kkprivate Client and Family Law Update March 2015 Children and Family Relationship Bill 2015 The Children and Family Relationship Bill was passed in the Seanad (today 31 March 2015), after extensive debate in the House and 122 amendments. The last major Act passed concerning the guardianship of children was passed in 1964, a year after the birth of this author and aeons away in terms of the social change that has happened since. It was passed when the concept of illegitimacy was alive and well, before contraception was legal, before the lifting of the marriage ban and when Divorce a mensa et thoro from bed and board was still the only way besides Nullity to rescind a marriage. Practitioners have endured the frustration of being unable to provide flexible solutions for families where for one reason or another, the parents could not care for their children and another person was willing and able to step into their shoes. Progress was made with the passing of the Civil Partnership and Certain Rights of Cohabitants Act 2010 with the recognition of other forms of families such as cohabitants and civil partners, but little or no mention was made of the children of such families. This Act deals with the duties and responsibilities of parents to maintain and nurture their children whether those parents be civil partners or cohabitants. It provides a mechanism whereby disputes as to custody and access can be dealt with bearing in mind the best interests of the child at all times. While the use of much of the now outmoded language of the 1964 Act has been avoided, the opportunity to use the language of Parental Responsibility which was introduced in English legislation in 2001 has not been taken up. The terms Residence and Contact are used in the UK in place of Custody and Access, which seem more appropriate when dealing with the sensitive issues involved. The views of the child are given a stronger voice and this is in line with Ireland s obligations under the UN Convention on Human Rights and the European Convention on Human Rights. The category of person who can apply for a guardianship order has been increased to include the father where he has been residing with the mother for twelve months in total- ten months before the birth and two after. The new provisions are many and vast. Some of them are outlined here: An order for custody can be made in favour of a person in loco parentis that is, a person who treats the child as their own, where that person has been caring for the child for 12 months and there is no parent or guardian willing or able
to exercise the responsibilities of Guardianship with regard to that child. The term relative includes a step parent, step sibling, spouse, civil partner or cohabitant of a child s parent, thus reflecting the reality of the real care givers in many families. While much store is given to determining who exactly the real or genetic parent of a child is, it is really those who are present on a day to day basis, giving stability and care to child who are in practical sense more entitled to and worthy of an order for guardianship. Turning to the provisions for AHR or Assisted Human Reproduction, the Bill provides for the making of orders for parentage in respect of a donor conceived child. The Bill avoids the use of mother and father and instead refers to Parent, reflecting the reality of same sex couples who fulfil the role of both father and mother. It maintains the principle that the birth mother is always the mother, but provides for the creation of a Donor conceived Persons Register while at the same time prohibiting the use of genetic material from anonymous donors. This leaves the door open for donor conceived children to ascertain the identity of their genetic parents. There is a mechanism whereby the donor and the child can opt for their personal details to be revealed to their genetic siblings and for medical details to be revealed where the donor was suffering from a genetic illness which may have been passed on. The Bill goes on to make two further fundamental changes to adoption law by amending the Adoption Act 2010 to allow for Civil Partners and couples cohabiting for three years to apply to adopt children. Thus the groundwork is laid for a legal system to deal with the prospect of a referendum being passed for same sex marriages. This Bill will be debated in the Dáil over the next few weeks. While we may have waited a long time for this reform, it is to be hoped that we have learned enough from other countries to put in place a workable, forward thinking piece of legislation. New Central Bank Regulations on Residential Mortgage Lending The much discussed new Central Bank regulations on residential mortgage lending were signed by Governor Patrick Honohan on 9 February 2015 [Statutory Instrument 47 of 2015 Central Bank (Supervision and Enforcement) Act 2013 (Section 48)(Housing Loan Requirements) Regulations 2015]. These Regulations apply new limits to the amounts that can be borrowed by house buyers after the date of the Regulations. Under the new rules distinctions are made between different categories of borrower, depending on whether they are first time buyers, investors purchasing buy to let properties and those purchasing their second or subsequent principal dwelling house, and the value of the property. Non-First Time Buyers Non-First Time Buyers (i.e. those buying their second or subsequent house to be lived in as their principal dwelling house) the loan to value limit is set at 80%. This means that a non-first time buyer must have a 20% deposit. First Time Buyers First Time Buyers the loan to value limit is set at 90% for the first 220,000 of value and 80% on the balance of the value over that amount. This means that a first time buyer who purchases a house for 220,000 will need to have a deposit
