Ensuring that your loved ones are looked after is a priority for most of us. In these uncertain times it is more important than ever.
The current pandemic has had a huge impact on our lives and has also seen individuals assessing their current position and wishing to ensure their loved ones are looked after by updating or making their Wills.
Death is not something we like to think about or plan for but if you do some planning now you could ease the practical and financial issues your family may face.
Not having a Will means your estate will be divided according to the laws of intestacy and that may not be what you wish as it can put your loved ones at risk. Making a Will is one way you can ensure your loved ones are looked after when you are not here to do so.
Irish Inheritance Tax
Under Irish tax law, an inheritance received by an Irish resident automatically falls within the scope of Irish Capital Acquisitions Tax (“CAT”) i.e. inheritance tax. The current rate of CAT is 33% and this can result in a significant and real financial strain on beneficiaries of a Will.
There are various tax exemptions and reliefs from CAT available for beneficiaries/assets under a Will. Very many of these reliefs and exemptions require some forward thinking and consideration prior to an inheritance actually being received to ensure that the beneficiary/asset qualifies for the relief in question. As such, the key to limiting the financial impact and stress of CAT on your family members and beneficiaries is to plan in advance and this begins at the Will creation stage.
It is very understandable to wish to get your affairs in order in these uncertain times and our tax professionals would be very happy to assist you and your legal representative in optimising the impact of CAT for your beneficiaries during the process of your Will creation and finalisation.
CAT Tax- Free Thresholds
Once you have made a Will you should review it every five years to ensure, it is still valid and up to date. This is important for a number of reasons including the fact that CAT can change with each annual budget. By reviewing and updating your Will you ensure that you maximise the benefit of any available tax reliefs/exemptions while also utilising the group thresholds allowed for your family members and beneficiaries.
The current tax-free inheritance thresholds are based on relationships and are as follows:
|Group A||Group B||Group C|
|Son, Daughter, including certain foster children and minor children of a predeceased child||Parent, Brother, Sister, Niece, Nephew, Grandparent, Grandchild, Linear Descendants of the Testator||All other persons who do not fit within Group A or B|
Is it possible to make or amend a Will during the COVID-19 Pandemic?
In short, yes! The process will be slightly different to normal to ensure all parties adhere to current protocols.
If you are considering drafting or updating your Will and wish to ensure that CAT is minimised for your family members then please contact our Care Team member Susan and she will organise a consultation with one of our tax experts via video call or over the phone, to begin the process.
In certain circumstances for estates with significant assets values, it may be worth putting a life policy in place to cover any CAT liabilities for beneficiaries. Our Care Team can also organise a video or phone all with a trusted CAT insurance policy expert.
Main Considerations On Drafting A Will
We have set out below some of the main considerations you should give some thought to prior to drafting a Will.
- Review and take account of your assets
- Decide whom you would like to benefit
- Consider if you will need to appoint guardians to your children;
- Considered a trust arrangement
- Is there a specific asset you want someone to have
- Consider the tax implications for various beneficiaries of your Will; and
- Plan accordingly to reduce the CAT impact on your beneficiaries.
Validity of a Will
Please note that for any Will to be valid:
- You must be over 18 years of age
- You must be of sound mind
- Your Will must be in writing
- Your Will must be signed at the bottom of the document in front of at least two witnesses, neither of whom should benefit under the Will
Some elements you should also be aware of:
- A Will has no affect until a person dies;
- Your Will can be changed at any time;
- Your marital status is of relevance when you make a Will;
- Subsequent marriages revoke a Will;
- If you are making a Will and have been separated or divorced, you will require advice in relation to the succession rights of former spouses or partners including their entitlements
- Making a Will is an ideal opportunity to benefit any charity and once your family and friends have been looked after, this is a great way to support a cause important to you
Enduring Power of Attorney
We always recommend to our clients to have an Enduring Power of Attorney in place. A Power of Attorney (POA) is a deed executed by an individual which empowers another person(s) to act on their behalf.
One instance where appointing a POA is common practice is where a client is getting older or becoming incapable of looking after their financial affairs and themselves. Whilst this is not the only reason why someone may wish to consider granting a POA it is perhaps the most common.
Important information when appointing a POA:
- It is a legal device that enables you to choose a person called an attorney to make certain personal care decisions on your behalf in the event of you becoming mentally incapacitated
- You may choose one or more attorneys
- You must notify two people that you have executed the power
- If you become incapable of managing your own affairs your attorney must apply to have your enduring power registered in the High Court
- The enduring power will not come in to force until it is registered
Our Specialised Team
Our team are working constantly to bring you the latest updates on all the changes affecting you and your business in the current climate.
Our Care Team are available to assist you with your queries and will facilitate making an appointment via video call or phone call with any of our team experts.
Keep up to date by signing up to our mailing list, follow us on social media and check our website for more details. Check out our COVID-19 Resource Centre to view information on supports available, updates from the Revenue Commissioners and more. We hope you and your families are keeping safe and well and we wish you continued good health.