Getting Your Affairs in Order
Making a will is something many of us put off because it reminds us of death, something we don’t want to think about. But in actual fact it’s far more about making life easier for your family, friends and executors who will have an unenviable task dealing with your affairs if you don’t put them in order. Much better to cope with things like wills and last wishes when you are in full bloom, rather than leaving these things to the eleventh hour.
A sensible approach is to have a ‘bible’, a book or file in which all the information on the whereabouts of your will (usually kept with your solicitor), information about bank accounts, investments, insurance and last wishes is kept. Making a Living Will so that you and your family are clear about your wishes in extremis now could be extremely helpful. Once done this will give you peace of mind and you can get on with living with a clear conscience! Your nearest and dearest should know where this file is kept. Planning for eventualities like wills and Living Wills also helps take the sting out of the subject.
This is a legal document setting out how you wish the property you own at the time of your death to be left. The last valid will you make is the one that comes into effect. Ideally it should be drawn up by a solicitor as even small mistakes can result in complications. It must be signed in the presence of two witnesses (beneficiaries under your will shouldn’t be signatories) and executors (preferably two who sort out the finances), should be nominated. The law requires that spouses or civil partners are entitled to half your estate and children one third and the family home may be included in that share. Where partners are divorced or separated they do not automatically lose their share of the estate, but generally these will be renounced in separation or divorce agreements.
A surprising number of people die intestate (without a will in place), this is not a great idea, since it causes delays, headaches for those trying to sort out your affairs; your worldly goods may not be distributed as you would wish besides not being tax efficient. In this situation your estate will pass to your spouse or civil partner or, if there are children, two-thirds to your spouse and one-third to children or, if you have no spouse, to your children equally or, if you have neither, to your parents, if no parents, to siblings. Tax may be an issue and Capital Acquisitions Tax (CAT) or inheritance tax – while it does not apply to bequests to spouses – may be levied if bequests exceed the various thresholds. This is a complicated area and it’s best to get advice from your solicitor or accountant how to be most tax efficient if you have a valuable estate.
The following are guidelines on what should and should not be in your will and will help you to advise the professional drawing up your will. It is important to keep your last wishes up to date. Your will should be renewed every few years or when circumstances change. Ensure that all previous wills are cancelled and the new will is dated and signed correctly. It is safer to produce a new will rather than making changes to an existing one.
What not to put in your will:
- Do not use your will to settle old grudges. Do not put your funeral arrangements in your will as this may not be acted on until some months after your passing. The same applies to a Living Will. Do not add attachments, rather include the items in the will.
- Do not try and describe all your assets. You should only include specific items that are bequeathed to specific heirs.
- Avoid inflexible instructions. Instructions to sell assets can lead to losses if the market is low. Leave such decisions to your executor and heirs.
Guidelines for compiling a will:
- It should be structured so as to minimise CAT.
- It should be clear and well thought-out to ensure that it gives effect to your wishes, preventing headaches for your family.
- Be very specific about items. For example – my son John gets the contents of the garage. Does that include the car or just the tools and equipment?
- Be specific about investments and policies giving the name and number of the investments.
- Set up trusts for any minor and other dependents. The latter includes adults incapable of looking after themselves.
A trust is created when a will dictates that certain assets must not be distributed immediately, but should remain under the control of the trustees for a certain purpose and a determined period of time. Trusts are used to:
- Provide for a vulnerable or irresponsible spouse.
- Minor dependent children.
- An irresponsible adult.
- Reduction of inheritance.
- Continuation of a business allowing heirs to benefit from the income.
- Provide for the long-term needs of a charity or educational institution.
When including a trust it is important to choose the trustees carefully as they may be different from the executors of the will.
A Living Will
This will assist your family should a decision need to be made about prolonging your life unnecessarily. A Living Will is a letter to your doctor and your family, instructing them not to keep you on life support and not to resuscitate if there is no chance of a meaningful life.
Have copies signed and witnessed while you are still of sound mind. Have one copy in your personal file, have one on your file with your doctor and if you are travelling, have a copy with your passport.
It is important that you discuss the implications of this with your family and that they are aware of where the signed copy is stored. Do not put these instructions in your will as this may only be acted upon some months after your passing.
Power of Attorney
This is where a trusted party is given signing powers to make decisions on your behalf should you be overseas or become mentally incapacitated due to illness. After your death your executors should apply for legal permission to wind up your estate and the Probate Office will issue a grant of representation allowing them to do so. This may take a while to issue.
To help you keep your affairs in order, read this Guide to Your Affairs checklist.
This excerpt was taken from Rewire Don’t Retire, sponsored by Irish Life and Active Retirement Ireland. You can download the full guide HERE.