Children and guardianship in will

We’re deciding the finer details of our will and would like some feedback on the issues below before we talk to our solicitor.

We are married with 2 young children. We have chosen the guardians (family member and spouse) to look after the children should both of us die. This family member would also be the executor.

On our death, our estate would comprise the house where we currently live, the proceeds of two life assurance policies, the proceeds of some bank and credit union accounts and death in-service benefit from employment.

We want to leave all of this to the children but recognise the added financial and other burden that looking after our children would place on the guardians.

Some questions

1. Do we specify in the will that the guardian should have access to whatever funds are necessary to rear our children and that the rest is to be held for the children until they are aged 18/21/25? Is this a discretionary trust? What are the CAT/CGT tax implications on the guardians and the children in this scenario?

2. If we stipulated that the house should be kept and given to my children when the youngest reached 21, would they be liable for any form of tax? The house is currently worth c€380K.

3. If, before my children are 18, the family member who will be the guardian herself dies, can we insist that another family member becomes guardian? Are there any legal or financial implications in doing this?

4. If both guardians die before their children and my children reach 18, what happens to our estate – do we ask our guardians to change, on our death, any existing will they have to take account of what our wishes would be in this situation?

Good questions. We are in a similar situation and just talking about making a will. Same situation, 2 kids, guardians decided. Are there any othjer things we should look out for?

Getting legal advice is the best thing to do.
A few things that our solicitor explained to us, for you to think about before talking to your solicitor.

We were recommended to get trustees to be in charge of the money, who are different from the guardians, This makes life easier, someone neutral has to make decisions and you cant have teenagers demanding that their guardians buy them a car with THEIR money. The law on what the trustees can do with the money is quite strict - no risky investments allowed.

In the case of questions 3, the court would ultimately decide.
I dont understand question 4, if you leave the money to your kids, the guardians will is irrelevant as the money does not belong to them. unless you leave it to them, in which case, they can do what they like with it.

I found our solicitor very helpful at explaining these issues.

In regards to your item 2 (family home): I would be very wary of introducing something so restrictive.

You have no way of knowing what might happen in the future...if (heaven forbid) one of the children required a life-saving operation that could only be done overseas - wouldn't you far prefer the house was sold and the operation paid for?

You might also like to include smaller individual bequests to the children e.g. traditionally any fine china/silver/linen would be left to your daughter(s) etc.,

Huskerdu
We have discussed the trustee/guardian issue but decided, in consultation with the potential guardians, not to have separate trustees.

As regards Q4, if our chosen guardians died, we would not want our children looked after by the chosen guardians for their children. Should this be stated in their will? I know the "what-if" scenarioes could go on forever but we really would want our children looked after by family members in the event of our chosen guardians death.

Kildrought
Hadn't thought of the house/operation angle. As regards fine china, linen etc, kids would be more interested in getting the plasma TV, IPODs, etc

The guardians of your guardians children would not automatically become your childrens guardians. However you can provide for alternative guardians in your will in the event of the death of the first appointed.

SimTwo,

Simply go to a solicitor and get all the advice you need! They don't normally charge for a will - I think the idea is that they will keep it in the firm and get the money when they administer it upon your death. Morbid, eh?!

Anyway, you can pretty much do anything you want to in your will. That's the whole point.

If you appoint two guardians, they act jointly. If one dies, the surviving guardian acts alone. I think you can provide for an alternate guardian in such an event, but it must be very carefully worded. Also the guardian could be a "testamentary guardian", so that if you died, that guardian would act with your spouse, unless the spouse disagreed. You should set up a trust and the guardians can be the trustees. The job of trustee is onerous and unrewarding, though! As trustee, they would be personally liable for the estate and so if money was spent unwisely or "stolen" they would have to account for it upon your children reaching the age of majority.

You decide what age you want your children to inherit. Thousands of euro is a lot for an 18 year old to have!! I'm not sure about the CAT implications, but as it stands, a child can inherit roughly 500k (euro) from a parent. After that, CAT is at 20%. I can't see how there would be CAT issues for the guardians but I'm not sure. They're not inheriting anything from you.

In relation to your house - maybe give the trustees the power of sale. That way the house could be maintained, but if your children wanted to go to college and big fees were required, the trustees could sell the property, pay the required money, and the excess forms part of your estate for the children to inherit.

As for your last question - I wouldn't ask the guardians to change their will accordingly. Go to a good solicitor and get all eventualities covered. Only then can you be sure your wishes will be carried out after you die.

LouisLaLoope, DH and I recently got wills drawn up, and solicitors do charge, anything between €50 and €100 per will. The solicitor does not administer the will, that's the job of the executor. Once the will is drawn up the solicitor has nothing more to do with it.

AFAIK, the guardians only come into play if both parents die, if one parent dies the other automaticaly becomes their full guardian, anyone know?

terrysgirl33 said:

AFAIK, the guardians only come into play if both parents die, if one parent dies the other automaticaly becomes their full guardian, anyone know?

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Yes that's right.

Got this from the Revenue website re Discretionary Trusts

Questions: What happens when the youngest reaches 21 - does the 6% and 1% come into play then? On what amount do these rates apply? Is it the value of the estate at that time?

Is CAT payable at that time as well if the estate is worth more than the parent - child threshold ?

Sim

"Paying Discretionary Trust Tax

When the trust is a discretionary trust, i.e. where there is no immediate benefit under the trust, the trust assets are subject to the following Discretionary Trust Tax charges during the lifetime of the trust:

• an immediate once-off 6% charge,
• an annual I% charge arising on 5th April* in each year (to be paid by 5th July the same year). (* Other than the 5th April occurring in the twelve months immediately following the date on which the 6 % charge arose.)

However, where the deceased left young children as prospective beneficiaries of the trust, the 6% and 1% charges will not arise during the lifetime of the trust while the youngest of these children remains under the age of 21.

There are a number of exemptions from the Discretionary Trust Tax charges - trusts set up exclusively for persons with certain disabilities are exempt as are trusts set up for charities.

Self-Assessment returns for the 6% and 1% Discretionary Trust Tax charges must be completed and sent, together with the tax due, to the Capital Taxes Office. If this is done within the time-limits specified above no interest will be charged".

LouisLaLoope, DH and I recently got wills drawn up, and solicitors do charge, anything between €50 and €100 per will. The solicitor does not administer the will, that's the job of the executor. Once the will is drawn up the solicitor has nothing more to do with it.

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I'm a trainee solicitor so I'm still learning (long way to go!) but I've drawn up a few wills in the office I work in and we don't charge. Most of my colleagues don't either - I think the angle is to get that client's other business as time passes. Anyway, I'm sure plenty of other places do charge - sorry you had to pay!

The executor has all the power to administer the estate but this is usually done through the solicitor. The solicitor is only an agent and most executors find it easier to let the solicitor do the paperwork. We draw up all the documents and get the executor to sign on the dotted line!

Sorry if I confused issues. Maybe I should go study some more... ;0)

kids would be more interested in getting the plasma TV

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Please God by the time you pass on these things will have no value whatsoever whereas your china/silver/paintings will be antiques!

if one parent dies the other automaticaly becomes their full guardian

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Only if the couple were married to each other.

Situation is more complex where parents are unmarried, if parents are unmarried only the mother has automatic guardianship, father has to apply for it. If unmarried parents are separated it can get more complicated still....but I don't think that's the situation in this case.