Effective Ways of Reducing Inheritance Tax
Capital Acquisitions Tax (CAT) is payable on a gift or inheritance received by a beneficiary from a “donor”. There are several ways donors can be efficient and help to reduce CAT payable by their beneficiaries.
The following are some ideas which can assist in this tax planning exercise:
- Transfer or hold property in joint names as property in joint tenancies can be passed, on the death of one of the parties, to the other party/ies named on title tax free;
- Make a will based on your wishes, but also based on the tax-free thresholds available to your beneficiaries in the will;
- Be generous to your other half in your will as assets of any kind can be passed tax free to your surviving husband, wife or civil partner;
- Know the criteria for the various CAT reliefs available and utilise them where applicable e.g. Agricultural, Business, Favourite Nephew/Niece, Dwelling-House Relief;
- Take out a Life Assurance Policy, known as a section 72 Policy, to cover the CAT payable by your beneficiaries;
- Consider setting up a Trust, particularly where the beneficiaries are minors;
- Cashable assets are very important as this helps beneficiaries pay off the CAT liability without needing to get loans etc.;
- Every year you can give a gift of €3,000 tax-free blood relation or not. This will decrease the CAT payable.
Copyright © McKeever Solicitors, 10 July 2017.
This article is a general review and is not intended to be a complete statement of the law. Specific legal advice must be sought in every case. For further information on Wills, Probate and Estate Planning, please contact Clodagh O’Hagan or Helen Sweeney.
T: +353 (0) 1 670 2990
F: +353 (0) 1 670 2990