Spouses’ and Children’s Rights under the Succession Act, 1965

spouses rights

The Succession Act, 1965 protects surviving spouses of deceased persons by affording considerable protection as the Act restricts the right of the testator to leave his/her property to whoever he/she wishes.

Spouses’ Rights under the Succession Act, 1965

Section 111 of the Succession Act, 1965 states:

111.—(1) If the testator leaves a spouse and no children, the spouse shall have a right to one-half of the estate.
(2) If the testator leaves a spouse and children, the spouse shall have a right to one-third of the estate.

 

The estate to which the surviving spouse is entitled to a share in is ‘net estate’ which is ‘all estate…not ceasing on his death’. So this excludes trust property, joint property passing by survivorship, property in which the deceased had a limited interest, and validly nominated property (credit union accounts, post office saving certificates, nominated pension schemes).

Costs, liabilities and expenses also need to be taken into account to leave a net estate figure. It is this figure that the spouse is entitled to either one half of (no children) or one third of (children).

In summary, the legal right share is calculated on the net estate of the testator ie all property less expenses, debts, and liabilities.

Legal Right Share

This entitlement is called the ‘legal right share’ which only applies in a testate situation, that is where there is a will.

In an intestate situation, that is, there is no will, the surviving spouse is entitled to two thirds of the estate if the deceased has children; if the deceased has no children, the surviving spouse is entitled to the entire estate.

‘Children’ included for the purposes of section 111 above include

  • Children of his blood, both marital and non-marital
  • Children validly adopted by him.

It does not include

  • Step children
  • Foster children
  • Children for whom he acted in loco parentis

The right of the surviving spouse to the legal right share ranks after the rights of creditors of the deceased but before all other beneficiaries.

Section 112 of the Succession Act, 1965 states:

112.—The right of a spouse under section 111 (which shall be known as a legal right) shall have priority over devises, bequests and shares on intestacy.

 

Legal Right Share Versus Bequest?

Section 114 (2) of the Succession Act, 1965 states that

(2) In any other case, a devise or bequest in a will to a spouse shall be deemed to have been intended by the testator to be in satisfaction of the share as a legal right of the spouse.

If this situation occurs and the testator dies fully testate, then the surviving spouse will have a choice to make as set out in section 115 of the Act which provides for the surviving spouse to elect to between the legal right share entitlement and the rights under the will.

115.—(1) (a) Where, under the will of a deceased person who dies wholly testate, there is a devise or bequest to a spouse, the spouse may elect to take either that devise or bequest or the share to which he is entitled as a legal right.
(b) In default of election, the spouse shall be entitled to take under the will, and he shall not be entitled to take any share as a legal right.

 

If the surviving spouse does not elect to take either the bequest or the legal right share, he/she will be deemed to have taken the bequest and will lose the legal right share.

Where a testator dies partly testate and partly intestate the calculation is more complex and the following will need to be calculated-the value of the net estate, the value of all bequests under the will, and the value of the intestate part of the estate.

Section 115, Succession Act, 1965

(2) (a) Where a person dies partly testate and partly intestate, a spouse may elect to take either—
(i) his share as a legal right, or
(ii) his share under the intestacy, together with any devise or bequest to him under the will of the deceased.
(b) In default of election, the spouse shall be entitled to take his share under the intestacy, together with any devise or bequest to him under the will, and he shall not be entitled to take any share as a legal right.

 

Appropriation of the Family Home in favour of a Surviving Spouse

Section 56 provides for the right of surviving spouse to require dwelling and household chattels to be appropriated.

This section provides for the surviving spouse to request the personal representative to appropriate the dwelling in which the surviving spouse ordinarily resides if this property is part of the estate of the deceased person. This appropriation will be towards the satisfaction of his/her legal right share. (There are certain restrictions on this right to appropriate which are set out in subsection 5)

Spouse no longer a spouse?

There are 4 ways by which a spouse ceases to be a spouse for Succession Act, 1965 purposes.

a)      Renunciation

Section 113 provides for renunciation before or after marriage by way of a written contract.

b)      Separation

The Judicial Separation and Family Law Reform Act, 1989 and the Family Law Act, 1995 can provide for property adjustment orders and the extinguishment of succession rights.

c)       Divorce

The Family Law (Divorce) Act, 1996 and the subsequent marriage of a testator will have important implications here. For example, a will is revoked by the subsequent marriage of a testator.

d)      Unworthiness to succeed

Section 120 of the Succession Act, 1965 provides for the unworthiness of the surviving spouse to succeed. An example of this situation is the ‘Catherine Nevin/Jack Whites Pub’ case: In Re Nevin, High Court, 1997.

