Inheritance Tax Planning

Inheritance Tax Planning

Passing down assets upon death is a quagmire for wealthy individuals when really it doesn’t have to be. Whereas passing assets from spouse to spouse is fairly straight forward, passing assets to children or other individuals requires forward thinking and effective financial planning.

For example, if you pass €500,000 value in assets to a child dependent upon death. There is a €335,000 threshold**, whereby no inheritance tax is payable. The remaining €165,000 is taxable at 33%. Inheritance Tax Payable is €54,450

** Threshold correct as at 5/12/2023

- Do You Have Children?

- Have You Thought About Inheritance Tax Planning?

- Do You Need Assistance?

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Useful Financial Planning Tools for Inheritance Tax Planning:

Section 72 Plan:

You can set up a joint life, second death life insurance plan which covers the inheritance tax payable i.e. in the example above, a life insurance payment for €73,333 could be used by your child dependent to pay his/her inheritance tax liability and not be forced to quickly sell assets, such as the family home.

Section 73 Plan:

You can set up a section 73 savings plan whereby the proceeds are exempt from inheritance tax and can be used to pay an inheritance tax liability.
The proceeds are only exempt from inheritance tax if the plan is in force for a minimum of 8 years and the premium cannot increase or reduce by more than 50% during this 8 year period.

Small Gift Exemption:

Another useful loophole to avoid paying gift/inheritance is to make use of the exemption whereby you can gift assets to different individuals during your lifetime to a maximum value of €3,600 per year.

A good example of using this small benefit exemption in practice is setting up a bare trust, whereby each parent can save €300 per month, which is €3,600 per year for each parent (= €7,200 per year) into a savings plan. This can be for the benefit of their child when going to college or buying their first home. This €7,200 saved for the child’s benefit does not use any of €335,000 gift/inheritance tax Group A lifetime threshold.

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How to Get Started

Do you have children or other loved ones that you want to take care of in the unfortunate instance of your passing? Don’t leave Inheritance Tax Planning too late.

Follow the steps below to get started with Mark Cahill Financial Services.

Step 1: Contact Us

Contact us and Speak to Mark Cahill.

Step 2: Information

Provide us with some information on your current situation and what you're looking for.

Step 3: Advice & Next Steps

We will provide you with advice and next steps to get started.

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