By Dave Kavanagh

Something that I have recommended for many years to clients, is to set up an “ICE” file, (In Case of Emergency). Preferably in either a metal filing cabinet or any container that is fire resistant (some have even used a strong biscuit tin, but only after the biscuits are gone!). Then make sure at least one trusted friend or family member is aware of where it is kept in the home. This way, in the unexpected event of either a fatality, severe illness or even early onset dementia, it removes the confusion of trying to establish details like what bank accounts are there, what cover (if any) is in place, is there a will made? I often hear of situations where a surviving partner says “oh he/she always dealt with all of that, I haven’t got a clue.”So what kind of things should be kept in it?

Consider the kind of information that would be needed at such a time. Details of bank accounts, any loans due to be paid, details of any mortgage and any associated cover in place that could clear such a mortgage. Any life cover details (and any contact names/numbers in connection with them). Details of any regular payments that should be cancelled, such as gym membership, magazine subscriptions, etc. The benefit of having cover plans/ wills in pace is diluted somewhat if nobody knows that they exist or where the details are.

Dave Kavanagh QFA has been advising people financially for over 25 years. For quotes or information (with no cost or obligation) he can be contacted by emailing info@financialcompanion.ie or use the contact form on www.financialcompanion.ie or phone 087-6414570, or @Davekav_advice on Twitter and Instagram. Combined with his previous role of gym/nutrition adviser, he regularly gives talks and workshops at seminars and events for groups, companies and government departments on financial wellbeing, positivity and motivation. As heard on RTE 2FM and TV3.

By Dave Kavanagh

In 2019 in Ireland, there was €455 million collected in Capital Acquisition Tax. This covers both inheritance tax and gift tax. It also includes estates that may have been taxed in previous generations. For example, if someone left an estate worth €2,000,000 to an only daughter, she would (in the current tax year) have a tax bill of almost €550,000. After she pays the bill and puts what’s left in the bank, any interest is taxed (DIRT). Guess what happens when she passes and leaves her estate behind? It’s taxed again! Spouses can leave any amount to each other tax free. After that, the three thresholds are, a) Children - €335,000, b) Other close relatives - €32,500 and c) All others (including cohabiting partners) - €16,250. Everything received above these is taxed at 33%.So, is there any way to avoid it? There are two main actions that can either reduce or eradicate such a tax bill. The first is to take the time to plan when making a will. Let’s say a value of €750,000 was being left to 2 adult children. (Not a big estate if you combine a house, savings and a life policy). This would create a tax bill of over €25,000. Instead, if €670,000 of it was left to the 2 children and the balance between a few grandchildren, there is no tax bill. The second thing that can be done is for the person leaving the estate to take out a Section 72 plan. This is a type of life policy that is allowed to pay any tax liability without adding to the value of the estate. It becomes particularly important for anybody that does not have children to plan things out, as even other relatives can only receive €32,500 before any balance is taxed. Make the time to plan.

By Dave Kavanagh

There are many aspects of life that people take for granted, especially if it’s something that is long running and gets paid by direct debit from your bank account. I regularly see clients that have had the same cover plans in place, without ever checking if they are still suitable for their current circumstances. Changes in employment, income, new additions to family, or moving home are just some of the things that could completely alter your requirements. You could even be paying for something that is no longer required or needed. If a plan was taken out directly with a bank or insurance company (where it was not compared) you could be paying premiums way higher than necessary.

What kind of details should people be aware of?

For a start, just knowing the basics would be helpful. With things like life cover, mortgage protection or serious illness cover, what premiums are you paying? How much cover is in place? When is the plan due to expire? Does it have a conversion option that would allow you to continue cover beyond the end of the plan if your health deteriorated? Is it “dual” or “joint” cover? If you pay for income protection, has your salary reduced or increased over the years? Are you paying for levels that you may no longer be able to claim for? While it may not be the most “fun” exercise, taking some time to examine the details of anything you may have in place, is usually very worthwhile. You may save yourself money but you will also have the peace of mind that what you have in place is the most appropriate for your circumstances.

By Dave Kavanagh

When compared to home-owners, people who rent where they live can be a lot more vulnerable. Apart from the obvious points, like rents being increased or having to move out if a property is being sold, there are other potential events that could prove problematic for renters. For home owners, an unexpected temporary loss of income, whether due to illness or occupational difficulty, may mean that they need to make an arrangement with their lender until their income returns to normal. Even in the event of a fatality, the mortgage protection in place will clear the mortgage, leaving the surviv-ing partner (if there is one) not worrying about mortgage payments. Renters don’t usually have any such protection in place. If a loss of income meant rent could not be paid, they would most likely be evicted. With the current levels of rent so high, if one of a couple renting passed away, it may not be affordable on one income. So, can renters protect against such eventualities?Yes, firstly, having income protection in place, which pays out an income if someone cannot work due to illness or inju-ry and suffers a loss of income, would make sure that rent could still be afforded, preventing a pos-sible eviction. Also, in the same way that home-owners have life cover in place to clear a mortgage in the event of a fatality, renters can do the same, with the payout allowing them to purchase their own property mortgage free. Serious illness cover also pays out a lump sum on diagnosis of one of the specified illnesses, which could also be hugely helpful to renters. Premiums for such cover plans, especially for younger renters can be a lot cheaper than people often think. If you rent, it would be clever to give some thought to these.