of 22,000. As the value of the house increases over 220,000 so does the amount of the deposit (an consequently the maximum amount that can be borrowed). For example if first time buyers were to buy a house valued at 500,000 the deposit amount required would be 15.6% or 78,000. Where two people are borrowing and one previously had a mortgage neither will be deemed to be a first time buyer where they subsequently borrow. The above loan to value limits for principal dwelling houses are also subject to multiples of income limits. The maximum amount that can be borrowed is 3.5 times a borrower s gross income. Buy to Let Purchasers Buy to Let Purchasers the loan to value ratio is 70%. The value of the property must be assessed by a professional valuer engaged by the lender within two months of mortgage drawdown. It is important to note that these loan to value limits may be exceeded on a case by case basis by lenders based on prudential lending requirements and appropriate credit assessments of borrowers. For example, for principal dwelling house loans the amount of loans that are outside the criteria cannot exceed 15% of the lender s total for all principal dwelling house loans. Ultimately the decision to lend and the amount of the loan is a matter for the lending institution The Regulations do not apply to the refinancing of existing housing loans or switcher mortgages, although equity releases and top ups for existing mortgages will be caught. Nor do they apply where the lender has issued a written approval in principle prior to the Regulations coming into force. Lenders are prohibited from structuring loans in ways that avoid their obligations under the Regulations. The stated aim of the Regulations is to increase the resilience of the banking and household sectors to the property market and to reduce the risk of bank credit and house price spirals in the future. Changes to the CAT Treatment of Receipts by Children from their Parents for their Support, Maintenance or Education Capital Acquisitions Tax (CAT) is a tax that taxes individuals who receive gifts and inheritances where the value of the gifts and inheritances exceed that individual s lifetime tax-free threshold. Section 82, of the Capital Acquisitions Tax Consolidation Act 2003 exempts from CAT money or money s worth given by an individual ( the disponer ) during their lifetime for the support, maintenance or education of their children, their civil partner s children or a person in relation to whom they stands in loco parentis, as well as payments for the support or maintenance of a dependent relative. To qualify for exemption the expenditure must be such as would be part of the normal expenditure of a person in the circumstances of the disponer, and reasonable, having regard to the financial circumstances of the disponer. Revenue view normal in the context of the expenditure rather than the amount. For example, Revenue have stated that the purchase of a house for a child would not be within the concept of normal expenditure. Revenue does not accept that gifts to a financially independent child are acceptable and that large capital expenditure is also outside the scope of the section. The Finance Act 2014 has amended section 82 to confine the exemption of receipts by children for the provision of support, maintenance or education to receipts by:
a child under 18, or; a child who is more than 18 but not more than 25 who is receiving full-time education (the course must last 2 years), or; a child who, regardless of age, is permanently incapacitated by reason of physical or mental infirmity from maintaining himself or herself. Currently the lifetime tax free threshold between parents and children is 225,000 with the balance above this taxed at 33%. However, anyone can receive a small gift each year of 3,000 from a person which is tax free and does not reduce the lifetime threshold. The small gift exemption therefore can be used by parents to give 6,000 tax free to a child each year. The Revenue issued guidance on how it will treat such situations and the following examples situations will be exempt from CAT: a child, even where they are financially independent, finished education and over 25, who continues to reside with their parents; the provision of a house rent free for a child attending university; the payment by a parent of the costs of the child s wedding is deemed to be a cost of the parent rather than a gift to the child. Consideration should therefore be given by parents and their adult children as to whether their situations could fall outside of the exemptions under section 82 and therefore by liable for CAT. Update on the Key Provisions of the Assisted Decision-Making (Capacity) Bill 2013 The Assisted Decision-Making Capacity Bill 2013 is currently at Committee Stage in Dáil Eireann. The Bill aims to assist vulnerable people in our society with decision-making in relation to their personal affairs and give them much needed legal protection from abuse or exploitation or fraud. The Bill introduces a system for support in decision-making, giving the vulnerable person greater autonomy in any decisions concerning their lives. When enacted, the Bill will modernise the law in relation to Enduring Powers of Attorney and will provide for Advance Care Directives (at Committee Stage). Set out below are the noteworthy provisions of the Bill. 1. Establishment of an Office of Public Guardian The Office of Public Guardian will have supervisory powers to protect vulnerable people and to supervise the different types of assistant decision-makers permitted under the legislation, including Attorneys. The Office may: prepare codes of practice act on complaints if satisfied there is substance to them nominate persons to act as Decision-Making Representative The Office of Public Guardian will replace the Wards of Court Office and the creation of future Wards of Court will be
