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Memorandum on Administering an Estate where a Person Dies Testate

1. DUTIES OF EXECUTOR

The duties of an Executor are:

(1) to pay all the debts and liabilities of the deceased, including tax liabilities;

(2) to discharge all the legacies and bequests mentioned in the Will;

(3) to vest any real property in accordance with the provisions of the Will; and

(4) to take out Fire Insurance Cover on any property as soon as possible after the death of the

deceased. The cover must be for an amount which is a realistic reinstatement value of the premises. 

 

2. PROCEDURE TO TAKE OUT A GRANT OF PROBATE

Until a Grant of Probate issues from the Probate Office all of the assets of the Deceased are frozen. The Grant of Probate is a document which issues from the Probate Office in the High Court which confirms the following:-

(1) that the Will is a valid Will;

(2) that the Executor who has applied for Probate can now administer the Estate; and

(3) the amount of the gross Irish Estate and nett Irish Estate. 

In order to obtain a Grant of Probate, the Executor must execute the following documents:-

 

(a) Inland Revenue Affidavit:

This is a document which sets out all of the assets and liabilities of the Deceased located in Ireland or abroad when they have all been ascertained. Frequently there are delays for a number of months in obtaining all of this information. In addition it is necessary to write to each Beneficiary named in the Will for details of all Gifts/Inheritances received from any person (including the Deceased) since the 5th December, 1991 before the Inland Revenue Affidavit may be prepared. This information is required by the Revenue Commissioners in order to establish whether or not any liability to Capital Acquisitions Tax arises. The document is prepared in duplicate and both documents are sworn by the Executor before a Commissioner for Oaths/Practising Solicitor. It is necessary to include documentary evidence in the Inland Revenue Affidavit stating the assets and liabilities of the Deceased as at the date of death e.g. letters from Financial Institutions certifying the balances in Accounts as at the date of death and Valuations of any property and contents. The Revenue Commissioners certify the amount of the gross assets and the nett assets normally within six to eight weeks of receiving the Inland Revenue Affidavit. 

 

(b) Oath for Executor

Pursuant to this document which is sworn before a Commissioner for Oaths/Practising Solicitor, the Executor:

(1) confirms that the document submitted to the Probate Office is the Deceased’s last Will and that the Deceased was of full age and didn’t marry after making the said Will;

(2) undertakes to pay all of the Deceased's debts and liabilities and to discharge all of the bequests and legacies contained in the Will.

The Inland Revenue Affidavit (in duplicate), the Oath of Executor and the original Will are lodged in the Probate Office. The Grant of Probate normally issues within six to eight weeks approximately from the date of lodgement of the papers in the Probate Office.

 

3. AFTER THE GRANT OF PROBATE ISSUES

The original Grant is sent to all of the Financial Institutions in order that the monies in such Institutions may be released to the Executor so as to discharge the Deceased’s funeral and testamentary expenses as well as his/her debts and liabilities. The balance is then distributed in accordance with the terms of the Deceased's Will.

Once the Grant of Probate issues, the Executor is in a position to vest any real property or any stocks or shares comprised in the Estate in accordance with the terms of the Deceased’s Will. In certain situations the Executor may be obliged to sell assets comprised in the Estate and once the Grant of Probate issues it will be possible for him/her to effect such a sale. 

 

4. INCOME TAX/CAPITAL GAINS TAX

The Deceased's Tax affairs must be finalised up to the date of death. This is normally done by the Deceased's Accountant or by the Solicitors acting for the Executor. There may also be additional Tax liabilities after the date of death. A liability to Capital Gains Tax may arise on the disposal of certain assets of the Deceased. The Executor may be personally liable for such Taxes if they are not paid by the Estate.

 

5. INHERITANCE TAX

Inheritance tax is a tax which may arise where a person receives a benefit on someone's death. The tax implications are linked to the residence or ordinary residence of either the disponer or beneficiary.

A distinction is made between surviving spouses and other beneficiaries. An inheritance taken by a surviving spouse from a Deceased spouse is completely exempt from tax since 30 January 1985. In the case of other beneficiaries, liability to inheritance tax depends on whether or not the total value of all gifts and inheritances received by a beneficiary from the Deceased, and from anybody else within the same "group threshold" in the period from 5th December 1991 up to and including the date of the current benefit exceeds a tax-free element called the "threshold" amount. 

The relationship between the disponer and the beneficiary at the date of the inheritance determines the maximum tax-free amount - known as the "Group Threshold".

