What is the difference between a “vital interest” and a “right of occupancy” in a property?
I hope you can explain the difference between “life interest” and “right of occupancy” in a property. What becomes of the property when the person with a lifelong interest dies?
he Irish Property Owners’ Association provides a good example of the distinction between a life interest and a right of residence.
“Suppose Mary wants to make her will and leave her house to her daughter Anne, but make sure her brother Mark, Ann’s uncle, can live there until he dies.
“In the circumstances, there are two possible options. The first option is to include a clause in Mary’s will that Mark will bequeath the house for life, with the remaining interest in the property going to Ann. In this case, Mark first receives a benefit from Mary’s will and if Mark dies, Ann receives a benefit from the house. Ann’s benefit comes from Mary’s estate.
“In the alternative scenario, we could include a clause allowing the house to be ceded to Ann, subject to Mark’s right of abode. In these circumstances, Ann inherits the house upon Mary’s death, but her benefit is limited by Mark’s right to reside in it until his death.
“It should be noted that a ‘right of residence’ is not as broad an interest as a ‘life interest’. In our example, Mark’s lifetime interest entitles him solely to use the property. A right of residence only allows Mark to reside in a property, not exclusive use of it.
“In fact, Anne could potentially rent out other rooms in the house as long as she continues to allow Mark to live there. From a tax perspective, a valuation table is provided to enable us to calculate the NPV of a life investment.
“The capital value of the house is reduced by an amount that results from the age and sex of the main tenant.
“A right of occupancy is generally assessed by the tax office based on a rule of thumb of 10 percent of the property. This value of the right of residence increases to 20 percent in cases where the right of residence includes a right to support and maintenance.
“So use caution when making wills as we have encountered situations where a person has been granted residency but actually thought they had a vital interest and it is important to be specific in framing your intentions .”
My sibling and I live together in the family home and our parents passed away. We are both over 60, unemployed and neither of us married. We have a combined income of €400 per week.
When our second parent died a few years ago, we were left with over €30,000 in the bank. However, we cannot access it without a certificate of inheritance and would have to pay legal fees. Is there a way to access it without a scholarship? If something should happen to us, will this money go back to the state? Our parents worked hard to save this money. We have no nieces or nephews who would benefit from being away.
You are certainly in a challenging financial situation. Getting your hands on your rightful inheritance should be of the utmost importance, but I am having trouble understanding why you are not proceeding with the grant.
It is the only legal way to transfer title (ie ownership) of the estate to you and your siblings. Technically, it’s not something you need a lawyer for; The courts allow you to apply for a grant yourself.
The €30,000 isn’t really your problem though (in your lengthy email to me you blame the bank for not releasing that money, but they are not allowed to until they have proof of ownership).
The home is probably the larger asset and the estate is based on the valuation of the entire estate, not just the cash in the bank.
Given your tight living conditions on only €400 a week, it’s better to get this fixed sooner rather than later.
In terms of cost, Probate is actually not that expensive (although there are many confusing fee structures). Since March 1, 2021, the system has been simplified.
There are five tranches of property appraisal from under €100,000 to over €1,000,000 and the cost depends on the appraisal. The probate application is €100 on the first €100,000, €200 to €250,000, €350 to €500,000, €500 to €750,000 and €650 to €1 million.
There are small additional costs for orders, certificates and copies of documents, but these are around €20 – €100 each. The thing is, the fees are higher – double in most cases – if you apply yourself, so hiring a lawyer is actually cheaper.
This is a “bread and butter” business for them, and since your money depreciates in value if left in custody, it is a false economy. A solicitor will tell you how you will value the estate (and if inheritance tax is due, the Inland Revenue expects you to do so promptly) and claim what is legally yours.
Your parents were smart enough to leave a will; you should really clarify that.
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https://www.independent.ie/life/home-garden/homes/whats-the-difference-between-a-life-interest-and-the-right-to-reside-in-a-property-41646027.html What is the difference between a “vital interest” and a “right of occupancy” in a property?
