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GAZETTE
JULY/AUGUS
T
1982
Instructions for the Rural Will
by
Donal G. Binchy, Solicitor
W
E can hope, with some confidence, that the
Law Society's "Make a Will Week" will help
to overcome the natural reluctance of many people to
make Wills and convince people of the genuine
necessity to make proper testamentary provision for
their families. In turn, solicitors must be ready to
meet the challenge by drawing wills that suit the
circumstances and requirements of our time.
Historically, the earliest known will is apparently
attributed to Noah. Not merely was he reputed to
have made the first will, but he also had the largest
estate ever recorded. He bequeathed the world
between his three sons! Anyone who disputed this
was denounced as a heretic by a fourth century
Bishop. Noah did not, however, have to contend with
the Succession Act, Estate Duty or Capital
Acquisitions Taxes, nor with the complexities ot
agricultural values and tax-free thresholds.
For the modern man, life has become complex.
Most people today have some small share of the
world's goods, in the form of a house, its contents, a
car, insurances and possibly death benefits from their
employment. If a will is not made, then this property
is divided arbitrarily according to the laws of intestate
succession.
..
The primary purpose of this article is to consider
the tax implications that arise in taking instructions
for a will, with special emphasis on the rural scene.
Clearly, the main tax consideration is Capital
Acquisitions Tax, although some considerations ot
Capital Gains Tax may also be necessary, especially
in the context of discretionary trusts. What, then,
should be the approach of the modern solicitor."' l
think it can be summarised as follows:—
1. Take proper instructions, with particulars of:—
(a) the testator's family and the ages and
circumstances of each of them;
(b) the testator's assets;
.
(c) the testator's wishes as to the distribution of
his property and as to the appointment ot
executors.
, ,
. . .
2. These particulars will iden|ify whether a testator
is meeting his obligations in regard to the legal
rights of a spouse or children under the
Succession Act and whether tax problems may
arise by reason of any bequest or benefit or legal
right share exceeding the availabe tax-free
thresholds. If, as the situation will probably be m
many cases, no problem arises on either count,
then further consideration of these problems is
not necessary and the solicitor can proceed to
draft a will with an easy mind.
3 If the legal right of a spouse could exceed the tax-
free threshold, then it may be necessary to
consider, if possible, renunciation by the spouse
of his or her legal right. This has its own
problems, including the advisability of
independent advice for the spouse. Such
renunciation may not be essential, if the testator
is satisfied that the spouse will not exercise the
legal right. It is a point that needs consideration,
however, because the solicitor and testator
should consider how the terms of the will may be
affected if the spouse does, in fact, claim the legal
right.
4. These instructions will also identify whether a
Capital Acquisitions Tax (Inheritance Tax)
problem is likely to arise in relation to any
particular benefit or bequest. If so, then the
solicitor and testator must apply their minds to
considering whether the liability could be
avoided or reduced, without interfering
materially with the testator's wishes.
5. Because a will speaks only from the date of death,
we must keep in mind that today's values may not
obtain when the testator dies. Depending upon
the age and circumstances of the testator and of
his family, the possibility of a settlement or of
inter-vivos
gifts at present-day values should, in
some circumstances, be seriously considered.
This can offer other potential benefits or tax
advantages. For example, a farmer of pension-
able age can transfer a farm reserving very
adequate rights of maintenance and support and
still be eligible for a pension for himself and his
wife of over £51.00 per week. Or a younger
farmer can transfer part of his farm to a son and
create a partnership, with possible Income Tax
savings to both.
6. Once again, it must be emphasised in terms of
general approach that the paramount con-
sideration must always be the wishes of a testator,
to ensure that his will deals responsibly with his
dependants and others, who have a reasonable
right of expectation from him. Social obligations
should never be subordinated to tax planning.
Prior to the passing of the Finance Act, 1982, on
17th July 1982, the most useful single method of
reducing liability for C.A.T. was through asset-
splitting between spouses. One spouse transferred
property to the other, up to the tax free threshold,
following which both spouses built up their assets
simultaneously. This enabled both spouses to give
benefits to each child up to the amount of their
respective tax-free thresholds without incurring any
liability to tax. This method of reducing Capital
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