Where there’s a will, there’s a way to cause trouble and strife, and even divide a family.
Not always — but often enough to excercise the courts in Ireland, especially where there are substantial inheritances involved.
Every year, dozens of wills — mostly involving a bequest by parents to their children — are contested in court by an aggrieved party who feels they were hard done by or not properly provided for.
It is an issue now being examined by the Law Reform Commission, which is seeking submissions in relation to the law that deals with children contesting a parent’s will.
The LRC is examining section 117 of the 1965 Succession Act which deals with whether a parent has made proper provision for a child and, wisely, it is looking for comments and submissions not just from legal experts but also members of the public. Observations will be collected by the commission and a report drawn up by the end of the year.
“We are interested in hearing not only from people who are interested in the legal aspects of this question, but also from people who would have expertise or ideas about the whole question of the private transmission of wealth from one generation to another,” said Tom O’Malley from the Law Reform Commission.
Speaking on RTÉ radio, Prof O’Malley said the result of the public’s input will be a consultation document, which will also examine what happens when a parent dies without leaving a will.
At the moment, inheritance is divided equally between children. This can create problems, said Prof O’Malley, as a child who might have stayed at home to look after a parent into old age is not entitled to a larger share than a sibling who may have left home and established themselves financially.
Under the current rules, a child has no right to their deceased parent’s estate where a will has been made but can apply to court and claim that the parent has failed in his or her “moral duty to make proper provision” for them.
If the court agrees, it can adjust the amount left to the child in the will and order that a different amount the court thinks proper should be made out of the parent’s estate.
The Succession Act was considered revolutionary in its day as, before it, anyone could leave their estate to whatever person or institution they chose. The surviving spouse and children could be completely left out and the entire estate left to the Cats Home.
One of the main purposes of the act was to protect the spouse and children of a testator from being completely disinherited, but it is now showing its age. In the past 50 years, Ireland has undergone enormous societal and demographic changes and the biggest of these has been in the area of what we regard as “the family”.
During the Oireachtas debates on the 1965 act, justice minister Brian Lenihan Sr observed that, “in a country such as ours which recognises the very special position of the Family [in Article 41.1.1° of the Constitution] ‘as a moral institution possessing inalienable and imprescriptible rights, antecedent and superior to all positive law’, so-called freedom of testation is a paradox which cannot be defended on any ground”.
That kind of self-righteous language is evident in the act’s reference to the ‘moral duty’ of the parent and assumes, as the Constitution did at the time, that the family was based on a married heterosexual couple.
Up until 1988, children born to parents who were not married to each other were not entitled to claim under section 117. This changed when the Status of Children Act 1987 which abolished the concept of illegitimacy and removed many of the legal distinctions between children born within and outside marriage.
Similarly, Article 41 of the Constitution was amended in 1995 to remove the constitutional prohibition on divorce; and since the enactment of the consequential Family Law (Divorce) Act 1996 the application of section 117 must take account of more complex family patterns in which claims by children of a number of different parents may be at play.
Last year’s monumentuous referendum that overwhelmingly endorsed same-sex marriage also points to a succession regime that is past its sell-by date.
“It is likely therefore that the policy behind family provision legislation such as section 117, and its application in practice will, and should, reflect such changed social and legal settings,” says the LRC.
“The Commission considers that this should be taken into consideration in the context of any reform of section 117 of the 1965 Act.”
The Commission also considered changing the demographic context in which section 117 of the 1965 Act operates. As noted in Oireachtas debates on the 1965 act, section 117 was derived from the family provision legislation first enacted in New Zealand in 1900.
“At the beginning of the 20th century, half the population of the UK and Ireland died at 72. Since then, medical and scientific advances, combined with better nutrition, have extended life expectancy. Even since 1965, life expectancy in Ireland has increased by approximately 10 years.”
Another related change in family dynamics is that children remain dependent on their parents for longer, but have greater opportunities than many previous generations. The days of parents insisting on “24, out the door”, whereby young adults are expected to fend for themselves, are gone. At the same time, people are living longer after retirement and may look to their children for help or view accumulated earnings as a means to fund their old age.
“Parents may decide to have children later and may themselves become dependent on the support of their own children later in life. Lifetime earnings may become increasingly viewed as a safety net to provide for someone’s later years, rather than a helping hand to give the next generation.”
That is why the commission is also seeking views as to whether account should be taken of the effect of current or future demographic changes, such as changing family relationships since 1965. More generally, it is seeking views on the impact longer life expectancy may have on what has been called the “generational contract”. This is a kind of deposit against future withdrawals whereby the adult generation first cared for their children who, in turn, looked after their parents in later life.
The children did so in the knowledge and expectation that they would inherit, if not quite the Earth, at least the family home.
The traditional generational contract that operated in the 20th century in Europe and elsewhere involved an exchange in which the adult generation first cared for young people, then the young people grew up and cared for their elderly parents.
The LRC paper pays great heed to the work of leading gerontologists, who specialise in the study of ageing, who have commented that we may currently be moving into an “adapted generational contract”, which means older people will have more responsibility for themselves than in the past. This will arise because parents are having fewer children, and therefore there are fewer people to care for the parents in later life; and that the parents live longer, so they have a longer time period, potentially, to fund their own later life.
This, of course, also means that they may have little or nothing left to leave to their children.
In which case the siblings will have nothing to fight about.
Case study 1: Nothing in will
In one of the first cases under section 117 (decided in 1970) called the GM case (names are anonymised because these cases are heard in camera), the plaintiff was an only (adopted) child, and was 32 when the case was heard.
He was a merchant seaman. His late father had been a doctor and had paid for the plaintiff’s education. The father’s will left everything to his widow. The plaintiff was left nothing and he then brought a claim under section 117.
The High Court decided the following should be taken into account in these cases:
Any amount left in the will to the surviving spouse (or else the value of the minimum statutory legal right share of the surviving spouse under the 1965 act);
The number of children, their ages and their position in life when the parent who made the will dies;
The parent’s means;
The age, financial position, and prospects in life of the person making the claim under section 117;
Whether the parent has already made proper provision for the child; and
The facts at the date of death, not when the will was made.
In the GM case, the court concluded the father had failed to make proper provision for the plaintiff. It awarded him half of the father’s estate, after taking account of his mother’s mandatory legal right share under the 1965 act and other will-related expenses.
Case study 2: Value devastated by the economic crash
A section 117 case decided in 2015, the SF case, involved a situation directly related to the economic crash that emerged after 2008.
The estate in this case was worth more than €14m, and the parent’s will had divided it equally between his six children.
One of the children, who brought the case under section 117, had worked in the family business instead of pursuing his own independent career. When his father was alive, he had sold to the plaintiff some development land for €1.2m.
This was financed by a bank loan to the plaintiff which had been guaranteed by the father.
Because of the economic crash, however, the development land was worth just €160,000 in 2015, but the plaintiff still owed €1.6m on the bank loan.
This meant that the plaintiff was in a much worse financial position than his siblings because much of his share of the estate would be needed to pay off the bank loan.
Taking this background into account, the High Court decided that the father had failed to make proper provision for the plaintiff because he had not referred in the will to the loan guarantee he had given the plaintiff; and because the guarantee was now worthless, the plaintiff was in a considerably worse position than his siblings because much of his share of the estate would be required to pay off the balance remaining on the bank loan.
The court, therefore, decided that the plaintiff’s bank loan of €1.6 m should be paid out of the €14m estate, that he should be given an additional sum of €500,000, and that he and the other five children should then share equally the remainder in the estate.