What happens when a surviving spouse takes his/her legal right share?

It blows the will out of the water. And there is no compensation for aggrieved beneficiaries who lose out as a result.

Children’s Rights

Unlike spouses, children are not entitled to any specific share in a deceased person’s estate.

childrens rights

Testate

Accordingly, in a testate situation, a child is only entitled to whatever the will of the deceased says.

Intestate

In an intestate situation a spouse is entitled to two thirds of the estate with the one third going to the ‘issue’. ‘Issue’, for the purposes of the Succession Act, 1965, includes marital and non-marital children, adopted children and their lineal descendants. Step children and foster children are not included.

Types of Children

A testator may have a number of different types of children eg

  • marital children
  • unborn children
  • section 98 children (see below)
  • non-marital children
  • adopted children
  • step children
  • foster children.

Section 98 Children

It is worth noting the provisions of section 98 of the Succession Act, 1965. It provides that where a child predeceases a testator leaving issue at the time of death, the gift from the testator will not lapse but will take effect as if the death of that child occurred after the death of the testator, unless a contrary intention appears from the will.

This means that if a testator’s child predeceases him leaving grandchildren, any benefit that would have been received by the child will pass to his estate.

Actions that a Child Can Take Against an Estate

The first action to look at is a ‘section 117′ action. Section 117 of Succession Act, 1965 provides:

117.—(1) Where, on application by or on behalf of a child of a testator, the court is of opinion that the testator has failed in his moral duty to make proper provision for the child in accordance with his means, whether by his will or otherwise, the court may order that such provision shall be made for the child out of the estate as the court thinks just.
(2) The court shall consider the application from the point of view of a prudent and just parent, taking into account the position of each of the children of the testator and any other circumstances which the court may consider of assistance in arriving at a decision that will be as fair as possible to the child to whom the application relates and to the other children.
(3) An order under this section shall not affect the legal right of a surviving spouse or, if the surviving spouse is the mother or father of the child, any devise or bequest to the spouse or any share to which the spouse is entitled on intestacy.
(4) Rules of court shall provide for the conduct of proceedings under this section in a summary manner.
(5) The costs in the proceedings shall be at the discretion of the court.
(6) An order under this section shall not be made except on an application made within twelve months from the first taking out of representation of the deceased’s estate.

 

The Court will consider the situation from the perspective of a prudent and fair parent and must consider the position of the other children of the testator also.

The time limit for bringing an action under section 117 is 6 months and this is a strict limit.

The critical test for success of a section 117 challenge is

  • whether the parent positively failed in his moral duty to make proper provision for the child and
  • the child must establish that he/she had a need which the testator could have satisfied in making his will.

A court cannot make an order which will interfere with the legal right share of the surviving spouse.

The second type of action is a ‘section 63′ action. Section 63 of the Succession Act, 1965 deals with advancements to children and allows a child to bring a case against a child who has previously received an advancement during the testator’s lifetime. This action will seek to have the previous advancement to a sibling taken into account in the distribution of the estate on death.

If this action is successful, it will clearly impact on the distribution of the estate.

Proprietary Estoppel

The third type of action that can be taken by a disappointed child is a proprietary estoppel action. A proprietary estoppel action will aim to prove that the child acted to his detriment in the belief that he would be given a right to the deceased’s property and the deceased knew and encouraged this belief.

This is a very difficult action to succeed with.

However, if it is successful and an equitable interest has been established, it will prevail over the legal right share of the spouse and the claims of other children sharing the estate, unlike a successful section 117 action.

Underage Children and Wills

If there is a bequest to a child (an underage child) and there are no trustees appointed in the will, or where an underage child inherits on intestacy, the legal personal representative has a problem: there is nobody to whom the legal personal representative can vest the asset and there is nobody from whom he can obtain a receipt.

This is why it is advisable to insert a trust in a will where the beneficiaries may include under age children.

However if this does not occur, section 57 of the Succession Act, 1965 allows the personal representative to appoint trustees. Also, if the personal representatives do not appoint trustees then they will be trustees for the purposes of this section.

Section 57:

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.

Section 58 is of assistance where a child becomes entitled to land on intestacy:

(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.

One other piece of legislation should be considered when dealing with children and wills:

  1. The Guardianship of Infants Act, 1964 which allows a parent by deed or will to appoint another person to be a guardian after death. This is a testamentary guardian and only comes into effect after the death of the testator.

