Will my children inherit their dead mum’s share from grandparents?

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?

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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 your children, and their mother.

In that case, you would have no tax charge on anything that came to you and the children would benefit from the highest category A exemption from inheritance tax – up to €335,000 – on anything they received as it was “technically” coming from their mum.

However, that is not the case. The Capital Acquisitions Tax Consolidated Act 2003 (CATCA) makes specific provision for section 98 cases. It is dealt with in section 42 of the CATCA.

It states that, even though the inheritance has deliberately been routed through the estate of their dead mother, it will for tax purposes be deemed to have come direct from the grandparents.

This is significant. Your children will fall under category B – with the €32,500 threshold you suspected – because they are all now adults (over 18) and it will be deemed to come from their grandparents. If they had been under 18 at the time they were inheriting money from a grandparent destined for their mother, they would have qualified under category A, but that is now moot as they are older.

If the will is rewritten and they receive money direct from the grandparents – or if they inherit by intestacy – the same tax rules apply.

* However, in your case, there is another twist in the tail. Scedule 2 (6) of CATCA also makes specific provision for a surviving spouse inheriting from their in-laws.

It states: “Where any donee or successor is, at the date of the gift or at the date of the inheritance, the surviving spouse of a deceased person who, at the time of that deceased spouse’s death, was of nearer relationship than such donee or successor to the disponer, then such donee or successor is, in the computation of the tax payable on such taxable gift or taxable inheritance, deemed to bear to the disponer the relationship of that deceased person.”

You can see why this stuff takes some getting your head around. But essentially it means that anything you receive from your wife’s parents as a gift or in their wills will be subject to the €335,000 category A threshold.

Finally, as to contesting a will, my solid advice is don’t. My understanding anyway is that there is no provision for grandchildren to sue over being left out of a grandparents’ will but, even if it were possible, proving as adults that they had an entitlement to inherit would be near impossible and likely deeply divisive.

Please send your queries to Dominic Coyle, Q&A, The Irish Times, 24-28 Tara Street, Dublin 2, or email dcoyle@irishtimes.com. This column is a reader service and is not intended to replace professional advice. No personal correspondence will be entered into

* This article was edited on Tuesday, November 9th, 2021