I intend to bequeath my house to my son, who is married and has no children. He has not made a will.
My query is if he were to leave me, will the bequest be transferred to his wife? If so, would she be eligible for the Class A limit rather than Class C?
Your question highlights the importance of careful wording in wills to ensure that your estate is distributed as you wish after you die – and are therefore unable to decide. It also raises an interesting feature in the Inheritance Act of 1965, which is the legislation that regulates inheritance.
The key here is the doctrine of lapse. This essentially says that if someone you intend to inherit upon your death dies before you, their inheritance dies with them. If it is a specific bequest – such as the house – the bequest falls into the remainder of the will, provided the will contains such a clause.
The residuary clause is really an overarching saying that once any specific bequest has been dealt with in accordance with the terms of a will, the remainder of your estate will be distributed in accordance with the terms of the residuary clause.
If there is no remainder clause, any lapsed gifts – and anything else not specifically covered by the terms of the will – are distributed as if you died intestate. There is a succession in intetacy, which effectively means that your closest relatives inherit.
So if your son is to inherit and he predeceases you, any specific asset you leave to him will fall into your residuary clause. It could pass the property on to his wife, another relative or even a charity, provided you specify who will benefit from the remainder.
If you don’t, it will go to your spouse or partner in succession or be divided between them and any other children you have; shared with other children you have; inherited by your parents, if you are alive; the inheritance of siblings with children of dead siblings gets their share; nieces and nephews, other close relatives. It only moves down the order if the recipients before them do not exist or are dead.
You will notice in that cut that inheritance is preserved for spouses and relatives. There is no provision that allows your children’s spouses to automatically inherit what was originally intended to go to their husband or wife. So in the scenario you outline where your son predeceases you, the bequest will not pass to his wife unless you express your will very specifically to ensure that it must.
There is one exception to everything we’ve said above, a really critical exception. If your son were to have children – in his marriage or otherwise – the inheritance of your house would not die with him. This is not the case at the moment as you make it clear that he has no children, but if that were to change it would certainly change the dynamic of the situation.
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Section 98 of the Inheritance Act states that if a child to whom you leave something in your will has children themselves, the law assumes that your child dies immediately after you, even where they may have died many years before.
But even if children are the catalyst for the exemption, those children do not automatically inherit your home. Instead, by virtue of him having children, your home will be treated as part of his estate. This means it will be handled according to any will he has made.
Of course in this case you say your son has no will. Assuming his wife is still alive when you die and there are children at the time, she will inherit two-thirds of your home under the rules of intestacy, and the children will share the remaining third.
If he had a will leaving everything to his wife, even if he had children, she would inherit the property in its entirety. He could not make a will leaving everything to any children who might be born at that time, as his wife is entitled to a so-called “lawful legal share” of his estate. If it is a spouse with children, it is one third of the deceased spouse’s or cohabitant’s assets. Of course, depending on the estate, this may be met from other assets that allow the home to go to the children.
If you felt strongly about these possible outcomes, it is possible to draft your will so that your son’s wife inherits in the event of his death, or that any grandchildren inherit under these circumstances – although in the latter case you would need a backup as there at the moment there are no children, unless you want the house to be treated under gut.
That brings us to tax.
If you have drafted the will so that your son’s widow inherits in the event of his death, it is my understanding that she continues to be treated for capital acquisitions tax (CAT)/inheritance tax under the category C limit. This is the lowest threshold, with the lifetime tax-free benefit currently being €16,250.
The CAT thresholds are largely framed to benefit blood relations, and in-laws are clearly outside of it. So they are effectively treated as “strangers” for inheritance tax purposes regardless of family proximity. In this case, it would clearly leave your daughter-in-law with a significant tax bill if she were to inherit your home.
But if there were children and then his estate received your home and she then received her share under intestate, she would have no tax bill as assets transferred between spouses or partners are exempt from capital gains tax.
For your son’s children, assuming he had someone before he died, they would benefit from his category A status in relation to any inheritance his estate received from you after his death – as long as they were under 18 when you door . This means they can each inherit a lifetime limit currently set at €335,000 from him, their mother and you (and your spouse/partner if applicable).
Depending on what, if anything, they have already inherited from their dead father at the time, and the value of your home, they may have a CAT liability.
But as it stands, this is all academic. Your son currently has no children, so if he were to predecease you, neither he nor his wife would inherit your home unless you specifically express the will to allow her to do so. If so, she would face a significant tax bill.
Oh, and the uncertainty of the various scenarios outlined here illustrate why your son should really focus on creating a will.
Please send your inquiries to Dominic Coyle, Q&A, The Irish Times, 24-28 Tara Street Dublin 2, or by email to firstname.lastname@example.org. This column is a reader service and is not intended to replace professional advice
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