Tax Status of a Child

Step children and foster children are not considered “children” for the purposes of the Succession Act, 1965; however they are under capital acquisitions tax legislation.
By Terry Gorry Google+

What Happens When You Don’t Make a Will? Intestacy Simplified

intestate-estate

When a person dies having failed to make a will, he/she is said to have died intestate.

This means that his estate will be distributed in accordance with the Succession Act, 1965, part VI (sections 67-75).

This sets out the rules for distribution on intestacy, the shares of surviving spouses and issue, the shares of parents, brothers, sisters, and other matters.

The rules concerning who can take out the grant of administration intestate are set out in the Rules of the Superior Courts 1986, Order 79, rule 5:

Rule 5(1) deals with the order of priority as to who can apply in an intestate situation:

5. (1) In determining to whom letters of administration of the estate of a person who died on or after the 1st of January, 1967, wholly intestate and domiciled in Ireland shall be granted, the persons having a beneficial interest in the estate of the deceased shall be entitled to a grant of administration in the following order of priority, namely:

(a) the surviving spouse;

(b) the surviving spouse jointly with a child of the deceased nominated by the said spouse;

(c) the child or children of the deceased (including any person entitled by virtue of the Legitimacy Act, 1931, to succeed to the estate of the deceased);

(d) the issue of any child who has died during the lifetime of the deceased;

(e) the father or mother of the deceased or, in the case of an illegitimate person who died without having been legitimated, the mother;

(f) brothers and sisters of the deceased (whether of the whole or half-blood);

(g) where any brother or sister survived the deceased, the children of a predeceased brother or sister;

(h) nephews and nieces of the deceased (whether of the whole or half-blood);

(i) grandparents;

(j) uncles and aunts (whether of the whole or half-blood);

(k) great grandparents;

(l) other next-of-kin of nearest degree (whether of the whole or half-blood) preferring collateral’s to direct lineal ancestors;

(m) the nominee of the State;

The entitlement to extract the grant of administration intestate is determined at the date of death of the deceased as section 71 of the Succession Act, 1965  provides:

71.—(1) Subject to the rights of representation mentioned in subsection (2) of section 70, the person or persons who, at the date of the death of the intestate, stand nearest in blood relationship to him shall be taken to be his next-of-kin.

It is worth noting therefore that if a person is not a next of kin at the date of death of the deceased, he cannot become one-even if all the deceased’s other relatives are dead. (‘Next of kin’ are blood relations)

Section 70 of Succession Act, 1965 states:

70.—(1) If an intestate dies leaving neither spouse nor issue nor parent nor brother nor sister nor children of any deceased brother or sister, his estate shall, subject to the succeeding provisions of this Part, be distributed in equal shares among his next-of-kin.

 “Next of kin” means a blood relation so step brothers/sisters, and step-relations generally have no right to extract the grant or to succeed.

No grant will be made to more than 3 persons jointly unless the Probate Officer directs it.

Shares of Surviving Spouse and Issue

Section 67 of the Succession Act states:

67.—(1) If an intestate dies leaving a spouse and no issue, the spouse shall take the whole estate.

(2) If an intestate dies leaving a spouse and issue—

(a) the spouse shall take two-thirds of the estate, and

(b) the remainder shall be distributed among the issue in accordance with subsection (4).

(3) If an intestate dies leaving issue and no spouse, his estate shall be distributed among the issue in accordance with subsection (4).

(4) If all the issue are in equal degree of relationship to the deceased the distribution shall be in equal shares among them; if they are not, it shall be per stirpes.

Documents Required to Extract a Grant of Administration Intestate

  • Death certificate
  • Oath for administrator intestate
  • Typed notice of application or copy of oath
  • Affidavit of current market value of land
  • Inland revenue affidavit (CA 24)
  • Administration bond.

The Oath of Administrator Intestate

This sworn document sets out the history of entitlement of the applicant to extract the grant of administration. It will also “clear off” all persons having a prior right to the grant and establishes the right of the applicant to extract the grant.

The Administration Bond

An administration bond is always required when a grant of letters of administration is sought.

The administration bond binds the “principal” to compensate the President of the High Court if he fails to administer the estate in accordance with the law. This cover must cover double the gross assets of the estate.

The administration bond is a guarantee for the beneficiaries and creditors of the estate in respect of the administration not being carried out properly. It is never required when seeking a grant of probate as an executor is never required to execute a bond.

