Inheritance: what happens when there’s not enough to pay bequests?

My mother died a few months back and she had just over €5,000 in savings. She left the house to me, €2,000 to my three siblings and €500 to six grandchildren after the funeral, the costs of which came to €6,000.

Now I have no problem paying the extra funeral costs but could you tell me, will I have to pay €9,000 to my siblings and grandchildren out of my pocket?

Mr M.W.

The situation you outline is not common but it is certainly not exceptional either. People draw up wills at a moment in time and they are based on the best information available to them at that time about their current and future assets.

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But circumstances change – not least these days that we are all living a lot longer than we might have expected even a few years ago. The wonders of modern medicine are one thing but living does obviously come at a cost and that means we might work our way through more of our assets than we had banked on – including having to dip into savings that we had originally ring-fenced for family members after our death.

The rules of inheritance are set out in the 1965 Succession Act and it has plenty to say about the order in which various financial obligations are met from the estate of a person who has died.

And your question is interesting because, when I first read it, the answer seemed very clear but the more I looked at it and at the legislation, the less clear it became.

We generally assume that the first call on a person’s estate is any outstanding debt they might have, details of which are gathered by their executor. However, there are two things that have even higher claim on the estate, and the first of these is funeral expenses.

The cost of burying your mother is the first claim on any cash in the estate. They get paid even before the tax authorities or any other “secured creditors”. The executor is also entitled to what are called testamentary and administration expenses. These are essentially the costs – legal and otherwise – in dealing with the estate, including the cost of probate.

Only then do any outstanding debts your mother may have had at the time of her death enter the equation. Secured debts rank first, followed by anything owed in taxes or PRSI, and finally any other creditors.

If there is not enough cash to meet those costs, the creditors can sue the estate. That could mean there would be nothing left to distribute to beneficiaries, including yourself, but the good news is that family will not be left responsible for the debt of a person who has died – unless they have gone guarantor on such debt.

Now, in your mother’s case, you say the funeral expenses of €6,000 exceeded the €5,000 cash that she had at the time she died. In that case, the funeral expenses take precedence so the €5,000 in cash is used to pay those. Any further charge would be against the physical property – the only other asset she had. I am assuming from your letter that she had no other debt.

Only once all that is done do we get to what’s left in the estate for distributing under the terms of the will. This is where things might get tricky and you will probably need to talk to a solicitor.

You note that you got the house in the will and paid the outstanding deficit for the funeral costs. What I am not clear about is whether you had the option of doing that at all, or whether the house would have had to be sold to meet the debt.

The critical thing here is that, on my understanding, the house is not yours until the debts have been paid because we don’t even get to the disbursement of assets under the terms of the will until we sort the debts. And I’m not aware of any provision that would allow a beneficiary to “pay a contra” – in this case the outstanding €1,000 funeral debt – to preserve their inheritance in a way that, in this case anyway, effectively disenfranchises other beneficiaries.

That could force the sale of the house. And if the sale of the house is forced in law – in this case by the funeral directors suing for satisfaction of their bill – then the only assets remaining are the net proceeds of that sales after expenses and the outstanding funeral debt is paid.

Getting back to your mother’s will then, there is a ranking order here. Legacies are apparently not all of equal standing.

There are specific legacies – things like property for instance – and then there are general legacies. This latter group includes what are known as pecuniary legacies, which is a set sum of money such as those laid down in your mother’s will.

And under inheritance law, the rule is that specific legacies trump general legacies, including pecuniary legacies. That means if the house remains an asset in the estate after the debts are met, it goes to you, and your siblings and your mother’s grandchildren get to share whatever cash is left, if any, in the ratios set down in the will.

If there were any cash available short of the €9,000 needed to meet the legacies set down in the will, each would be reduced pro rata by the same amount to divided this smaller sum.

If the house survives probate but not the cash, then you get the house and they get nothing.

However, if the house has had to be sold to meet the estate’s debt and all that survives probate is a net cash sum, they would get the sums set down in the will. What happens any balance would be down to the residuary clause in the will, if any. This would read something along the lines of... “any outstanding sum in the estate is to be shared between A, B & C”, or whatever.

If there is no residuary clause, any balance would be treated under the rules of intestacy which, in a case like this, means it would be shared equally between you and your siblings.

I think it certainly makes sense for you, given the widely different outcomes here, to consult a solicitor.

Having said that, in the circumstances where there appears to be some uncertainty whether the house survives the debt side of the equation, the most practical solution for you might be to pay the amounts sought by your relatives who seem content that that is the extent of their expectation from your mother’s estate. A legal challenge could certainly raises the possibility of you being worse off.

That’s not to be mistaken for legal advice. I’m no solicitor. But it might be a small price to pay to avoid an expensive headache all round.

Please send your queries to Dominic Coyle, Q&A, The Irish Times, 24-28 Tara Street Dublin 2, or by email to dominic.coyle@irishtimes.com. This column is a reader service and is not intended to replace professional advice