By Dave Kavanagh
One of the most “put on the long finger” exercises in Ireland is making a will. A recent survey by Irish Life showed that 3 in 4 people say it’s important to have a will but 2 in 3 people in Ireland have no will. 1 in 3 people say they haven’t made a will because they “haven’t gotten around to it”!Avoid Capital Acquisition Tax - One of the financial aspects to consider (and a good reason to make a will) is that good planning can reduce or completely eliminate a potential tax liability in the event of a fatality. This is because without a will, it is the Succession Rights Act that deter-mines how someone’s estate gets distributed and this may not be the most tax efficient, as there is a limit to how much someone can receive either as a gift or an inheritance, depending on their re-lationship to the person leaving the estate behind. There is no limit between spouses or registered civil partners. After that, there are three thresholds - In the current tax year, children can receive €335,000, other close relatives (such as grandchildren, parents, siblings etc.) can receive €32,500 and all others (classed as strangers, including cohabiting couples) can receive €16,250. After these thresholds, all balances are taxed at 33%. So planning the right distribution of an estate can mas-sively reduce tax liabilities.Any other way to minimise tax? - When it is clear that a substantial CAT bill will become liable, a person can commence a Section 72 life plan. The proceeds of this plan can be used to pay the tax liability without increasing the value of the estate. These can be arranged through your financial advisor or broker and are the most efficient way to pay the tax liability.
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 firstname.lastname@example.org or use the contact form on www.financialcompanion.ie or phone 087-6414570. 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.