How to divide inheritance fairly between children in will

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suework

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Looking for some advice or insights for Aunt on her will please, she wants to divide the inheritance equally between her 2 daughters. One daughter lives in the family home with her. She has informed them that the daughter living with her to have ownership of the house and a small cash amount as her inheritance, and for the other daughter to have her inheritance as a cash amount, there are enough assets to cover this.

She wants both to get equal use of their inheritance, she is unsure if she leaves everything equally in her will, that her daughter currently living in the house, might decide after her death that she wants half the house and half the cash amount as this would give her a larger cash amount, leaving her other daughter owning half the house, and receiving less cash and would be tied to owning half the house.

Daughter living with her in the house will inherit tax free as she has resided in house for a long period, and cash amount within band A allowance. The other daughter will pay tax in excess of Band A.

Any advice on how to ensures her wishes are clear in her will, as she does not want any disagreements.
 
Prior to making an appointment to consult a solicitor in order to get advice and to make her will (essential in my view) would your Aunt maybe have a sit down with her daughters and ask for their opinions or wishes?

If such a thing is possible it might serve to give her great peace of mind. I am aware however that may not be possible for any number if reasons.
 
Thank you for your reply Zobeda, she has told them both her wishes and talked to them, the daughter not living in the house agrees with the division, her other daughter to get the house did mention she won't get as much money.
She wants both to get the full use of their inheritance, and is wondering if she said in her will it is to be split equally and makes the daughter not residing with her the executor, would this enable her wishes be carried out as she has told them?
 
suework said:
The other daughter will pay tax in excess of Band A.
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Is the estate (all assets) likely to be worth more than €800K? If not then this is not a concern assuming that both daughters still have their full €400K Capital Acquisitions Tax group A exemption threshold available.
suework said:
Any advice on how to ensures her wishes are clear in her will, as she does not want any disagreements.
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A solicitor advising on the drawing up of the will should be able to help with this.
 
Is the Daughter living in the house all of her life rent free, in other words if she splits everything 50/50 in her will and leaves it open ended will this cause trouble after she dies,,
 
Thanks for the reply Clubman, yes it is in excess of that figure, daughter in family home will not have to pay tax if the divison is either way. Other daughter will have to pay tax on either split, and if her Aunt's wishes are carried out she will get her inheritance for her use. If the house is split 50/50 she will lose the use of more than half her inheritance and will still have to pay the tax on that portion.

This is about each getting the use of their full inheritance, not really the tax side, as one knows its tax free and the other will pay tax. My Aunt would like to prevent one daughter being forced to possibly losing the use more than half her inheritance in her lifetime.

She feels she if providing equally for both as she has told them and wants the will to reflect this, what other options has she if she does not leave it equally?

What power does an executor have to have the will dispersed as my Aunt intends?

Thanks for the reply bkenn 14, a nominal amount only.

Thanks for the reply Fortune, yes that would be difficult, and would prefer no disagreements.
 
suework said:
She has informed them that the daughter living with her to have ownership of the house and a small cash amount as her inheritance, and for the other daughter to have her inheritance as a cash amount, there are enough assets to cover this.
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I am not a lawyer, but the following will cover it. A solicitor will tidy it up for you.

"I leave to my daughter A, the house at 100 Main street.
I leave to my daughter B, a sum equal to the value of 100 Main street as of the date of my death.
The balance of my estate is to be split equally between them.
In the event that, after giving the house to A, there is not enough assets in the estate to give my daughter B the full value of 100 Main Street, then she should get the entirety of my assets other than 100 Main Street.
In the event that A and B do not agree on the valuation of 100 Main Street at the date of my death, they should appoint xyz ( a firm of local estate agents) to value the property and their decision is final."
 
Each person should look after their own tax affairs and the mother should not try to word it so that each receives an equal value after tax.

There is a reason why there is an exemption from CAT for the person living there who has no other residence.
 
Could the daughter at home sell the house and buy something cheaper, leaving her with extra cash? Splitting the house between them would probably end in disaster so I think that option shouldn't be on the table at all and Brendan's suggestion above is the best option - assuming your aunt doesn't need to go into a nursing home which could deplete a lot of her cash assets.

I gather that the daughter at home, paying just a nominal amount to live there, has already gained finacially over the years by saving on larger amounts of rent/mortgage, bills etc. Does the other daughter have a mortgage? If so she too would be left with less cash if she chooses to pay it off with her inheritance.

Quite frankly I think the daughter at home is being ridiculous. She is set to gain an expensive asset plus some cash, and is already disagreeing.

