That old proverb is never out of date. And indeed what about this perennial favourite;

Whilst good financial planning cannot lessen your sense of loss on the death of a loved one, it can reduce your Tax Bill.

Issues that need to be considered when you have assets to pass on are as follows:

  • Making a Will
  • Testate and Intestacy
  • The Succession Acts
  • Capital Acquisition Tax (CAT)
  • Probate

Anyone who owns a property or other assets such as a Life Assurance policy, Savings Plan and even a simple deposit account should make a will.

A will not only ensures that you can distribute your wealth as you wish, but it also means that your family and beneficiaries are spared the expense and distress of a complicated and drawn-out administration of your estate as set out by the Succession Act 1965.

Dying intestate is when you die without making a will and all your property will be distributed according to the 1965 Succession Act.

Since there is no official executor (i.e. the administrator and not the person who killed you as has been confused!) the personal representative of the deceased, who can be a spouse, relative, friend will need to obtain what is known as a grant of Letters of Administration in order to distribute the proceeds of your estate to your beneficiaries.

Inheritance tax is payable if after your death the beneficiaries of your estate receive sums in excess of the Thresholds for Capital Acquisition Tax (CAT).

The CAT tax free thresholds have been reduced in the Budget 2013 and are as follows:

Group A : €225,000 where the recipient is a child or minor grandchild of the benefactor (if the parent is dead)

Group B : €33,500 where the recipient is a brother, sister, niece, nephew or linear ancestor/descendent of the benefactor or where a gift is made by the child to the parent.

Group C : €16,750 in all other cases

The CAT rates are if you are below the above thresholds then there is no liability but if you over them then you will be taxed at 33%.

There is a way around protecting against having to pay such bills from one’s own pockets and this by putting a Section 60 policy in place.

This a life assurance policy that is taken out for the purpose of paying CAT.

These policies are very popular especially with people who are leaving large estates to their families or other beneficiaries.

Since Capital Acquisition Tax in the form of inheritance or gift are subject to aggregation i.e. a rolling up of benefits from various sources – the relevant thresholds can be affected.

The calculations can be very complicated and you should always consult your financial advisor.

For more information regarding Estate Planning and Section 60 policies, please contact our Qualified Financial Consultants in Ocean on (01) 8693400 or use the enquiry form here.