Will you face an Inheritance Tax Bill?
Inheritance Tax is again hitting the headlines with families facing huge Inheritance Tax bills as the values of houses increase in Ireland. €522 million was paid in Capital Acquisitions Tax or Inheritance Tax in 2018*. This is a huge amount of money and is something that can be properly planned for with the right advice.
Ask yourself a question. If you and your spouse were to die tomorrow and everything you own was passed to your children, would they be financially better off than they are now? The answer is probably yes, however your children could be faced with a huge tax liability which they are unaware of. The amounts which a child can inherit tax free from parents and grandparents reduced significantly from 2008 and, although having increased slightly over the last few years, have failed to reach the amounts in 2008/2009. In addition to this, the tax rates have also increased.
What is Inheritance Tax?.
In very simple terms, Inheritance Tax is a tax you pay in the event you inherit an asset from a person who has passed away. Everyone has a threshold in relation to how much they can inherit depending on your relationship with the donator. For example a child can inherit €320,000 from a parent and anything in excess of this amount is liable for Inheritance Tax at 33%.
The Solution
By taking out a Section 72 Inheritance Tax policy, that tax can be paid when the child inherits your estate. A Section 72 policy is a Life Insurance policy set up by parents under trust for their children. The proceeds of the policy are exempt from Inheritance Tax because they are used to pay off Inheritance Tax. The effect is that your children inherit your estate without having to pay Inheritance Tax yet the Revenue will receive the tax that was incurred on the passing of your estate.
A number of companies offer a Section 72 policy where the premiums are guaranteed and not subject to change for the duration of the plan. Talk to us today by calling 090 6492664 or emailing info@planalife.ie and we can help you secure the legacy you build over your lifetime.
