What is estate planning? Is it a preserve of the wealthy?

estate planning Aug 25, 2021

Estate planning, is a term that when you hear it, sounds like a lofty concept…..but it isn’t!

Estate or inheritance tax planning as it is also known is for anyone with the following assets that they wish to pass on to a loved one:

  • Home
  • Holiday home
  • Land
  • Pension
  • Savings

It is increasingly a requirement for middle Ireland, with smaller family units and the modern family pressures of society. Without a plan, a sudden death or unplanned estate can have a long and costly impact on all those left behind.

Setting up a will, trust, figuring out what a small gift exemption is as well as minimising what Capital Acquisitions Tax (CAT) your beneficiaries will pay are all simpler than they sound.

A specific type of life policy can be set up to minimise the stealth tax that happens upon death when passing on an inheritance. There is a 33% tax on your accumulated assets after you have worked and built up personal assets. Nobody likes tax!

In a simple scenario of two adult children with one surviving parent, the children are currently entitled to a tax exemption of €335,000 each. A family home of say €500,000 and one or two personal assets that add up to €950,000 will easily exceed these thresholds, forcing your children into an unexpected tax liability of 33%/€92,400 of the surplus of your post taxed personal assets.