The Per Stirpes Rule

The Per Stirpes rule only applies on intestacy. It is an exception to the general intestate rule that to inherit on intestacy you must be next of kin entitled at the date of death.

It allows kin to inherit the share of their parent, which would otherwise have lapsed due to the death of the parent prior to the death of the deceased, while others of their parent’s next of kin entitled (eg children/brothers of the deceased) survived the deceased.

Relatives of Half -blood and step relatives

Section 72 of the Succession Act, 1965 states:

72.—Relatives of the half-blood shall be treated as, and shall succeed equally with, relatives of the whole blood in the same degree

Kinship is based on blood so if there is no common blood with another person there are no succession rights to that person’s estate.

Disclaiming on Intestacy

Any proposed beneficiary can disclaim his inheritance. However you cannot disclaim in favour of someone else.

Where a person disclaims the property will automatically pass to the person next entitled under the rules of intestacy.

If a spouse disclaims her entitlement to 2/3rds of the estate his issue would inherit the whole estate.
By Terry Gorry Google+

How to Create a Will Trust in Ireland

 

How to set up a trust

What appears to be one of the most boring topics imaginable has been the subject of closer scrutiny by those looking to put assets beyond the reach of creditors.

If you have significant debt problems and are looking to put assets out of reach of creditors, a trust can be useful.

But it is not foolproof and can be attacked and unraveled by creditors.

On the other hand you may have assets, no debt problems, but the person(s) who you would like to give those assets to may have debt issues.

And you are, understandably, afraid that those hard earned assets of yours will eventually end up in a great big pot for distribution to the creditors of your loved one.

This is the type of circumstance where a trust may be more usefully deployed, provided it is drafted correctly.

Trusts are also valuable when there are minor children who will be beneficiaries in a will, where you want to make arrangments for someone with a disability, perhaps for an elderly person. You might also set up a trust for taxation reasons.

Will Trusts

Trusts that can be used in drafting wills include:

  • a discretionary trust
  • a trust for sale
  • a Settled Land act trust
  • an interest in possession/fixed trust.

Discretionary Trusts

A discretionary trust fund is one where the only interest that potential beneficiaries have is the right to be considered for an appointment of property. The beneficiaries do not have an absolute right to the trust fund so do not have an interest in possession.

A discretionary trust is useful where

  • There are young children
  • The testator wishes to postpone mainstream capital acquisitions tax
  • The testator wants to adopt a “wait and see” approach to see how potential beneficiaries will turn out.

The trust fund, the beneficiaries, and the trustees must be set out in the will.

Here is an example:

In my Will where the context so admits

1. The beneficiaries shall mean and include:

a) My children

b) My grandchildren born within the trust period hereinafter defined.

2. The trust fund shall mean

a) The sum of €25,000 or the whole of my estate after the payment of my debts, funeral, testamentary, administration expenses and legacies and

b) All money, investments or other property accepted by the trustees as additions.

c) All accumulations (if any) of income directed to be held as an accretion to capital and

d) The money, investments and property from time to time representing the above.

The definition of the trust fund can be as narrow or as wide as the testator chooses. It can be a specific sum of money, a property, or the residue of the estate.

The trustees need to be defined also.

Here is an example:

I appoint Jim and Mary to be trustees (my trustees) of my Will and I appoint them trustees for all the purposes of the Settled Land Acts 1882 to 1890, the Conveyancing Act 1881, the Land and Conveyancing Law Reform Act 2009 and sections 57 and 58 of the Succession Act 1965.

Once the trustees, trust fund, and beneficiaries are defined the substantive trust must be created.

Here is an example of a substantive trust:

I give devise and bequeath the trust fund to my trustees upon trust either to retain or sell it on the following trusts:

Until the vesting day to pay the capital and any income arising from it to any one or more of the beneficiaries in such shares and at such times as my trustees in their discretion think fit without obligation to make payments to or for the benefit of all the beneficiaries or to require equality among those to whom payments are made and on the vesting day to divide what remains of the capital and accrued income equally among the beneficiaries then living without regard to payments already made to them.

Trusts for Sale

This trust is where the trustees are under an obligation to sell, invest the proceeds and hold the proceeds on the terms of the original trust.

This type of trust puts the trustees in control of the timing of any sale of trust property and they cannot be forced to sell, even if a beneficiary wants them to do so.

