Days of generous inheritance over as parents need to fund old age
Published 25/04/2016 | 02:30
It signals the end of the inheritance as we know it.
Parents are less likely to leave substantial inheritances for their children in future, due to increased life expectancy and economic pressures, according to the Law Reform Commission.
It said lifetime earnings are becoming "a safety net" so people can live comfortably in old age, rather than something to be passed on to children.
The commission is now investigating whether changes are needed to inheritance laws due to the fact people are living longer and releasing equity in their homes to fund their healthcare. The remarks are made in a paper published today.
In particular, the commission is examining whether alterations should be made to Section 117 of the Succession Act 1965, which allows children to challenge a deceased parent's will if they don't believe they got their fair share.
The section has been successfully used in the past to increase a child's share in an inheritance where they believed a parent failed in their "moral duty" to provide for them.
This law was introduced to stop people from being disinherited, but other countries have begun to move away from making such awards.
A member of the commission, Raymond Byrne, said courts in New Zealand and Australia were moving away from the view that people were entitled to an inheritance if they have been cut out of a will.
"In more recent years you are finding judges saying maybe people are no longer entitled to inherit and so they are less likely to change anything that they do see in a will," he said.
He said the commission was not prejudging the issue and could not yet say what recommendations it would make.
The commission says there has been major demographic and economic changes in Ireland since the law was enacted over 50 years ago.
It said children now remain dependent on their parents for longer.
In turn, parents are also living longer and may themselves become dependent on their own children later in life.
"Lifetime earnings may become increasingly viewed as a safety net to provide for someone's later years, rather than a helping hand to give to the next generation," the paper said.
It cited research by English gerontologist Professor Sarah Harper, who found that many parents will be relying on the value of their family home to fund their longer life expectancy.
In the past, this would have been the main asset inherited by their children.
But the paper noted Professor Harper's view that the 20th century idea of getting on the property ladder, not only to own a property but to be able to pass it on, may be quite short-lived.
"The effect of this may be that in the 21st century, the older generation may consider that it does not owe much to the next generation, their children, once they are adults," the paper said.
The commission's questions are now being raised over whether Section 117 should take into account such demographic changes.
When completed, the review will contain recommendations on whether Section 117 should be repealed, retained or amended. It is also considering whether it should be extended to cases where a parent dies intestate.