The first thing to understand about making a will is that it is a pretty straightforward exercise. Unless your financial affairs are very complicated, there is little to fear in the process. Having said that, getting things wrong can be catastrophic for those near to you whom you intend to benefit once you die, so it is important not to cut corners.
Yet, as many as 60 per cent of Irish adults have yet to make a will. It’s not just an Irish thing. In the US, where they tend to be more focused on personal finances, it is estimated that as many as two in every five people do not have a will in place.
So why haven’t more of us got around to making a will?
Time, age, understanding and assets are all cited as reasons in various surveys but it is difficult to escape the suspicion that people shy away from doing so because it forces them to address the one thing most of us consciously avoid doing – accepting that life is ephemeral and fragile, the opposite of how we like to see ourselves.
Among the many misconceptions about wills is that they are only for old people. If only life were so convenient. People can, and do, die at all ages. The simple rule of thumb is that if you are over the age of 18 and have any assets at all, then you should have a will in place to determine what will happen to them if you are not around yourself to decide.
This is especially so where you have children, any person’s greatest asset. A parent’s untimely death is inevitably massively disruptive for children but failure to provide for them – most particularly in ensuring you have appointed guardians who you know will care for your children as you would have wished and with the tenderness they should expect – can be more devastating still. A will allows you do formalise those decisions to avoid confusion or worse.
What do you need to do?
There are certain basic requirements of a will. First you must be of sound mind and not under any duress and the document should state this. It highlights one of the dangers of leaving it too late to draw up a will. If you start to suffer memory issues – dementia – you will no longer be able to draw up a legally valid will. Putting things off could come back to haunt your family, if not you.
On a more practical level, the will must be in writing and not just in electronic format, it must be signed and dated at its end by you – the signature being at the end is important. That signature must be witnessed by two people in your presence and these witnesses (or their spouses) cannot benefit from the will.
The will should also revoke any previous wills, for the sake of clarity. The rule is that the most recent will is the only valid one and this can be determined by dating but it is as well to expressly revoke any previous will.
Thereafter, it should give your name and address, the name(s) of people you are appointing as executors – bearing in mind they need to survive you to carry out this function – and who you want to get your property, assets, savings etc. You should note as you do this that there is something called the legal right share. This means that your spouse or civil partner is entitled to a minimum of half your estate if there are no children and one-third where there are children.
This does not mean children are automatically entitled to anything in a will, though you would generally be expected to provide for minor children or those still dependent – perhaps because they are still studying, for instance. Beyond that, it is open to any child who does not feature in a parent’s will to challenge that decision though the grounds for doing so are narrow.
And how should you go about it?
Lawyers costs money, so you want to be as well prepared as you can be before going in for your appointment.
That means you have gathered a comprehensive list of your assets and have a clear understanding of what you want to do with them.
Also, be clear whom you would like to be executor to your will – the person who manages your estate and its dispersal after the securing of probate – and get their approval for the role. You may have a favourite brother you would trust with your life but he may have no head for detail and might not be the best option.
You can name more than one executor and, with limited exceptions, it can be anyone you like to appoint. Generally people go for family members or solicitors, or both.
If you have children who are minors, you should name a guardian for their welfare in your will – assuming the other parent is not available. Again, make sure they are happy to fulfil the role. It is onerous and does not suit everyone. And just because someone is a close friend does not mean their approach to parenting is one you would be comfortable with.
You will also need to name trustees to manage any asset or money left in your will to a minor.
Finally, when you have allocated who is to get what, my advice is that you include a residuary clause. This is what happens anything in your estate that is not already specifically accounted for elsewhere in your will – including bequests that cannot be made because the intended recipient dies before you, or maybe assets you simply forgot about or did not own at the time the will was drawn up.
Without a residuary clause, any residue will be treated under the law of intestacy (as though, for these assets, you died without making a will) and the legislation determines who gets or shares them, with priority given to your closest living relatives.
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So what are the costs involved?
For most people, the costs involved in making a will are very modest. For the vast majority of people, you could be looking at prices of €150 plus VAT or slightly more. The more experienced or high profile a solicitor you use, the higher the likely cost but we are not talking huge numbers here.
Yes, you can save on that by going the DIY route. These can cost under €30 but you need to ask yourself whether you are willing to take a chance that the wording you consider clear when drawing up the will will pass legal challenge after your death for the sake of the price of a couple of decent restaurant meals.
Unsurprisingly, the strong advice of the legal profession is that you do not go it alone on wills; in this case, I think they are absolutely correct, even having come across information about inheritance law on at least one legal firm’s site that is categorically wrong. Why? Most particularly because these are legal documents. Words you use may have one commonly understood meaning but they might have a different meaning in strict legal terms. You want to make sure your wishes are fulfilled; solicitors are the professionals skilled to ensure that they are in a legally watertight document.
Finally, remember your will is not fixed in stone. If circumstances change, your decisions on inheritance might change.
Marriage automatically voids a previously dated will unless that will was drawn up with specific written reference to the upcoming marriage. Interestingly, however, divorce does not necessarily void a will. Having children clearly might change your views on succession but equally leaving bequests in your will to people you know have died years before is counterproductive.
For instance, if you are planning on leaving something to your children and they predecease, the inheritance lapses and goes into the residue. If they have children – ie your grandchildren – that is no longer so, but that doesn’t mean it goes directly to those grandchildren. Instead it is treated as part of your dead child’s estate and in many cases that means it will go to their spouse. So be clear on what you want and make sure the will reflects that, and be clear about what defaults will happen in the event of a lack of clarity.
Given the cost involved, you can and should review your will as your life changes and certainly every five years or so.
You can contact us at OnTheMoney@irishtimes.com with personal finance questions you would like to see us address. If you missed last week’s newsletter, you can read it here.
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