To incorporate such a trust in a will you need to first decide:

  1. Who are the trustees and
  2. What is the trust property.

Here is an example of a trust to sell:

I Give Devise and Bequeath all the rest residue and remainder of my estate of whatsoever nature and wheresoever situate unto my trustees upon trust to sell the same and to hold the proceeds of such sale or my residuary estate for so long as the same shall remain unsold upon trust for my daughters Michaela Smith and Susan Sarandon in equal shares.

There is no power to postpone a sale in the wording above. If such as power is to be given then this will give that power:

I Give Devise and Bequeath all the rest residue and remainder of my estate of whatsoever nature and wheresoever situate unto my trustees upon trust to sell the same with power in their absolute discretion to postpone the said sale and to hold the proceeds of such sale or my residuary estate for so long as the same shall remain unsold upon trust for my daughters Michaela Smith and Susan Sarandon in equal shares.

If a property is not held upon trust for sale then a power of sale must be given to the trustees in the will.

An ultimate default trust will also be needed to cover the situation where Michaela and Susan referred to above predecease the settlor/testator or the trust fails for want of a beneficiary. If this default trust is not inserted the danger is that the property will pass on intestacy.

Settled Land Act Trusts

The Settled Land Act, 1882 defines a “settlement” of land. A “settlement” is where real property is held by a succession of interests or where a minor has an interest in property.

Settled Land Act Trusts are very useful for the protection of a life tenant who has the power of sale under the Settled Land Acts.

An example of a settlement would be

To my wife for life and thereafter to my son Sheamus.

One of the benefits of this type of settlement is to fix the time at which an interest will vest in the remainderman (Sheamus above) and to postpone the payment of tax to sometime int eh future.

Fixed Trusts/Interest in Possession Trusts

A fixed trust is one in which the interests of various beneficiaries are fixed at the time of the creation of the trust.

They can be very useful to

  • Create an immediate interest in possession eg a life interest
  • Provide clarity as to who will get the trust property at a fixed time in the future
  • Allow a testator to postpone the vesting of an interest until a beneficiary reaches a certain age
  • Avoid discretionary trust tax provisions.

It is worth noting the distinction between a benefit vested in possession and a benefit vested in interest.

Eg of a benefit vested in possession:

I Give Devise and Bequeath all the rest residue and remainder of my estate of whatsoever nature and wheresoever located to my daughter Emily.

Eg of a benefit vested in interest:

I Give Devise and Bequeath all the rest residue and remainder of my estate of whatsoever nature and wheresoever located to my daughter Emily and on her death to my son John.

John has a benefit vested in interest.

Trusts and Taxation

You would be well advised to obtain taxation advice about using a trust because deemed disposals of property are said to have taken place for capital gains tax purposes at different times, depending on the wording of the trust instrument/will.

The Land and Conveyancing Law Reform Act 2009

The Land and Conveyancing Law Reform Act 2009 has made significant changes to trust law in Ireland eg the Rule Against Perpetuities which may have affected a trust has been abolished.

The Land and Conveyancing Law Reform Act 2009 introduced a simpler way of dealing with trust land which up to then had been governed by the Settled Land Acts, 1882-1890. The 2009 Act covers all trusts of land ,whether created by will or otherwise.

The Land and Conveyancing Law Reform Act 2009 also sets out the powers of trustees of land, procedures for resolution of disputes, jurisdiction of the Courts to vary and make other orders in relation to trusts, and offers protection for purchasers of trust land.

Will Trusts-Some Other Facts You Should Know

Trusts are incredibly useful legal devices which are typically used to

  • Ensure property is enjoyed by individuals in succession
  • Provide for beneficiaries whose identity may not yet be known.

Trusts can be broadly categorised into

  1. Inter vivos (during the lifetime) trusts and
  2. Will trusts.

What is a Trust?

A trust is an equitable obligation, binding a person (who is called a trustee) to deal with the property over which he has control (which is called trust property) either for the benefit of persons (who are called beneficiaries) of whom he himself may be one, and any one of whom may enforce the obligation, or for a charitable purpose…, or for some other purpose permitted by law..(Source: Underhill)

The 3 Certainties

In order for a trust to be legally constituted it must have 3 certainties:

  1. The subject matter of the trust must be certain (this imposes 2 obligations: the trust property must be certain and the interest to be taken by the beneficiaries must be certain)
  2. The objects (beneficiaries) must be certain
  3. The words used by the testator must have been imperative to show his (her) intention to create an obligation.

