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GAZETTE
NOVEMBER 1994
Taking the scenario of an intestacy
where, for example, children may
wish their mother to have the entire of
their father's estate, if under a strict
deed of family arrangement the
children convey their one-third share
to their mother, the deed is stampable
at the
ad-valorem
rate (at the
concessionary rate of half the
ad-
valorem
rate for voluntary deeds
between relatives). There will also be
the question of a potential CAT
liability both on the inheritance by the
children and the subsequent gift to
their mother.
An alternative method could be for the
children to disclaim their intestate
share i.e. for them to sign a disclaimer
whereby they renounce all of their
share and interest in the intestate's
estate.
Such a disclaimer would not be "in
favour" of their mother (as such it
would attract a double CAT liability -
in relation to the acquisition by them
and subsequent disposal in favour of
their mother and then the acquisition
by her from them). It would rather be
a disclaimer simpliciter.
There are two schools of thought in
relation to such disclaimers:
The first is that they are effective to
pass an interest in the property to the
persons next entitled (or if the persons
disclaiming are in the same "class" of
next-of-kin to the remainder of that
class).
The second school of thought is that a
disclaimer of an intestate share is not
so effective. Section 67(2) of the Act
states that on intestacy, certain
proportions of the intestate's property
shall
vest in the spouse and children.
Disciples of this second school hold
that those sections of the Succession
Act which provide for who is entitled
to an intestate's estate use mandatory
language and accordingly, there is no
possibility of effectively disclaiming
an intestate share. A substantial
number of practitioners believe
that an intestate's property
automatically vests in the persons
specified in the Succession Act and
that it is impossible for a beneficiary
to decline to accept it. They would
say that on a disclaimer by such
persons the interest does not revert
back to the estate since, never having
accepted their interests in the first
place, they cannot vest them back, so
to speak.
Section 73 of the Succession Act
provides
"in default of any person
taking the estate of an intestate,
whether under this Part or otherwise,
the State shall take the estate as
ultimate intestate
successor".
Subscribers to this second school of
thought thus hold that it is impossible
to disclaim on intestacy since the
effect could be to bring about a
forfeiture to the State.
Subscribers to the first school of
thought would say however, that
section 73 can never have any
application where an intestate is
survived by any of the persons
mentioned in section 67-71 of the
Succession Act because there would
not be any "default of any person
taking the estate" under Part (vi).
This would require that no one could
take the estate. The would hold the
view that the provisions of Part (vi) of
the Act merely provide for the
order in which the surviving next-of-
kin of an intestate are entitled
and that the word "shall" is used in
such a sense and not in a mandatory
sense.
(At this point it is worth mentioning
that there is no controversy in relation
to disclaimers in a testate estate - the
disclaimer of a prior interest under a
will will accelerate subsequent
interests [subject to any contrary
intention appearing in a will]).
Putting aside for the moment the
question of whether a deed of
disclaimer in an intestate estate is
effective to pass title we will now
Í consider the Stamp Duty and CAT
implications of such deeds.
j Stamp Duty
As outlined previously deeds of
family arrangement are liable to stamp
duty. A simple disclaimer however,
' does not attract stamp duty unless
under seal in which case it is liable to
a fixed charge of £10.
Capital Acquisitions Tax
Section 13 of the CAT Act, 1976
provides . . .
"if a benefit under a will
or an intestacy is waived any liability
to tax in respect of such benefit,
entitlement, claim or right shall cease
as if such benefit, entitlement, claim
or right as the case may be had not
existed.
. .". In practice the Revenue
Commissioners accept disclaimers for
CAT purposes but in relation to
disclaimers of an intestate share they
do so with a warning that it might not
be good law in Ireland.
The fact that a disclaimer simpliciter
will not attract stamp duty or CAT
liability will satisfy practitioners who
subscribe to the first school of thought.
This will not, however, be relevant for
those who hold the alternative view
since, in their opinion, the deed is
ineffective. They argue that from a
conveyancing point of view no proper
title passes and a purchaser of
unregistered land will not be able to
accept an assent at face value since, in
their opinion, an assent must be to the
person entitled. (A purchaser of
registered land would be able to rely
on the conclusiveness of the register).
Others would say and, personally I
think with good grounds, that a
purchaser is entitled to rely on section
53(3) of the Succession Act. This
provides
"An assent or conveyance of
unregistered land by a personal
representative shall, in favour of a
purchaser, be conclusive
evidence
that the person in whose favour the
assent or conveyance is given or made
is the person who is entitled to have
the estate or interest vested in him. .
. " i.e. a purchaser as defined in the
Act can accept an assent at face value
and does not need to look behind the
assent in order to satisfy
himself/herself with the manner in
which the beneficiary named in the
assent obtained the beneficial interest
in the property concerned.
A conveyancer might query whether
the assent has been properly stamped.
The Conveyancing Committee is
considering whether it may then be
sufficient from a title viewpoint to
have the assent adjudicated. If the
Committee finds favourably further
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