Q&A

Your personal finance questions answered.

Old-age Budget issue

Q I AM an 81-year-old pensioner and my wife is 86. I have asked several people, including a major accountancy firm, what, if any, change I can expect in my financial circumstances following the Budget and they cannot tell me.

Is my pension being cut? Will I be hit by these new, higher levies? Our only income is the contributory old-age pension.

Mr J.M., Dublin

AYour situation is actually quite clear. The one thing that will affect your finances is that the Christmas bonus traditionally paid to social welfare recipients in December will not be paid this year, according to Minister for Finance Brian Lenihan in his Budget speech.

Aside from that, there is no move to claw back the 3 per cent rise in the pension announced in the October 2008 budget. On the other hand, the Minister did not unveil any further increases for social welfare recipients.

On the income levy, you have no worries. The levy is not payable on social welfare payments and you tell me the State pension is your only income.

Equally, the increase in health levies will not be an issue as these are not paid by people over the age of 70.

Family dispute over estate

Q My mother-in-law died in 2006, leaving her house to her eldest son. My father-in-law died intestate in 1972. Both were born before 1921 in the South of Ireland and died here.

A dispute has developed over the will. There are nine siblings. Six have united to oppose the will. The majority of these “dissident siblings” reside outside Ireland. Lawyers, including from the US, and a barrister have been engaged.

Legal costs incurred by these dissident siblings now possibly approach or exceed the total value of the estate. Who will be held responsible for these costs?

The inheriting son (a trustee) is not in contact with the remaining two siblings. It appears that these two siblings are not in any group or alliance on any side. Are there possible legal cost implications for these two siblings? My wife is one of them.

Up to this I have felt that my wife and I had no worries because of our inaction.

However, having recently viewed the almost derelict house, it is clear that, in today’s property market, there may be a problem.

Do I, as a resident of the Republic, have legitimate concerns?

Mr F.C., e-mail

AThere are few things more distressing than a family dispute over the estate of a parent. The fact that your wife is not an active participant in the legal spat is little comfort.

In legal terms, there are two things at issue here. Are you or your wife an active party to the dispute? And is your wife a beneficiary of the will other than in respect of this property?

Billy Christopher of BCM Hanby Wallace’s private wealth services team notes that costs in relation to contentious probate matter are generally governed by the Rules of the Superior Courts.

While costs are at the discretion of the courts, in general the losing party bears the costs associated with the action. The court can rule otherwise and may well do if it determines there was there reasonable grounds for litigation and that the action was conducted in good faith.

The importance to your wife of this issue is that, if the costs were awarded against the estate, it could affect any inheritance to her even outside the property at issue.

However, Christopher notes that there will be no direct cost implications for your wife or the other sibling if neither is involved on either side of the action contesting the will.

Neither you nor your wife have any obligations or liabilities in relation to the estate unless you are executors of your mother- in-law’s will.

If either of you are executors, Christopher cautions, you do have duties to maintain, insure and preserve the value of the estate.

Outdated Ryanair share certificate

Q Ryanair split its shares on February 26th last year in a two-for-one split. To this day I have not received any new share certificate to that end.

My address details have not changed.

I contacted Ryanair’s share registrar, who informed me that no new certificates were issued. I asked what would happen if I were to sell my existing shareholdings – would my broker see the quantity on my original cert, eg €1,000, and sell at today’s price of circa €2.83, grossing €2,830, whereas I really have 2,000 shares, which should gross €5,660 if I sold them? He replied: “The broker would know.”

Can this really be the situation?

Mr J.O’C., e-mail

AYou are quite right to be suspicious but, as it happens, the share registrar is telling the truth. No updated share certificates were issued at the time of the Ryanair share split.

Whether this was simply Ryanair shaving another few cent off operating costs, I cannot tell you.

However, you should at least have received notification of the transaction around that time.

In any case, when you go to sell the shares, the information held by the registrar will make clear the extent of your holding following the share split. There should be no problem with the broker or confusion over the size of your holding – even if the whole situation makes something of a mockery of the notion of share certificates, which nominally represent your holding in a given company.

To buy or not to buy shares in banks

Q With bank shares at an all-time low, do you think it would be worth buying them now?

Ms B.F., e-mail

AUsually, at current levels, this would be a no-brainer. However, the current climate is anything but usual and there is still no certainty that the remaining listed Irish banks will not have to be nationalised.

As it is, the State is taking control of one-quarter of the shares of Bank of Ireland and AIB. That means that shareholders, who have already seen the value of their investment in the banks fall by about 90 per cent, are now seeing that emaciated stake reduced in value by a further quarter.

The Minister for Finance also made it clear this week that more cash requirements will have to be paid for by the handover to the Government of more ordinary shares, further diluting existing shareholders.

I am not a licensed investment adviser, but anyone I talk to is clear in their view that the only prudent action in relation to listed Irish banks at the moment is to sit firmly on one’s hands and keep one’s wallet in one’s pocket.

It is, of course, possible, that the banks could bounce sharply from their current lows but, in these volatile times, this does not seem like a risk worth taking.