My wife died suddenly in her 40s leaving behind four young children. All are now adults.
I assume that, had their mother not died, she would have received an equal share from her parents’ estates when they, in turn, die though I am in no way privy to their will or wishes.
If either of the grandparents now decides to divide their daughter’s share between our children, would they be subject to a grandchild’s exemption for tax purposes – currently €32,500 – before CAT.
In the highly unlikely event that they decided to leave my wife’s “share” to me, am I treated as a stranger in the eyes of Revenue?
If the grandparents decide instead to divide their estate equally between their remaining, surviving children (my wife’s siblings), is that contestable?
Mr C.M., email
Sudden and unexpected death can be massively disruptive for families. In this case, your children had to contend with their grief at a young and impressionable age. Your wife’s parents will clearly have had to go through the same process. No one expects to lose a child.
And it can also complicate things as far as inheritance goes. The first important thing to get straight in your head is that there are separate rules governing who benefits and then how any benefit is taxed.
In normal circumstances, when a person predeceases someone leaving them an inheritance, the inheritance dies with them. This is apparently called the “doctrine of lapse”.
However, there are specific exceptions to this laid down in the Succession Act 1965 – which governs inheritance rights, though not tax. One of these, section 98, states that where the person due to receive the inheritance has died but has left children, the inheritance does not lapse.
However, that does not mean that it would necessarily go to your children. Technically, what happens is that the law treats your wife as though she were still alive at the time her parents die and that she only died after them, meaning any inheritance would be part of her estate.
Will
So it would be dealt with under the terms of her will – even though her will was dealt with a number of years ago.
If, like a lot of couples, the will initially passed everything on to you, her spouse – in part because there is no tax on anything left to a spouse – then anything her parents leave her would go to you, not them. Only if her will left everything to the children would they directly benefit to the full extent immediately from anything left to their mother in her parents’ wills.
Of course, as your wife died so young and people in Ireland are notoriously shy of making wills, it is entirely possible that she did not have one, in which case her estate would have been dealt with under intestacy laws – also outlined in the Succession Act.
In that case, as she left a spouse and children, the law says that two-thirds of her estate would go to you and a third would be shared among the children in equal portions. The same would apply to anything left to her from her parents.
But that assumes your parents-in-law who will have survived their daughter by many years do not update their wills, assuming they have them at all. In reality, it is very likely the parents would have rewritten their wills to take account of that fact.
It is entirely their choice – individually – to decide how they want to manage their affairs. They could choose to divide their estate among all their children with specific written provision that their dead daughter’s share go to her children or (most unlikely now that they are adults) you.
They could also decide to divide the estate between their surviving children, making no provision for your children, or make a specific bequest to each of your children but divide the bulk of the estate among their surviving children.
As a married couple, it is very likely that the first death will see the estate pass in its entirety to the remaining spouse, with any inheritance down the line coming only on the death of the second grandparent unless, of course, they are no longer a couple themselves.
If they don’t have wills themselves, it is different again. Then we are back to the Succession Act, in which case the surviving spouse gets two-thirds and the children get a third split between them. Where a child has died, as in your case, their children – ie yours – would then split their mother’s share of her parent’s estate.
If there were no surviving spouse and no will, your in-laws’ children would split the entire estate, with your children again sharing their mother’s portion.
Inheritance tax
So what then about tax?
You might assume that, if section 98 applies, and an inheritance intended for your wife passes on to you or her children having been “deemed” to be initially taken by her, even though she was died, the tax rules would depend on the relationship between you, or yo