 

Taxable inheritances taken on or after 1st December 1999 are liable to tax as follows:

 

PERIOD

GROUP THRESHOLD AMOUNT

BALANCE

From 01/12/1999 to 19/11/2008

NIL

20%

From 20/11/2008 to 07/04/2009

NIL

22%

From 08/04/2009 to 06/12/2011

NIL

25%

From 07/12/2011 to 05/12/2012

NIL

30%

From 06/12/2012 to date

NIL

33%

 

The indexed Group thresholds for the years 2009 to 2014 inclusive are set out in the table below.

 

INDEXED GROUP THRESHOLDS

Group

Relationship to Disponer

Group Threshold from 08/04/2009 to 31/12/2009

Group Threshold from 01/01/2010 to 07/12/2010

Group Threshold from 08/12/2010 to 31/12/2010

Group Threshold from 01/01/2011 to 06/12/2011

Group Threshold from 07/12/2011 to 05/12/2012

Group Threshold from 06/12/2012

A

Son/Daughter

€434,000

€414,799

€332,084

€332,084

€250,000

€225,000

B

Parent/Brother/Sister/

Niece/Nephew/Grandchild

€43,400

€41,481

€33,208

€33,208

€33,500

€30,150

C

Relationship other than Group A or B

€21,700

€20,740

€16,604

€16,604

€16,750

€15,075

 

You might please note that certain liabilities, costs and expenses are allowable for the purpose of calculating the taxable value of any inheritance received.

 

When the Grant of Probate issues, the Revenue Commissioners are likely to write to the beneficiaries seeking a Capital Acquisitions Tax Return. Please note, that the responsibility for the submission of Inheritance Tax Returns and for making the appropriate payment (if any) rests with the Beneficiaries and these offices will not submit Returns on their behalf unless specifically requested so to do. If the Beneficiary files an Income Tax Return a reminder question as to whether he/she received an inheritance will be included in the relevant form. Please note that there are strict filing deadlines in operation in relation to Capital Acquisitions Tax Returns and there are substantial penalties and surcharges imposed in the event of late filing.

 

5. SOCIAL WELFARE AND PENSION PAYMENTS

There is a statutory obligation, on the personal representative of a Deceased person, who was at any time in receipt of a social assistance payment (i.e. a means tested payment), to:

(a) Give notice of his or her intention to distribute the assets of that person and to furnish a schedule of such assets at least 3 months before commencing to distribute the assets;

(b) Ensure that sufficient assets are retained to repay any assistance overpaid; and

(c) Be personally liable to repay the amount of an overpayment outstanding as a result of failure to meet these obligations.

Consequently a copy of the Inland Revenue Affidavit in respect of the Deceased’s Estate is filed with the Pension Services Office for the purposes of obtaining a Certificate of Clearance from the Department of Social and Family Affairs prior to the distribution of the Estate.

 

6. NURSING HOME SUPPORT SCHEME / “THE FAIR DEAL”

The Executor is obliged to ascertain whether or not the Deceased person was in receipt of any financial support or payments pursuant to the Nursing Homes Support Scheme Act, 2009 (or as it is often referred to “the Fair Deal”) towards the cost of nursing home care. If so, the Executor is legally obliged so as to ensure that the Deceased’s liabilities pursuant to the scheme are discharged out of the Estate in full.

Failure to do so will expose the Executor to personal liability to the Health Service Executive (“the HSE”) in this regard. Consequently a copy of the Inland Revenue Affidavit in respect of the Deceased’s Estate is filed with the HSE for the purpose of obtaining a Certificate of Clearance prior to the distribution of the Estate.

 

7. FINALISING THE ADMINISTRATION OF THE ESTATE

Before the administration of the Estate is completely wound up, the Executor must obtain the following:

(a) Letter of Clearance from the Revenue Commissioners for all outstanding liabilities to Capital Gains Tax and Income Tax in respect of the Deceased;

(b) Letter of Clearance from the Department of Social and Family Affairs, Pensions Services Office;

(c) Letter of Clearance from the Department of Social and Family Affairs, Pensions Services Office;

(d) Confirmation that all of the Deceased’s debts and liabilities have been discharged; and 

(e) Acknowledgements/Receipts from all of the beneficiaries in respect of the benefits they have received out of the Deceased’s Estate.

It is necessary for the Executor to prepare an Administration Account which shows how all of the assets are distributed during the administration of the Estate and how all of the debts and liabilities of the Estate were discharged. 

 

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