Offaly Solicitors and Notary Public, Thomas W Enright Solicitors: Expert Legal Advice
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Basic Payment Scheme Transfer of Entitlements 2018 - New Rules for Inheritances

16/2/2018

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Under the revised inheritance rules, the way entitlements are dealt with will depend on the date of death.

Inheritance of Entitlements 2018

The Department of Agriculture has recently published answers to a list of frequently asked questions about the transfer of entitlements under the Basic Payment Scheme 2018.

The full list of the department's FAQs and replies is published at the end of this post.

Included in the FAQs is the department’s interpretation and proposed implementation of Statutory Instrument No. 639 of 2017 which came into force on 21 November 2017 (see our blog post of 22 January 2018, Important Changes to European Union (Basic Payment Scheme Inheritance) Regulations 2017). 

How the department proposes to deal with the inheritance of entitlements following the new statutory instrument will depend on whether the owner of the entitlements died before or after 21 November 2017. 

​We have summarized the position below.

​Inheritance of Basic Payment Scheme entitlements for deaths after 21 November 2017

  • ​where the will does not specifically mention entitlements, the entitlements will transfer with the land unless there is a legal impediment preventing the transfer;

  • where the will does not specifically mention entitlements and lands are transferred to a number of beneficiaries, the entitlements will be transferred to the beneficiaries in proportion to the amount of land they each receive under the will. If they receive land in equal shares then they will receive an equal number of entitlements.
 
  • ​In all cases, where the will of the deceased bequeaths the entitlements to a particular person, the entitlements will be transferred to that person unless there is some legal impediment preventing it.

​Inheritance of Basic Payment Scheme entitlements for deaths before 21 November 2017

  • ​where the will does not specifically mention entitlements, the entitlements will form part of the residue of the estate and the residuary legatees will inherit them.

  • where the will does not specifically mention entitlements and there are farming and non-farming beneficiaries, the non-farming beneficiaries can do either of the following:

                  a) waive their rights and allow the farming beneficiary to receive the entitlements, or
                  b) apply for a 700 series herd number, take the entitlements and then transfer them to a third party
 
  • Again, in all cases, where the will of the deceased bequeaths the entitlements to a particular person, the entitlements will be transferred to that person unless there is some legal impediment preventing it.

 Department of Agriculture's Replies Frequently Asked Questions on the Basic Payment Scheme 2018


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What happens to a joint account when one of the co-owners dies?

13/2/2018

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The funds in a joint account do not automatically pass to the survivor​
In Irish law, if the surviving co-owner has not contributed to the joint account, the presumption is that a ‘resulting trust’ exists and the survivor holds the funds on trust for the deceased’s estate and not as beneficial owner.
 
This default position can be rebutted in certain circumstances.
 
For example:
 
1. If there is clear evidence that the account was put into joint names with the intention of making a gift to the surviving co-owner, then the surviving co-owner will be entitled to the funds.
 
2. If the surviving co-owner is the spouse or child of a deceased co-owner, then the “presumption of advancement” will displace the presumption of a resulting trust and the funds will advance to the spouse or child, unless there is evidence that this had not been the intention of the deceased.
 
In summary, if no consideration was paid by the survivor, if there is no evidence of intention to make a gift, and if the surviving co-owner is not the spouse or child of the deceased, then the survivor holds the funds on trust for the estate. This means that the funds will be distributed in accordance with the terms of the will of the deceased or, if the deceased has not made a will, in accordance with the laws of intestacy. 

​Joint accounts in Ireland

It is quite common in Ireland for a parent - often an elderly or infirm widow or widower - to add the name of their son or daughter to their bank account as a joint owner or co-signatory.
 
Often, this is done “for convenience”, with the intention of enabling the son or daughter to operate the account for the benefit of their parent: to pay, for example, various day-to-day expenses on the parent’s behalf.
 
In such circumstances, the funds remain the property of the parent and, on the death of the parent, form part of the parent’s estate. The surviving joint account holder is said to hold the funds on a “resulting trust” for the estate. In other words, no beneficial ownership passes to the surviving joint account holder at any time.
 
Sometimes, the parent might wish for the child to take a benefit from the account, either at the time the account is put into joint names or, more often, on the parent’s death. There might, in other words, be an intention on the part of the parent to make a gift to the child.
 
