Inheritance Planning Service
If you plan to leave an inheritance for your estate when you die, it may be liable to Inheritance Tax. Inheritance Tax is the amount of tax that the recipient has to pay if the inheritance is over a certain limit or threshold.
The tax bill which your beneficiaries would have to pay depends on three main factors:
- The relationship between the deceased and the beneficiary (this determines the maximum tax-free threshold that applies)
- The net value of the inheritance
- Any previous gifts or inheritance received
Without inheritance planning, your family could lose part of their inheritance or be faced with a difficult decision between having to sell part of their inheritance, or borrow the money to pay the tax bill.
To avoid this happening to your family, Cornmarket’s Inheritance Planning Service is designed to help you put the necessary plans in place.
Remember, if you are married or in a civil partnership you do not have to pay inheritance tax on anything you would inherit from your spouse/civil partner.
Cornmarket’s Inheritance Planning Service can help. Call: (01) 408 4025
What are the thresholds for Capital Acquisitions Tax?
Inheritances can be received free from Capital Acquisitions Tax (CAT) up to a certain amount (threshold). The tax-free amount varies depending on your relationship to the person giving the inheritance.
If the inheritance amount exceeds the threshold, CAT is charged at 33% (since 5th December 2012).
|Capital Acquisitions Tax thresholds* after 12th October 2016|
|Group||Beneficiary||Tax Free Amount|
|A||Son or daughter||€310,000|
|B||A parent**, brother, sister, niece, nephew or grandchild of the person giving the gift.||€32,500|
|C||All other relationships, other than those mentioned in A or B||€16,250|
*Threshold values after 12th October 2016. **In certain circumstances a parent taking an inheritance from a child can qualify for Group A threshold.
Example of how inheritance tax works
|Net Value of Inheritance||€700,000|
Number and type of Beneficiaries: 2
Son and Daughter
|Breakdown of inheritance due|
|Gross inheritance to each beneficiary||€400,000||€300,000|
|Less tax-free amount threshold |
Relationship: child i.e. Group A
|Gross taxable inheritance per child||€90,000||€0|
|Tax payable at 33% per child||€29,700||€0|
What are my options to protect my family against Inheritance Tax?
The tax liability for beneficiaries can be reduced in a number of ways, including:
1. Getting a Section 72 Life Assurance Policy
This life insurance policy is set up to fund any inheritance tax bill which your beneficiaries are likely to face. The policy is exempt from inheritance tax and is relatively straight-forward to set up.
2. Gifting of a maximum of €3,000 per person annually
Your beneficiaries can each receive gifts of up to €3,000 a year without paying tax. This is known as the Small Gift Exemption and is useful if you can afford to gift some of your inheritance while you are still alive. Cornmarket's Inheritance Savings Plan allows you to do this in a tax-efficient manner.