Don’t let the unexpected take you by surprise, plan today for financial security tomorrow
Nobody likes to talk or think about dying. Recent research has shown that people’s biggest concern was that their family would suffer financially. However only 50% had put a will in place or made their wishes known to family.
Wills:Whether you are young or old, healthy or ill, single or attached, you should have a Will. Without one, you die “intestate”, which means you forfeit your right to decide who inherits what, who administers and distributes your estate, and who looks after your children and their money. You owe it to your loved ones to give them and you peace of mind and to spare them the inevitable financial and personal risks. So if you don’t yet have a Will, get one drawn up immediately. A Will can be done up face to face, online or over the phone.“Where there’s a will, I want to be in it” (Anon)
Inheritance Tax:As the property market has been recovering over the last two years, this means that inheritance tax bills have been increasing simultaneously. People who are passing on the family home are concerned that the home may need to be sold to pay the inheritance tax bill.
However the recent Budget brought welcome news. The inheritance tax threshold from a parent to a child has increased from €280,000 to €310,000. Up to €32,500 can be left to siblings, nephews and nieces.
So what can you do to keep the taxman’s claws out of the inheritance you’re planning to leave to loved ones? Start passing on your inheritance now
The small gift exemption allows you to make a gift of up to €3,000 a year tax free, without eating into the recipient’s inheritance tax threshold. Using the small gift exemption is an excellent way to transfer money to children and grandchildren, if you can afford it and can reduce an inheritance tax bill in the future.
The dwelling home exemption. You could save your children hundreds of thousands of euro in tax by encouraging them to move into any properties you intend to leave to them. As long as your child has been living in the house for at least three years before inheriting it – and so long as they meet certain other conditions – he or she should not have to pay any inheritance tax on the property.
Probate: Probate is the right of an executor named in a will to deal with the estate of the deceased. Most executors assign the job of probate to a solicitor who will typically charge 1 to 3% of the value of the estate for the work. For example solicitor’s fee of 3% on an estate worth €500,000 would be €15,000. If you have the time and resources, you could reduce costs significantly by doing much of the admin element of the work yourself.
Life Assurance:Life Assurance is a cornerstone of any solid personal financial plan, but to most people, there are many mysteries behind the scenes of life assurance. In simple terms, a life assurance policy can help your family to avoid financial hardship by paying out a lump sum on your death. There are two main types of life assurance: term assurance, which pays out if you die during an agreed term, and whole of life cover, which is more expensive, but pays out regardless of when you die. Term assurance is more appropriate for someone worried about how their family will cope financially if they die. You won’t have the responsibility of providing for your family for your whole life. It will likely be for a set number of years, so term assurance is more suitable.
Example: A 35 year old non smoking male can get a €200,000 level term policy for as low as €13.23 per month.
A Section 72 whole of life policy is an efficient way to set aside funds for the purposes of paying inheritance tax. Normally the proceeds from a life assurance policy form part of the overall estate and become liable for inheritance tax. With a section 72 policy, however, the proceeds are not counted as part of the estate for tax purposes, provided they are used to discharge the inheritance tax bill.
Funeral Costs:Nobody likes to think about it much, but the day will come when death will occur in our family and/or extended family. The average cost of a funeral in Ireland is more than €4,000, but varies widely depending on where you live. Coffins and burial plots are the big ticket expenses.
So be prepared…make an appointment to speak to one of the team in MC Financial TODAY