The executor has to carry out your aunts wishes, regardless of how they feel about the will. However, in this situation it may be better to have a non beneficiary as executor so that her wishes are carried out without question and in a timely manner. An executor cannot make any changes to what the will states. Does your aunt like cats? Maybe you could recommend she leave her estate to the nearest cat home instead!
 
Thanks for the reply Protocol, so if she leaves it equally, can the executor give the house and money amount to make up equal half to daughter A and daughter B gets her split in money only, and daughter A can't dispute that?

Thank you Brendan that is most helpful, and is very close to what she wants, she is not trying to split assets looking at the tax amount, her daughter B knows she will be paying tax on her share.

Thank you Marsha25 spot on, yes could buy smaller house but unlikely to do that.

Can I ask another question please, my Aunt will be going to a solicitor, just say if in the future that apart from 100 Main Street, that some or all the other assets are needed to be used by my Aunt, she would still want everything split equally, does the wording in bold sound like a reasonable option that might be included, to cover if some or all of the other assets are needed to be used?

"I leave to my daughter A, the house at 100 Main street.
I leave to my daughter B, a sum equal to the value of 100 Main street as of the date of my death.
The balance of my estate is to be split equally between them.
In the event that, if giving the house at 100 Main Street to daughter A, there is not enough assets in the estate to give my daughter B the full value of 100 Main Street, then daughter A should get her equal share of the assets from 100 Main street and daughter B should get the rest of my assets and a share of 100 Main Street to get her equal share.
In the event that A and B do not agree on the valuation of 100 Main Street at the date of my death, they should appoint xyz ( a firm of local estate agents) to value the property and their decision is final."
 
seeing daughters are not in agreement should she keep it simple house be sold and all assets be split 50/50 and be done with it
 
Under no circumstances should B be given a share of 100 Main Street. Joint ownership is a recipe for feuding.

Say the house is worth €600k and there is €400k cash.

Then A should get the house and pay B €100k to even things up.

"In the event that, if giving the house at 100 Main Street to daughter A, there is not enough assets in the estate to give my daughter B the full value of 100 Main Street, then daughter A should pay B half the difference between the value of 100 main street and the rest of the assets, such amount to be paid in equal instalments monthly over 10 years."
 
Brendan Burgess said:
Then A should get the house and pay B €100k to even things up.
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And if offspring A is unable to raise the 100k?

I'm with Bkenn14 here; house to be sold & all divided equally.

Nothing to stop offspring A from buying the house in the normal way if they can afford to do so; they'll only be paying 50% of the market value.
 
Thank you Bkenn14, Brendan and DannyBoy appreciate seeing others points of view. Aunt and daughter B would prefer daughter A had the option to keep the full house ownership if the funds are in their share of inheritance. Daughter A won't be able to afford to pay for it otherwise. It is very difficult to see a clear path on this.

If the will said to sell and split assets, and there are enough assets, can the executor let daughter A inherit the house and daughter B gets the same value, or has the house to be physically sold, do not want daughter A to lose the tax free allowance they would get from living there for a long period.

Daughter B has agreed if there are no other assests but the house daughter A remains in the house with them paying all the cost of running it, unless both parties agree to sell it, not a good or wanted outcome as there is no independance from each other.
 
ClubMan said:
executor has to execute the will
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Indeed, but house can still be sold to offspring A.

Same difference.

Some figures if that helps (ignoring fees for the min just to make the maths easier)

House: market value - 400k
Other assets (cash / shares / life insurance) - 400k

Total estate = 800k.

Will says sell house & divide all between two offspring.

Offspring A wishes to buy house, so needs to give Offspring B 200k to buy out their share. Which they can do from their share of the cash assets.

All good so far.

What happens if the house value is less than cash assets?

No problem, A still gives B 50% of market value of house & has some cash in hand as well.

What happens if house value is more than cash assets?

If A wants to buy out B's share, they still have to find 50%; if their share of cash assets doesn't cover it, they need to find the balance.

If they can't do that, then the house has to be sold on the open market; because the will directs the house must be sold.

Writing the will this way ensures that no one is left a hostage to fortune.
 
Thanks ClubMan and DannyBoyD
Thanks DannyBoDy but assests are higher at present, think daughter B will lose out. Aunt does not want daughter A to lose exemption for dwelling house relief, so if having 'Selling and splitting house' will not allow daughter A to keep this relief, it seems daughter A will end up with the bulk of the inheritance, and daughter B with very little or at worse no access to her share tied up in the house.
 
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