Class divide being ‘locked in’ based on property and education

Changes to the "generational contract" between parents and their children have the potential to "lock in" a new class divide between those who have property and better education levels and those who do not, according to a paper from the Law Reform Commission.

As people are living longer and having fewer children, the contract between the generations that existed in Europe for most of the 20th century is likely to change in this century, with people living longer and using their family home to fund the cost of their care in their old age.

As a result, middle-class expectations of an inheritance based on the value of the family home may no longer be valid.

However, the paper notes, many families are now giving “upfront” inheritances to their children by way of paying college fees or helping with a first mortgage.

Legal minimum

Meanwhile, people without property who become dependent on the State in their later years might need to have the cost of their care supplemented by children who may not have had their education supported by way of an upfront inheritance.

“There is a real prospect that the ‘new’ generational contract may lock into place a division between two classes, based on home-ownership and education,” according to the paper, which is concerned with section 117 of the Succession Act 1965. This is particularly so given that wealth is expected to grow faster than incomes in 21st-century Europe.

The paper canvasses the topic as part of its discussion of the background to inheritance law and how it is changing internationally.

The 1965 Act, which was introduced by the then minister for justice, the late Charles Haughey, provided that a surviving spouse could claim a legal minimum from a partner's estate, irrespective of the will, but made no such provision for children.

In cases where a will had been made, children, including adult children, can go to court claiming that the parent had “failed in their moral duty to make proper provision” for a child, given the late parent’s means.

The consultation paper is asking for views as to whether the law needs to be changed given changing demographics and other factors. Courts in other jurisdictions are beginning to reflect the changing generational contract in their rulings.

Financial crisis

The paper asks if guidance for the courts in coming to decisions should be enshrined in law, whether changes are needed to take account of divorce and cases involving the children of a number of different parents, and whether the key date for courts should be the date on a will, the date death occurred or the date of any hearing. The issue of timing is relevant to estates affected by the financial crisis.

Copies of the paper can be obtained from the website of the Law Reform Commission at lawreform.ie. The closing date for submissions is June 27th, 2016.