No particular form of words is required to create a valid trust but words like “wish”, “hope”, “desire” may cause a trust to fail as they are not sufficiently imperative.

However precatory words like those above may be sufficient to create a trust if the wishes and intention of the settlor/testator is clear from the circumstances.

If any of these certainties are “uncertain” or unclear, the trust will almost certainly fail.

Other Trust Requirements

Where the trust property is land/real property, the trust must be evidenced in writing.

If the trust is a will trust, the will must be valid and comply with the Succession Act, 1965.

There are also categories of trust which are void because they are contrary to public policy and further trusts which are voidable by the Courts on the grounds of fraud, mistake, undue influence, duress, misrepresentation.

Different Types of Trust

Before going on to look at will trusts in more detail it is worthwhile to take a brief look at some different types of trust:

1. Trusts which arise by operation of law

These types of trust are either resulting or implied trusts-where the law presumes that the owner of property intended that it should be held in trust-or constructive trusts-where the Courts will impose a trust to satisfy the demands of justice in particular circumstances eg where a person in a fiduciary position makes a personal profit.

2. Statutory Trusts

The Family Law Act, 1995 and Family Law (Divorce) Act, 1996 allows Courts to order that property held by one spouse should be placed in settlement/trust for the other spouse and/or children.

  1. Charitable Trusts
  2. Trusts Created for Purposes
  3. Discretionary Trusts

A discretionary trust is one which is set up to gives the trust property to trustees with the power to the trustees to give the property as they see fit to members of a particular class of person.

3. Trusts for Sale

This occurs where trustees are given property on trust with the power to sell it or postpone a sale as they see fit.

4. Protective Trusts

This type of trust is usually for the benefit of family members and will have a restriction or condition attached eg “the income to Mick for life while he keeps out of betting shops.”

5. Revocable Trusts

A trust cannot generally be revoked but an exception is a trust for paying the settlor’s debts. This type of trust cannot be used to defeat the settlor’s creditors though.

The Parties to a Trust

There are usually 3 parties to a trust or settlement:

  1. The testator/settlor (if the trust is created by a will he/she is referred to as the testator)
  2. The trustee(s)
  3. The beneficiaries.

A trust which takes effect on death is a will trust.

A settlor/testator can himself be a trustee and/or beneficiary and creates the trust by deed, will, or by act. (However if he is a testator he clearly cannot be a beneficiary or trustee!)

The Trustees

The trustees are the legal owners of trust property and carry out the terms of the trust. The trustees have legal title to the property while the beneficiaries have equitable title.(Although strictly speaking it is probably more accurate to describe the trustees as the nominal owners. Because a beneficiary under a settlement could also make a settlement of his interest where the legal ownership remains with the original trustees).

Anyone who is not under a handicap can be appointed a trustee, including a beneficiary (but a conflict of interest may clearly arise).

Trust property is held by the trustees as joint tenants with the right of survivorhip arising on the death of a trustee. A completely constituted trust is one where a trust has been validly declared and the title to trust property has been transferred to the trustees.

You can have as many or as few trustees as you wish but the more trustees the more difficult it might be to manage the trust’s affairs.

Generally it is a good idea to have at least 2 trustees although one can perform all necessary duties.

Trustees are appointed by the settlor/testator in the first instance. Trustees can also be appointed by the original trustees, those who have statutory powers, and beneficiaries in some circumstances.

In a will trust the trustees and executors will usually be the same persons.

If trustees named in a will are unable to act or have disclaimed or if the settlor failed to appoint trustees then the Courts have the power to appoint trustees.

Both the Trustee Act, 1893 and the Succession Act provide for the appointment of trustees as circumstances dictate eg the predeceasing of the settlor by a trustee.

Trustees of a Minor/Infant Trust-Under Age Children

If a child inherits from a will, and there is no receipt clause in the will, or on intestacy there is nobody in whom the LPR (legal personal representative) can vest the asset or obtain a receipt.

However section 57 of the Succession Act, 1965 comes to the rescue:

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 minors inherit and no trustees have been appointed the LPR (legal personal representative) can appoint trustees for the purposes of section 57 and a trip to Court can be avoided. If the LPR does not appoint trustees he/she shall be a trustee for the purposes of this section of the Succession Act, 1965.

However it should be noted that this only applies to the share of a minor. Anybody else who is a beneficiary and is under a disability and cannot give a receipt to the legal personal representative will necessitate a trip to Court.

The powers of trustees appointed under section 57 of the Succession Act are set out in section 58 of the Act.

