Destiny of ‘sentimental’ assets could end in tears without succession planning

ATTACHMENT to land and property runs deep in Ireland. Taken to extremes, this fixation on property and inheritance can cause untold misery and misfortune as exemplified by the fate of Bull McCabe and his family in The Field.

And while that is an extreme example, many of us are familiar with cases where a disputed will has created lasting divisions within families.

The division of assets as valuable and ‘sentimental’ as the family farm is best resolved through a succession planning process that can identify and resolve any potential difficulties.

Remember that the costs of legal applications and actions in relation to wills could result in much of the estate’s value being spent on legal fees.

This cost does not take account of the huge personal costs and relationship damage that they cause among nearest and dearest.

The question of property inheritance is in the headlines again due to the publication by the Law Reform Commission of recommendations that the law should be changed in this area.

If these proposals are enacted as legislation there could be significant changes in the inheritance rights of adult children and how the courts deal with disputes over wills.

Existing laws provide that a child, including an adult child, of a deceased parent who has made a will, can apply to court and claim that the parent failed in his or her “moral duty to make proper provision for the child” (in accordance with the parent’s means) during the parent’s lifetime.

If the court agrees that the parent failed to comply with the duty to make proper provision for the child, it can make an order that adjusts the amount left to the child in the will. It can order that a different amount should be made for the child out of the parent’s estate. These type of cases, although rare, are very difficult for families and often very expensive.

NEW PROPOSALS

The Law Reform Commission recommendations, if implemented by the Government, will mean that the parents will no longer have a “moral duty” to leave an inheritance for their children under proposed changes to the law. The law would simply state that a deceased parent has a duty to make “proper provision” for a child.

If the law is changed, children who are unhappy with how they are provided for in a parent’s will can still bring a challenge in the courts. However, it will be more difficult for them to argue that they have not been provided for by their parents.

FARM FAMILIES

The new proposals effectively limit the circumstances in which a child can bring an application to have the will amended. One exception is where an item in the estate is of sentimental value to an adult child.

This leaves the possibility of certain assets like a family farm, that may be owned by a family for numerous generations, being classified as of sentimental value. These assets would inevitably be the subject of legal challenges.

Another exception is where an adult child has a particular financial need arising from their health or decision-making capacity or where the adult child has provided care and support for the deceased.

‘PROPRIETARY ESTOPPEL’

Another reason for challenges to wills, which arise quite often in the context of family farms, is when someone who works on a farm for a long period, often without pay, in the expectation that they will inherit the farm but ultimately does not inherit the farm.

The principle of ‘proprietary estoppel’ means that if you have relied on a promise made to you that you will gain a particular asset upon the death of a person and the person then makes a will effectively breaking the promise, the will can be challenged in the courts.

This is a long established principle in Ireland and it is unlikely that the proposed changes by the Law Reform Commission will affect the operation of the law in this area.

There is a time limit for bringing applications. Section 117 of the Succession Act 1965 specifies that an application to challenge a will must be brought within six months of taking out full probate or administration of the estate.

This is usually between nine to 15 months after death. The Law Reform Commission recommends that this should remain the case.

SENTIMENTAL ASSETS SUCH AS THE FAMILY FARM WOULD INEVITABLY BE THE SUBJECT OF LEGAL CHALLENGES

This article is intended as a general guide only and you should seek independent legal advice in relation to individual circumstances.

Theresa Murphy is a barrister based in Co Galway