Estate planning

Tax on inheritance is called capital acquisition tax (CAT) in Ireland. Anything left to either your spouse or civil partner will be exempt from inheritance tax, regardless of whether the value exceeds this threshold. CAT is usually charged at 33% on amounts over the group threshold.

Proper planning can help put you in the most tax efficient position. Your Fairstone financial planner will go through all the pension allowances, business property relief and trust options with you to make sure you’re utilising everything available.

To support your beneficiaries in paying future inheritance tax liabilities, you could take out a section 72 revenue approved life insurance policy to cover the anticipated bill. An insurance policy that will pay out a lump sum upon your death could act as a means of settling the bill quickly and easily. It is important to remember to set up any such policy in trust. This ensures the pay-out can go directly to your beneficiaries. If you don’t use a trust, the money will form part of your estate and your loved ones won’t be able to access it until the inheritance tax bill has been paid.

You don’t need to wait until after you have gone to share your wealth with your loved ones. You may want to help parents with their long-term care costs, support a child with a deposit for their first home or pay the education fees for a grandchild. While revenue commissioners have put rules in place to prevent people from avoiding an inheritance tax bill by simply giving away all of their money on their deathbed, individuals are entitled to give away €3,000 of capital in total, each tax year, free from inheritance tax.