Peavoy Financial Planning talk Inheritances

Peavoy Financial Planning talks Inheritances

Opportunity meets Planning

Whether you are about to receive an inheritance or about to make a will, whilst good financial planning cannot lessen the sense of loss of a loved one, it can reduce associated tax bills. First and foremost, anyone who owns a property, land or other assets such as a life assurance policy, pension fund, savings plan and even a simple deposit account should make a Will.

Inheritance Tax. If after a death, the beneficiaries of the estate receive sums in excess of their thresholds for Capital Acquisitions Tax (CAT), Inheritance Tax will be payable.

Gift Tax: A liability of gift tax arises when a person receives a benefit liable to capital acquisitions tax other than on a death.

The tax applicable to the sums in excess of the thresholds in either of the above instances, is at a rate of 33% currently and needs to be paid to Revenue by a pre-determined date, depending on when the inheritance or gift is received. Reducing or ultimately eliminating this financial burden for the beneficiaries can be as important as planning the Will in itself. The purpose of this months blog is to help educate you on how to do this. There are many reliefs available, such as:

  • Agricultural Relief: potential to reduce the market value of agricultural property by 90%
  • Business Relief: provides for a reduction in the taxable value of all relevant business property by 90%
  • Dwelling House Exemption: provides for relief of inheritance of dwelling house from CAT in certain conditions
  • Small Gift Exemption: Revenue allow anybody to receive a gift up to the value of €3,000 from any person in any calendar year without having to pay Capital Acquisitions Tax (CAT). This means that you may take a gift from several people in the same calendar year and the first €3,000 from each person is exempt from CAT

With asset and estate values steadily rising over recent years and the CAT thresholds not keeping pace with the growth in asset values, there is a massive need for anyone who is leaving an inheritance (or indeed may be receiving an inheritance) to try to alleviate the future tax burden of these assets and estates, through efficient planning. One of our partners, Zurich Life Assurance have created a very easy to use Inheritance Tax Liability Calculator to help you with this. The calculator is available on their website which you can access here

What has Peavoy Financial Planning got to Offer?

Outside of the reliefs offered by Revenue, there are also some readily available solutions that can be used to reduce the potential CAT burden for beneficiaries, namely a Section 72 (Whole of Life) policy and Child Savings Plan.

A Section 72 (Whole of Life) policy is a Life Insurance policy set up by a disponer (usually a parent) under trust for the recipient (usually the child(ren) of the disponer). The proceeds of the policy are exempt from Inheritance Tax, provided that they are used to pay the Inheritance Tax liability on the benefits received on death of the insured. The effect is that your beneficiaries (usually the children) inherit their estate without having to pay Inheritance Tax, yet the Revenue will receive the tax that was incurred on the passing of your estate to your children. Peavoy Financial Planning offers these Section 72 policies through the Guaranteed Whole of Life policy, where the premiums are guaranteed not to change for the full duration of the plan. We work with all three providers in this area. namely Zurich, Royal London and Irish Life. Tip: Have a look at this as early as you can (perhaps in your fifties) 

The Child Savings Plan is a solution  which was designed to help people avail of the Small Gift Exemption. It is a regular savings vehicle through which a fund is built up. Using an absolute assignment, the disponer (usually a parent or grandparent ) can make full use of the small gift exemption of €3,000 per annum or €6,000 in the case of a married couple, by assigning the plan to another individual (usually a child or grandchild). Extracting wealth like this through a child savings plan in a tax efficient manner, forms an integral part of the financial planning process. Wealth doesn’t always necessarily mean multiple zeros. The Small Gift Exemption allows for a steady movement of wealth from one individual to another. The transitioning of wealth from Grandparents or Parent to their Grandchildren or Children is where we see the Small Gift Exemption gain it’s popularity.

If any of the above is of interest to you, do get in contact with me me here at Peavoy Financial Planning and we will work through your specific situation.  I can be contacted on 087-2902206 or alternatively by email on .

David Peavoy BA, QFA, LIAP is the Owner of Peavoy Financial Planning whose practice is based in Office 5b, Portlaoise Enterprise Centre, Clonminam Business Park, Portlaoise, Co Laois.

David Peavoy T/A Peavoy Financial Planning is regulated by the Central Bank of Ireland

Disclaimer: All data and information provided within this blog is for information purposes only. It should not be taken as specific advice for your situation. Peavoy Financial Planning makes no representations as to the accuracy. completeness, or suitability of any information and will not be liable for any errors, omissions or delays in this information or any losses, injuries or damages arising from its use

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