Section 58 also provides for a situation where a minor inherits land on intestacy ie there is no will:

Section 58 (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.

The Constitution of Trusts

A trust is completely constituted where the trust property has been vested in the trustees for the benefit of the beneficiaries. This is critically important because the law will not enforce an incompletely constituted trust in favour of a beneficiary.

So an express trust may be completely constituted either by the transfer of property-this must be an effective transfer of the property to be included, not just an intention- to trustees to be held on certain trusts or by a settlor declaring himself to be a trustee for the benefit of specified trustees.

For a trust to be completely constituted whatever formalities are required for the method of constitution must be complied with eg for a trust to be completely constituted by will the relevant statutory formalities must be complied with as set out in the Succession Act, 1965. For an inter vivos transfer of property the formalities applicable to the transfer of that type of property must be carried out eg the transfer of land will required the execution of a deed or transfer.

Declaration of trust by settlor

A settlor can completely constitute a trust where he declares himself a trustee of the property for the benefit of third parties. There must be clear evidence of the settlor’s intention to create a trust. Where the trust property is real property, the declaration of trust must be evidenced in writing.

In summary, a completely constituted trust can be enforced by a beneficiary, even if he is a volunteer. If the trust is incompletely constituted then it will be of vital importance to establish whether the beneficiaries are volunteers or have provided consideration.

Duties and Powers of Trustees

Trustees have both statutory and non statutory powers and duties. Non statutory powers will be granted by the trust deed itself.

Powers and duties usually given to trustees include

  • The power and duty to collect and preserve the assets
  • The power to invest
  • The duty not to make a profit from the trust eg to buy trust property
  • To be impartial between beneficiaries
  • To account for and distribute the assets and keep proper accounts.

Trustees’ statutory powers derive from

  • The Settled Land Acts 1882-90
  • The Succession Act 1965
  • The Land and Conveyancing Law Reform Act, 2009
  • The Trustees Act, 1893.

Additional non statutory powers should be given to trustees such as, depending on the circumstances,

  • the power of sale
  • the power to invest
  • the power to run a business
  • the power to lend money and borrow money
  • the power to delegate
  • the power to insure property
  • the power to advance capital
  • the power to pay professional fees
  • the power to compromise action in claims.

A trustee who is appointed does not have to act-he can disclaim from the outset- but in a will trust if a person is appointed as executor and trustee and accepts the executorship he will be presumed to have accepted the trusteeship.

Once he accepts the job he cannot disclaim. He can retire however according to the terms of the trust.

A trustee can be removed from office either in accordance with the terms of the trust or if all the beneficiaries agree.

Differences Between Legal Personal Representatives and Trustees

An LPR (legal personal representative) can be appointed by will or by Court.

A trustee can be appointed by the settlor/testator, by Court, or by existing trustees.

Only one LPR is required; it is recommended that at least 2 trustees be appointed as 2 are necessary to give receipts for capital monies under the Settled Land Acts.

Receipts for land: one LPR is all that is required (unless it is for settled land) but all trustees must join in getting valid receipts.

An LPR cannot retire but a trustee can.

The powers of personal representatives and trustees are different; LPRs have wide powers deriving from common law, statute and the will.

Trustees derive their powers from statute and the will or trust deed.

If a personal representative dies before the administration of the estate a de bonis non grant is necessary; if a trustee dies his personal representative can take his place until a new trustee is appointed in his place.

Beneficiaries of a Trust

Beneficiaries are those for whom trust property is being held.

However the legal interests of those beneficiaries can vary greatly eg a life interest, an interest for a certain period, an interest subject to a condition etc.

Powers of Beneficiaries of a Trust

Beneficiaries of a trust can act collectively to terminate the trust. A beneficiary can also disclaim or sell his interest.

Some Common Misconceptions about Trusts

As a trust is not a legal entity per se it cannot hold assets or enter contracts or carry out any other legal formalities. Trust property is owned by the trustee(s) and it is the trustee(s) that has legal capacity.

