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Planning Tips to reduce your Inheritance Tax Bill


Do you have a tax efficient will?

Moran McNamara can help you…

We understand that no amount of planning can lessen the sense of loss for a loved one, but it can help reduce the associated tax bills. We offer tailored and practical taxation advice to meet your needs and wishes.

5 TIPS to reduce your Inheritance Tax bill 

1. Make a will and seek appropriate tax advice

If you die without having a tax efficient will in place, you will lose the opportunity to reduce the tax bill faced by those who inherit from you..

EXAMPLE: “Recently an only child inherited his parents’ family farmhouse, farm land and savings. This resulted in him having to sell some farm land to pay an unaffordable tax bill. This could have been avoided with proper tax planning when the will was being drafted to ensure the individual would qualify for Agricultural Relief and thereby reduce the liability to nil..”

2. Consider personal succession planning

If an inheritance is taken between those in a civil partnership or marriage, then no inheritance tax applies. However, if an inheritance is taken by someone living with their partner the same rights do not apply.

Sheila explains:

“With an estimated one in 5 adults cohabiting, inheritance tax bills will come more into focus. If you are living with someone and not married or in a civil partnership, then you will only be able to inherit up to €15,075 from your partner tax-free and you will be liable for tax at a rate of 33% on any balance over that limit. This is a very serious situation for those left behind, so it is important to understand and plan for the tax consequences.”

3. Start planning & passing on your assets now

Consider passing any properties you own to your children / beneficiaries now while property values are still low. This could help avoid inheritance tax bills.

Declan explains:

“By passing on the property while it has a lower valuation, any future growth on that property will be in the children’s name rather than the parents. You could also save your children substantial tax by encouraging them to move into any dwelling you intend to leave to them and availing of the Dwelling House Exemption.”

EXAMPLE: “Recently an individual inherited a house from his uncle. This triggered an inheritance tax bill of almost €58,000. He was unable to sell the property before the due date for payment, so he was forced to take out a mortgage on the property to pay the tax bill. With proper tax planning, this liability could have been avoided.”

Also, did you know that the small gift exemption is another useful exemption which allows you to drip-feed your inheritance, allowing individuals receive gifts worth up to €3,000 per year from any individual tax free.

4.Plan for the transfer of businesses including family farms and trading companies

The transfer of these assets can result in a high tax burden for the recipient if not efficiently planned. There are a number of tax reliefs available, namely Business Relief and Agricultural Relief. With effective tax planning the recipient may pay tax at a rate of 3.3% instead of 33%.

5.Consider the use of trusts

A trust will help you to pass on your wealth to your young children or grandchildren more tax efficiently.

The information contained herein is of a general nature and is not intended to address the circumstances of any particular individual or entity. No one should act on such information without first seeking appropriate professional advice.



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