporation) to be trustees of such share for the infant and may execute such assurance or take such other action as may be necessary for vesting the share in the trustee so appointed. In default of appointment the personal representatives shall be trustees for the purposes of this section.
(2) On such appointment the personal representatives, as such, shall be discharged from all further liability in respect of the property vested in the trustees so appointed.

This means that where under-age children inherit and there are no trustees to give a receipt to the LPR the personal representative(s) can appoint trustees, including themselves.

In fact, if no trustees are so appointed the personal representatives are deemed to be trustees for the purpose of section 57.

However, section 57 only applies to the share of a minor, not anyone else who is unable to give a proper receipt to the executors.

The Powers of the Trustee

Trustees are allowed to hold property vested in them under section 57 of the Succession Act, 1965, and their powers are set out in section 58:

58.—(1) Property vested under section 57 may be retained in its existing condition or state of investment or may be converted into money and invested in any security in which a trustee is authorised by law to invest, with power, at the discretion of the trustees, to change such investments for others so authorised.
(2) Where an infant becomes entitled to any estate or interest in land on intestacy and consequently there is no instrument under which the estate or interest of the infant arises or is acquired, that estate or interest shall be deemed to be the subject of a settlement for the purposes of the Settled Land Acts, 1882 to 1890, and the persons who are trustees under section 57 shall be deemed to be the trustees of that settlement.
(3) A person who is sole trustee under section 57 shall be entitled to receive capital trust money.
(4) Persons who are trustees under section 57 shall be deemed to be trustees for the purposes of sections 42 and 43 of the Conveyancing Act, 1881.
(5) Without prejudice to any powers under the said sections 42 and 43, persons who are trustees under section 57 may at any time or times pay or apply the capital of any share in the estate to which the infant is entitled for the advancement or benefit of the infant in such manner as they may, in their absolute discretion, think fit and may, in particular, carry on any business in which the infant is entitled to a share.
(6) The powers conferred by subsection (5) may also be exercised by the surviving spouse as trustee of any property of an infant appropriated in accordance with section 56.

Section 58(2) above sets out the situation when an infant becomes entitled to land in an intestacy situation.

The Land and Conveyancing Law Reform Act, 2009, section 20, updated and clarified the powers of the trustee, and this act significantly amended the law relating to trusts from 1st December, 2009.

20.— (1) Subject to—
(a) the duties of a trustee, and
(b) any restrictions imposed by any statutory provision (including this Act) or the general law of trusts or by any instrument or court order relating to the land,
a trustee of land has the full power of an owner to convey or otherwise deal with it.
(2) The power of a trustee under subsection (1) includes the power to—
(a) permit a beneficiary to occupy or otherwise use the land on such terms as the trustee thinks fit,
(b) sell the land and to re-invest the proceeds, in whole or in part, in the purchase of land, whether or not situated in the State, for such occupation or use.

Part 4 and Part 5 of the Land and Conveyancing Law Reform Act, 2009 deal with trusts of land and variation of trusts.

Section 18 created the new statutory model of a “trust of land”, which covers all forms of trust of land, including where land is vested in a minor, regardless of whether the land vest before or after 1st December, 2009.

Section 19 sets out who are the trustees in each case of trust.

Guardianship

A parent, by deed or will, can appoint another person(s) to be guardian of their children after their death. A testamentary guardian can act jointly with the surviving parent, provided the surviving parent does not object, in which case he/she can apply to court for an order under section 7 of the Guardianship of Infants Act, 1964.