A trust therefore cannot be bound by a legal contract and any contracts entered into by a trust are not legally enforceable.
By Terry Gorry Google+

Making a Will in Ireland-50 Facts You Should Know

how-to-make-a-will

Here are 50 things you should know about making a will:

  1.  The requirements for a valid will are set out in section 77 of the Succession Act, 1965.
  2. To make a will you  must be of sound disposing mind and at least 18 (or if younger, married)
  3. If you don’t make a will an intestacy situation arises; this means that your property will be distributed in accordance with the Rules of the Superior Courts and the Succession Act, 1965
  4. Making a will leads to a cheaper and quicker administration of the estate through a Grant of Probate
  5. If you leave a benefit in your will to your child who predeceases you the benefit will go to his estate, not to his children (section 98 of the Succession Act, 1965)
  6. You can prevent this happening by making provision in your will that the benefit will go to, for example, your child’s children
  7. You can engage in tax planning/minimisation of capital acquisitions tax by making a will
  8. Your choice of executor is critical-(s)he handles your affairs and extracts the grant of administration
  9. You can make as many wills as you want
  10. The only will that counts though is the last one before you pass away
  11. Your will must be in writing-it could be carved in stone
  12. You must sign it at the end of the will and your signature must be witnessed by 2 people
  13. Your witnesses cannot benefit from your will so if you intend leaving either one (or both) something get a different witness(es)
  14. Your will must contain your name and address
  15. Your will must be dated
  16. Your will should revoke all previous wills (if any)
  17. A list of legacies refers to your money or goods
  18. A list of devises in your will is a list of your real property
  19. Your will is not revoked by divorce
  20. Your will is revoked by marriage
  21. You cannot appoint alternative executors because your will will fail for uncertainty eg “I appoint Mary or Sean to be my executor”
  22. If you have children under the age of 18 you should appoint trustees and/or guardians
  23. The spouse of any of your witnesses cannot benefit from your will
  24. If an intended beneficiary predeceases you and there is no clause in your will dealing with the residuary of your estate that benefit will be distributed as if you died intestate
  25. Your child can bring a legal action against your estate under section 117 of the Succession Act, 1965 if you fail in your “moral duty” towards him/her
  26. Your spouse has a legal right to a share of your estate thanks to section 111 of the Succession Act, 1965
  27. If you make a will your spouse is entitled to  1/3 of your estate if you leave children and ½ of your estate if you have no children
  28. If you don’t make a will your spouse is entitled to 2/3rds of your estate if there are children and the whole shooting match if there is no children
  29. Children referred to at 26, 27, 28 above includes martial and non marital children and adopted children
  30. Your spouse can cease to be a spouse in 4 ways:By renunciation (section 113, Succession Act, 1965), By separation (Judicial Separation and Family Law Reform Act, 1989 and Family Law act, 1995), By divorce (Family Law(Divorce) Act, 1996), By unworthiness to succeed (Succession act, section 120)
  31. If your will is valid, there is a presumption of testamentary capacity
  32. The test for testamentary capacity was set out in an 1870 case:Banks v Goodfellow
  33. There are 3 aspects to testamentary capacity: a) you must understand you are making a will to dispose of your assets, 2) you must know the extent of your estate, 3) you must be able to give consideration to those who might expect to benefit from your will
  34. Certain situations will give rise to a presumption of undue influence; generally where the relationship of trust and confidence existed eg doctor/patient
  35. Your children are not entitled to any specific share of your estate, unlike spouses (see 26 above)
  36. If you don’t make a will though your children (strictly “issue”) are entitled to 1/3
  37. Your children can bring a legal action against your estate under section 117 of the Succession Act, 1965 for your failure to discharge your moral duty to them
  38. The time limit for bringing such an action is 6 monts; and it is a strict one
  39. You can create a trust in your will
  40. A trust is an equitable obligation binding someone (a trustee) to deal with your property for the benefit of beneficiaries whose identity may not be known yet
  41. Your trustees will be the legal owners of your trust property but they must carry out the terms of the trust which you will decide
  42. If your trust property is “real property” the trust must be evidenced in writing
  43. A trust is not a legal entity so cannot be bound by a legal contract
  44. The Land and Conveyancing Law Reform Act, 2009 has made huge changes in trust law in Ireland
  45. Your estate is administered by your personal representatives-an “executor” in a testate situation and an “administrator” in an intestate situation
  46. Your executor’s job is to extract a grant of probate to “prove” the will and deal with your estate
  47. Your executor does not have to act and may renounce; but once (s)he takes on the role (s)he can’t renounce later
  48. Your executor’s powers come from the will itself and the Succession Act, 1965
  49. Capital acquisitions tax is the tax payable by beneficiaries of your will
  50. The amount to be paid can be reduced/minimized because there is a wide range of reliefs and exemptions, provided you make a will.

You can have your will drafted quickly and easily-simply use the contact form to arrange a consultation.
By Terry Gorry Google+