I’m hoping you might be able to explain the difference between “a life interest” and “right to reside” in a property What becomes of the property after the person who has a life interest passes away?

he Irish Property Owners’ Association offers a good example on the distinction between a life interest and right to reside. 

“Assume Mary wants to make her will and wants to leave her house to her daughter Anne, but wants to make sure that her brother Mark, Ann’s uncle, can live there until he dies.

“In those circumstances there are two potential options: The first option is to insert a clause in Mary’s will to leave the house to Mark for life with the remaining interest in the property falling to Ann. In this circumstance Mark will first receive a benefit from Mary’s will and when Mark dies, Ann receives a benefit of the house. Ann’s benefit comes from Mary’s estate.

“In the alternative scenario, we could include a clause that allows for the house to be left to Ann subject to a right to reside for Mark. In that circumstance Ann takes inheritance of the house on Mary’s death but her benefit is restricted by Mark’s right to reside in it until he dies.

“It should be noted that a ‘right to reside’ is not as full an interest as a ‘life interest’. In our example, Mark’s life interest entitles him to the use of the property exclusively. A right to reside only allows Mark to reside in a property and doesn’t allow for its exclusive use.

“In fact, Anne could possibly rent out other rooms in the house so long as she continues to allow Mark to reside there. From a tax point of view, a valuation table is provided to enable us to calculate the capital value of a life interest.

“The capital value of the house is reduced by an amount which is calculated using a factor of the life tenant’s age and gender. 

“A right of residence is generally valued by Revenue using a rule of thumb equal to 10pc of the property. This right to reside value will increase to 20pc in circumstances where the right to reside includes a right to support and maintenance.

“So take care when preparing wills, as we have come across situations where a person was left a right to reside but actually thought they had a life interest and it is important to be precise in drafting your intentions”. 

My sibling and I live together in the family home and our parents are deceased. We are both over 60, unemployed and neither of us married. We have a combined income of €400 weekly. 

When our second parent died a few years ago we were left over €30,000 in the bank. However, we cannot access it without a Grant of probate, but we would have to pay solicitors’ fees. Is there any way of accessing this without a Grant? If anything were to happen to us, does this money go back to the state? Our parents worked hard to save this money. We don’t have nieces or nephews to benefit from it after we’re gone.  

You are certainly in a challenging financial situation. Getting hold of your rightful inheritance should be paramount, but I am having difficulty understanding why you don’t go ahead with the Grant.

It is the only legal way to permit the title (i.e. the ownership) of the estate to pass to you and your sibling. Technically it isn’t something you need a solicitor for; the courts allow you apply for a Grant by yourselves.

The €30,000 isn’t really your issue though (in your longer email to me you blame the bank for not releasing this money, but they are not legally permitted to until they have proof of the owner).

The house is likely to be the larger asset and probate is based on the valuation of the entire estate, not just cash in the bank.

Given your straitened circumstances, living on just €400 per week, you would be wise to get this sorted sooner rather than later.

In terms of cost, Probate is not actually that expensive (although there are lots of confusing fee structures). Since 1 March 2021 the system has been simplified.

There are five tranches of estate valuation from under €100,000 to over €1,000,000 and the cost depends on the valuation. The probate application is €100 on the first €100,000, €200 up to €250,000, €350 to €500,000, €500 to €750,000 and €650 to €1m.

There are small additional costs for orders, certificates and copies of the deed, but these are about €20 – €100 each. The thing is, the fees are higher – double in most cases – when you apply yourself, so in fact, engaging a solicitor is cheaper.

This is ‘bread and butter’ business for them, and as your money is losing value by leaving it on deposit, it is a false economy. A lawyer will tell you how to go about valuing the estate (and if there is Inheritance Tax due then Revenue will expect you to do this promptly) and claiming what is yours by right.

Your parents were smart enough to leave a will; you really should sort this out.

email your questions to siryan@independent.ie

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