A parent might also intend for both situations to apply successively. While they are alive, the parent might want the child to operate the account for the parent’s benefit and convenience but intend, at the same time, that the child should succeed to the ownership of the account after the parent’s death.

​The Account Mandate

If another person’s name is to be added to an account for convenience, then the account mandate signed with the bank should make this explicit. It is always preferable in such circumstances that the new person’s name be applied to the account as a signatory rather than as a joint owner of the account. This removes any doubt as to the intentions of the parties.
 
In all cases, whether the new name is to added with the intention of conferring a benefit or merely for conveience, it is extremely important that the older person be afforded the opportunity to receive independent legal advice.  This will ensure that they fully understand the effect of putting another name on their account and that they are not subject to any undue influence. Their intentions should be made clear to all parties - including the bank - written down, and acted upon.
 
The account mandate should be reviewed and signed by all account holders and copies retained. 

​What is a Resulting Trust?

A resulting trust - also called an implied trust - is a trust that arises by operation of law based on the unexpressed but presumed intention of the parties. Such a trust exists when an interest in property has been transferred from one person to another but the beneficial interest returns - or results - to the transferor.
 
As a general principle of law, where the legal ownership of a property is transferred from one person to another and the transferee (the person who receives the property) gives no consideration (or payment) for it, then the transferee is presumed to hold the property on a resulting trust for the transferor.

​The transferee can rebut this presumption by providing evidence of the transferor’s intention to make a gift.
 
Alternatively, and to similar effect, the presumption of advancement might apply. Whether it does or not will depend on the relationship of the people involved.

​What is the Presumption of Advancement?

​The presumption of advancement is based on the idea that when one person stands in a particular relationship to another, particular obligations ensue; and that when, in the context of such a relationship, property is transferred from one to the other, there is a presumption that the transferor intended to benefit the transferee absolutely.
 
In a situation where funds are placed by one person into a joint account with another, the doctrine operates to presume that the parties hold the beneficial interest jointly and, ultimately, for the benefit of the survivor.
 
The presumption of advancement, like the presumption of a resulting trust, can be rebutted by contrary evidence. In other words, if there is evidence that an advancement or gift was not intended, this evidence will override the presumption of advancement and the default position, that of the resulting trust, will apply.

Gender Discrimination and the Presumption of Advancement

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Some Good News for Setanta Claimants and Policy-Holders

1/2/2018

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Not all Setantas are the same.
The Minister for Finance had some good news this week for Setanta third party claimants – not to mention the defunct insurance company’s unfortunate policy-holders – when he announced an agreement in principle that the State would ensure that compensation claims would be paid in full. The proposed scheme – once it clears all state aid and competition law obstacles – will also apply to claims against Enterprise Insurance which likewise shut down leaving thousands of policy-holders without cover and claimants unpaid.  

The announcement means that, at long last, there is an end in sight to many years of anxiety suffered by claimants and policy holders, the former worrying that their rightful claims would not be paid in full, the latter facing the prospect of personal ruin in situations where the value of the claim against them exceeded their ability to pay it.

It was often pointed out during the course of the Setanta debacle – and was acknowledged again by the Minister in his announcement –  that the victims of motorists who wilfully or negligently drove without insurance were compensated 100% for their injuries through the MIBI while, in contrast, those involved in an accident with a Setanta motorist – a supposedly insured motorist – faced the possibility that their claim would, at best, be only partially covered. This left the innocent Setanta policy-holder personally liable for the balance of the claim, which in some cases could be enormous.

The liquidation of Setanta was the subject of protracted court proceedings, ultimately decided by the Supreme Court in May 2017. The court held that the Insurance Compensation Fund (ICF) was responsible for the payment of third party claims up to 65% of the claim or €825,000, whichever was the lesser, leaving, in most cases, a shortfall of 35%. While there was some hope that the liquidation of the Maltese-registered insurer would eventually yield up to 22%, it was the policy-holders against whom the claims were made who were immediately on the hook for the deficit.

While the news is positive from the point of view of claimants and defendant policy holders, it is not so good for the average motorist who will be required to pay for an extended period the 2% insurance levy to the ICF, the fund initially set up to cover the costs of the collapse of Quinn Insurance. As a result of the newly-announced Setanta compensation fund, the ICF is due to last an additional eight months or so beyond its initially anticipated span. The fund is expected to expire in 2028 or thereabouts, provided there are no more insurance failures in the meantime.

​Watch this space.
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