Important Tools for Your Estate Planning

By Rebecca Scaife

Published on: March 28, 2023

A range of tools that can be deployed in effective estate planning to ensure your loved ones are looked after, in a tax efficient manner, after you pass away.

We’ve given our theory on why estate planning is not very common in Ireland and explained what estate planning actually is. It is NOT simply setting up a Section 72 life assurance policy!

There is a range of tools that can be deployed in effective estate planning, and we have set out below some of the tools that should be considered to ensure loved ones are looked after according to your wishes, and that your wealth is transferred to them in a tax efficient way.

Enduring Power of Attorney

An Enduring Power of Attorney (EPOA) is a document drawn up by your solicitor that enables you to appoint someone you trust who would manage your financial affairs for you and take personal care decisions on your behalf, in the event that you should for any reason become incapable of doing so in the future. This person is known as your attorney and effectively steps into your shoes in managing your financial affairs.

There is a very strict process for establishing an EPOA. First of all, it must be medically certified that you are mentally capable when having the EPOA drawn up in the first instance. You are required to give notice to two people of the creation of an Enduring Power of Attorney, one of whom must be a family member (who is not also acting as attorney).

It is usual to draft the Enduring Powers of Attorney on the basis that a married couple would appoint each other as attorney in the first instance. However, this may not reflect your wishes. It is recommended that you also appoint a substitute attorney, who would act in the event of your attorney predeceasing you or being unable to act.

Once established, the EPOA remains in the background and is only invoked should you become mentally incapacitated in the future. Again, this must be medically certified at that time.

Living Wills/Advance Healthcare Directives

An Advance Healthcare Directive/Living Will is a document that allows you to make an advance expression of your will and preferences with regard to medical treatment. Specifically, you can refuse medical treatment in an Advance Healthcare Directive/Living Will for any reason, even if it may result in your death.

The Assisted Decision-Making (Capacity) Act 2015 which was signed into law at the end of 2015 gives legal effect to Advance Healthcare Directives/Living Wills, which are an expression of your personal wishes.

Family Partnerships

A family partnership involves family members becoming partners in the business of investing the assets of the partnership (the family) and entering into an agreement for the purposes of regulating the terms upon which the partnership would be carried on.

The partnership is typically drafted on the basis that the parents will each retain a % interest in it and your children, or other relatives, will share the remaining equity in the partnership. The key element within family partnerships of this type is control of the business of the partnership. It can be established in a way to ensure the parents can out-vote the children in any matter and retain control of the partnership.

Because of costs in setting up and managing a family partnership, they typically are formed where there is a reasonably substantial capital sum either by way of loans or gifts (ideally €1,000,000 or more).

Settlement for a Minor

Where a child is currently a minor, they do not have legal capacity to become a partner of the partnership in their own right. Therefore, it will be necessary for the parents to be appointed as their trustees and to hold their partnership share upon a bare trust for their benefit until they reach the age of 18.

Inter-Family loans

We are big believers in families sharing resources together wherever possible. Creative financial planning for your family when done right can save everyone money and help foster good attitudes in your family to manage money and working together.

For example, if your children have credit cards, car loans, mortgages, or other debts that they are repaying, you could consider lending them some money and replacing the role of the bank with ‘the bank of mum and dad’. After all, the interest rates they are paying are likely much higher than the savings rates that you are achieving. These strategies are not without their risks, but these risks shouldn’t put us off from considering innovative solutions either.

These are just a snapshot of some of the tools that can be used in effective estate planning. The Managing Director of Everlake – Marc Westlake, in addition to probably being Ireland’s most qualified financial planner, is also a registered Trust & Estate Practitioner. Marc and our team of expert financial planners can guide you through your personal estate planning requirements and some of the tools that might be considered in building up an effective estate plan for you.

To review your financial circumstances and estate planning opportunities, please get in touch or download our guide

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