prohibited. 2. Protection of Informal Decision-Makers Informal Decision-Makers (i.e. carers), will be protected from liability in relation to certain personal welfare matters made on behalf of a person with impaired capacity where such decisions are necessary and where no formal decision making arrangements are in place. 3. Appointment of Decision-Making Assistant by persons who consider their capacity to be in question/may shortly be in question The role of the Decision Making Assistant is to: advise the Appointer by explaining the information and considerations relating to the decision ascertain the will and preferences of the Appointer assist the Appointer in obtaining any information or personal records that are required in relation to the relevant decision assist the Appointer to make and express a relevant decision endeavour to ensure that the Appointer s relevant decisions are implemented A person cannot be appointed a Decision Making Assistant if they have been convicted of an offence in relation to the person or property of the Appointer or a Safety or Barring Order has been made against the person in relation to the Appointer. 4. Appointment of Co-Decision-Maker A person who considers that his or her capacity is or will shortly be in question, may appoint a suitable person to make joint decisions with them on matters related to his or her personal welfare and/or property and financial affairs. The appointment of a Co-Decision-Maker must be made in a co-decision-making agreement. 5. Court appointment of Decision-Making Representative If a vulnerable person is unable to appoint a Decision-Making Assistant, then the Court can appoint one or more nominees to be the Decision-Making Representative. In making an appointment, the Court may make provision for such matters as it considers appropriate, including setting out conditions covering the role of the decision-making representative. Before appointing a decision-making representative, the Court must be satisfied that the proposed Decision-Making Representative is a suitable person to act as decision-making representative for the person. What is very welcome about the Bill is that it moves away from the paternalistic way of looking after what we decide are people s best interests and recognises it is a person s right to make decisions about their own lives, enabling and supporting them in that decision making. Under the Bill, capacity is always presumed unless the contrary can be shown.
A second core element seeks to ensure that the assistant decision-maker must: reflect the right of the relevant person to his or her dignity, bodily integrity, privacy and autonomy permit, encourage and facilitate the relevant person to participate as fully as possible give effect to the past and present will and preferences of the relevant person take into account the beliefs and values of the relevant person A worrying provision in the Bill is Section 6. This states that expenses incurred by the legislation have to be sanctioned by the Minister for Public Enterprise and Reform. We hope this provision will not be used as an excuse to delay the operation of the legislation. And Finally... DSBA Seminar on the Children and Family Relationships Bill, hosted at Beauchamps offices Beauchamps hosted a seminar dealing with the Children and Family Relationships Bill 2015 on the 4 March on behalf of the DSBA (Dublin Solicitors Bar Association). Dr. Geoffrey Shannon analysed the main sections of the Children and Family Relationships Bill 2015 and also dealt with Guardianship and Adoption by same sex couples. Dr. Shannon is a Solicitor and the Government Special Rapporteur for Child Protection. Katherine Irwin, head of Private Client and Family Law in Beauchamps, addressed the Seminar on the Topic of AHR Assisted Human Reproduction- outlining the main effects of the new Bill as currently drafted. It was attended by 40 solicitors and ended with a lively Q & A session. It was agreed that there were many changes to the law and that the Seminar was useful in providing a guide to the main points. To obtain more information or advice on any private client or family law matters, please get in touch with us: Katherine Irwin Owen Burke John Costello k.irwin@beauchamps.ie o.burke@beauchamps.ie j.costello@beauchamps.ie Beauchamps Solicitors Riverside Two, Sir John Rogerson s Quay, Dublin 2 Tel +353 (1) 418 0600 Fax +353 (1) 418 0699 email securemail@beauchamps.ie web www.beauchamps.ie This ezine is for general information purposes only and does not comprise legal advice on any particular matter. You should not rely on any of the material in this ezine without appropriate legal or other professional advice. While every care has been taken in preparation of this ezine, we are not liable for any inaccuracies, errors, omissions or misleading information contained in it.