The Gazette 1982

JULY/AUGUS T

1982

GAZETTE

Instructions for the Rural Will by Donal G. Binchy, Solicitor W E can hope, with some confidence, that the Law Society's "Make a Will Week" will help

consider, if possible, renunciation by the spouse of his or her legal right. This has its own problems, including the advisability of independent advice for the spouse. Such renunciation may not be essential, if the testator is satisfied that the spouse will not exercise the legal right. It is a point that needs consideration, however, because the solicitor and testator should consider how the terms of the will may be affected if the spouse does, in fact, claim the legal right. 4. These instructions will also identify whether a Capital Acquisitions Tax (Inheritance Tax) problem is likely to arise in relation to any particular benefit or bequest. If so, then the solicitor and testator must apply their minds to considering whether the liability could be avoided or reduced, without interfering materially with the testator's wishes. 5. Because a will speaks only from the date of death, we must keep in mind that today's values may not obtain when the testator dies. Depending upon the age and circumstances of the testator and of his family, the possibility of a settlement or of inter-vivos gifts at present-day values should, in some circumstances, be seriously considered. This can offer other potential benefits or tax advantages. For example, a farmer of pension- able age can transfer a farm reserving very adequate rights of maintenance and support and still be eligible for a pension for himself and his wife of over £51.00 per week. Or a younger farmer can transfer part of his farm to a son and create a partnership, with possible Income Tax savings to both. 6. Once again, it must be emphasised in terms of general approach that the paramount con- sideration must always be the wishes of a testator, to ensure that his will deals responsibly with his dependants and others, who have a reasonable right of expectation from him. Social obligations should never be subordinated to tax planning. Prior to the passing of the Finance Act, 1982, on 17th July 1982, the most useful single method of reducing liability for C.A.T. was through asset- splitting between spouses. One spouse transferred property to the other, up to the tax free threshold, following which both spouses built up their assets simultaneously. This enabled both spouses to give benefits to each child up to the amount of their respective tax-free thresholds without incurring any liability to tax. This method of reducing Capital

to overcome the natural reluctance of many people to make Wills and convince people of the genuine necessity to make proper testamentary provision for their families. In turn, solicitors must be ready to meet the challenge by drawing wills that suit the circumstances and requirements of our time. Historically, the earliest known will is apparently attributed to Noah. Not merely was he reputed to have made the first will, but he also had the largest estate ever recorded. He bequeathed the world between his three sons! Anyone who disputed this was denounced as a heretic by a fourth century Bishop. Noah did not, however, have to contend with the Succession Act, Estate Duty or Capital Acquisitions Taxes, nor with the complexities ot agricultural values and tax-free thresholds. For the modern man, life has become complex. Most people today have some small share of the world's goods, in the form of a house, its contents, a car, insurances and possibly death benefits from their employment. If a will is not made, then this property is divided arbitrarily according to the laws of intestate succession. .. The primary purpose of this article is to consider the tax implications that arise in taking instructions for a will, with special emphasis on the rural scene. Clearly, the main tax consideration is Capital Acquisitions Tax, although some considerations ot Capital Gains Tax may also be necessary, especially in the context of discretionary trusts. What, then, should be the approach of the modern solicitor."' l think it can be summarised as follows:— 1. Take proper instructions, with particulars of:— (a) the testator's family and the ages and circumstances of each of them; (b) the testator's assets; . (c) the testator's wishes as to the distribution of his property and as to the appointment ot executors. , , . . . 2. These particulars will iden|ify whether a testator is meeting his obligations in regard to the legal rights of a spouse or children under the Succession Act and whether tax problems may arise by reason of any bequest or benefit or legal right share exceeding the availabe tax-free thresholds. If, as the situation will probably be m many cases, no problem arises on either count, then further consideration of these problems is not necessary and the solicitor can proceed to draft a will with an easy mind. 3 If the legal right of a spouse could exceed the tax- free threshold, then it may be necessary to

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