Calculating a capital contribution
The Regulations provide that capital resources comprise of every resource of a capital nature, excluding the value of the applicant’s home and any tools of trade of an applicant. An applicant whose disposable capital exceeds €100,000 is not eligible to obtain legal aid or advice, except in cases falling within section 28(5) and 5(a) of the Act.
The value of the applicant’s home is NOT INCLUDED in assessing the applicant’s disposable capital.
A capital assessment does not need to be carried out where the value of a person’s capital assets is below €4,000. If the value of a person’s capital assets is above €4,000, the capital assessment must be carried out. Furthermore, such a person may not have their application passported, even if they would otherwise be eligible for passporting. They must therefore complete a statement of income and capital.
The applicant must provide details of all capital resources including, for example:-
- Monies lodged, deposited or invested in a financial institution;
- Land, including details of:- the acreage; buildings; plant/machinery; and stock; and
of any lease agreement.
- Property including, for example, other house, commercial property, sites, and provide details of any outstanding mortgage/charge, any monthly repayment figure and name of the lending institution.
- Stocks/shares including details of
- the type of share/stock; and
the name of the issuing company or institution.
- Interest in a company, business or property owning body. This includes the exact nature of the interest; any financial benefit from the interest in the company or business; and, if so, a full set of audited accounts and balance sheet.
- the type of share/stock; and
- Other capital resources, including details of all other items of a capital nature such as a car, boat, mobile home, etc. In the case of a car details of the make/model/year are required.
Stocks and shares
Stocks and shares are considered to include (but are in no way limited to):
- Shares in a limited company (public or private)
- Government bonds (this includes all NTMA State Savings/National Savings and Investments products other than a Post Office Savings Bank account).
- Prize Bonds/Premium Bonds
However, money held in a Post Office Savings Bank account is a cash asset and treated the same as other savings on deposit in a financial institution.
Value of resources
An applicant who is the sole owner of a resource will be assessed on the full market value of the resource, while a joint owner is assessed on 50% of the value.
The current market value of each capital resource must be provided by the applicant. The applicant’s estimate of the value should be accepted unless the asset has been blatantly undervalued. A formal valuation should not be required.
The value of an applicant’s home on any land that the applicant owns is to be excluded from the value of the land. A standard deduction of 10% of the market value of the capital resource (other than money) is allowed in respect of its realisation cost.
Disposable capital is arrived at after making allowances for certain items that are deducted from an applicant’s capital.
Loans used to finance capital resources
For each asset other than money, a deduction is allowed in respect of any mortgages or other loans which were used to purchase the asset in question. In addition the amount of any charge registered against an asset may be deducted in the same fashion. Any other debts outstanding against an asset may also be included.
An applicant must provide the name of the lender and the amount of the loan/debt; the reason for the loan/debt; and the balance outstanding.
Legally enforceable debts which fall due within twelve months
This includes any debts which are due to be paid within the next twelve months, including any debts which are already outstanding and are due to be paid immediately. This might include Revenue arrears, arrears on bills that have gone to a credit control department, an overdraft in arrears, maintenance arrears, among others. The applicant must provide details of the debt. The Board has the right to ask for proof of the debt in the form of a demand for payment and/or threat of legal action.
How to treat other loans
For loans other than those used to finance the purchase of a capital resource, the Board may allow the cost of twelve months repayments of the loan. The applicant must provide details of the current repayment amount and the staff member should multiply this by twelve to ascertain the value of the allowance to be granted in respect of each loan.
For example, a person takes out a loan of €5,000 to pay back to school expenses. The loan is to be repaid at €100 per month. A person is allowed €100x12, i.e. €1,200, as a deduction from their gross capital.
Procedure 4.2 - How to manually calculate the applicant’s capital contribution
EOS can do this for you. A capital contribution is payable only where the service provided includes legal aid.
The contribution is calculated as follows:-
The statement of capital on the application form enables an applicant to provide details of any capital resources (other than the person’s home), of mortgages/loans, and of any legally enforceable debts.
Michael is a farmer. His wife has applied for a divorce. He applies to the Law Centre seeking legal services in connection with this.
His farm is jointly owned by him and his wife. This has been valued at €180,000, however, the auctioneer advises that €120,000 of this is due to the family home - in which Michael resides - and the agricultural land is valued at €60,000. There is a mortgage of €40,000 outstanding which he and his wife are jointly paying.
He owes a private solicitor €1,000 in professional fees in connection with a previous legal action. The solicitor has sent a fee note demanding payment.
He has a credit union loan of €4,800 to cover miscellaneous expenses, repayable at €200 per month for 24 months. He has €1,000 shares (savings).
How to assess:
Jane is taking a personal injuries action. She lives alone and is not married. She owns her own apartment valued at €120,000 and also has a second property valued at €150,000 which is rented out. She owns a 3 year old Toyota Corolla 1.6l valued at €8,000. She has mortgages outstanding of €80,000 on her own apartment and €170,000 on her rental property, which is in negative equity. She also has an outstanding car loan of €2,000.
How to assess:
John is married and taking a nuisance and personal injuries claim. He and his wife, Mary, jointly own the family home valued at €150,000. He owns a 5 year old Toyota Corolla 1.6l valued at €5,000. Mary owns a 3 year old Toyota Yaris valued at €5,000. They have savings in a joint account of €20,000. There is a mortgage outstanding on the family home of €20,000. John has a car loan of €2,000 outstanding and Mary has a car loan of €3,000 outstanding.
How to assess:
Sarah is taking judicial separation proceedings. She and her husband jointly own the family home, worth €200,000, and have a joint share in a second property worth €200,000. Sarah lives in the family home, the second property is rented. Her husband lives elsewhere in rental accommodation. In addition, Sarah has savings of €30,000 and a car, a 2l Nissan Quasqai valued at €15,000. The mortgage on the family home is paid off; however, the mortgage on the second property is valued at €140,000, Sarah pays half of this mortgage. There is a car loan outstanding of €7,500.
How to assess: