A lot of people don’t think about the potential inheritance tax liability that may attach to a gift left to a loved one. I can’t tell you how many times a niece or nephew has approached me close to tears that their uncle or aunt has left them a property and they have no way of paying the tax bill, other than to sell that property, which wasn’t what the Testator intended at all. What had been an extremely generous gift is ruined.The double-edged sword
In his last Will, Alan bequeathed his house to his niece Betty, which was valued at his date of death at €95,000.00. Assuming Betty did not reside in the house with Alan, and she did not receive any prior gifts or inheritances, she will have a tax free threshold of €30,150, and has to pay tax at 33% on the balance. Therefore Betty will have a tax bill of €21,400.50 on this inheritance.
I must also point out, if you don’t have a Will, and your Estate, for example, will be left to your siblings under Intestacy rules, your siblings will have the same dilemma. Once the value of each of their inheritances is over €30,150, inheritance tax will apply; if you are leaving cash assets behind, it is likely to be used to pay the Revenue bill.
At MakeMyWill Solicitors, I am available to discuss any potential inheritance tax liabilities your beneficiaries might incur, bearing in mind the current valuations, tax rates and thresholds. We can see if there are ways to draft your Will that will help reduce or avoid that liability. There is also what is known as a Section 72 policy which you can take out should you wish to assist your beneficiary with their future tax bill.
Please call me today on 086-8377559 or email me at firstname.lastname@example.org to discuss this further.
[Note: The tax free threshold from parent to child (Group A) is €225,000 before a tax liability will apply. The tax free threshold for a stranger-in-blood (Group C) is €15,075 before a tax liability will apply. Group B as discussed above covers siblings, nieces & nephews, parents and grandchildren. Tax is at the rate of 33% on the balance of the inheritance. Prior gifts or inheritances that the beneficiary has received since December 1991 that are within the same Group will also be taken into account by the Revenue. For more details, please contact me or visit www.revenue.ie]