Introduction
Our society is changing and more and more people are living together in ‘non-married’ situations.
The Civil Partnership and Certain Rights and Obligations of Cohabitants Act 2010 and the Finance (No 3) Act 2011 have significantly expanded the rights of registered civil partners and qualified cohabitants in Ireland. Read on to get an overview of the key changes in succession rights and tax treatment that may affect you.
New Definitions
Civil Partner: Two persons of the same sex who are registered civil partners or have a recognised foreign relationship.
Cohabitant: Two adults, regardless of sex, who live together in an intimate and committed relationship.
Qualified Cohabitant: An adult who has cohabited with another adult for at least two years (if they have dependent children) or five years (otherwise).
Succession and Inheritance Tax
Civil Partners: Registered civil partners now have similar succession rights to married couples. They are entitled to a portion of their deceased partner's estate, subject to the needs of any children. Additionally, they benefit from the same tax-free inheritance exemptions as married couples.
Cohabitants: While qualified cohabitants can now apply for provision from their deceased partner's estate, they do not have automatic rights. Their claim is subject to the rights of spouses and civil partners and may be subject to inheritance tax.
Financial Compensation Orders
Civil Partners: Registered civil partners can apply for financial compensation orders within 12 months of the date of the decree, similar to married couples.
Cohabitants: Qualified cohabitants do not have the same right to apply for financial compensation orders.
Other Taxes
Civil Partners: Registered civil partners have substantially the same tax treatment as married couples, including exemptions from exit tax, stamp duty, and certain fees related to property transfers.
Cohabitants: Cohabitants do not have the same tax reliefs as civil partners. Their reliefs are generally limited to maintenance payments and property transfers following a court order.
Summary of Tax Treatment
Succession Act Information
When a person dies, their property is transferred to their successors by their "personal representatives." The process depends on whether the deceased had a valid Will. If a Will exists, the executors distribute the assets according to the Will's terms. If there is no Will (intestacy), the administrators distribute the property based on the Succession Act 1965.
The Succession Act grants certain minimum legal entitlements to legal spouses, registered civil partners, and children:
Succession in Intestacy
If a person dies without a Will (intestate), their estate is distributed according to the following rules:
Spouse or civil partner with no children: The spouse or civil partner inherits the entire estate.
Spouse or civil partner with children: The spouse or civil partner receives two-thirds of the estate. The remaining one-third is divided equally among the children. The civil partner's share may be reduced if the children's financial needs require it.
No spouse or civil partner, but children: The estate is divided equally among the children.
No spouse, civil partner, or children: The estate goes to the parents, if living, or to the siblings.
Succession with a Will
If a person dies with a valid Will (testate), the estate will be distributed according to the terms of the Will. However, the Succession Act provides certain minimum entitlements for spouses, civil partners, and children, regardless of the Will's provisions.
Spouse or civil partner with no children: The spouse or civil partner is entitled to one-half of the estate.
Spouse or civil partner with children: The spouse or civil partner is entitled to one-third of the estate. The remaining two-thirds is divided among the children. The civil partner's share may be reduced if the children's financial needs require it as determined by the courts.
While individuals can create Wills according to their wishes, Sections 111 and 111A of the Succession Act provide certain legal rights for surviving spouses and civil partners, regardless of the Will's provisions.
Children do not have an automatic right to a specific share of the estate under a Will. However, Section 117 of the Act allows children to apply to the court for a share if the court believes that the testator failed to adequately provide for the child based on their means.
It's important to note that a child's claim does not affect the legal spouse's statutory rights. However, it may impact the portion of the estate that a registered civil partner is entitled to.
The above information is a guideline only. Circumstances may vary according to individual situations. Get in touch to discuss this further.
(01) 513 8710
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