Attendees at the second in a three-part series on succession planning which Shannon Chamber is hosting in association with Holmes O’Malley Sexton (HOMS) solicitors were advised to be mindful that changes to the inheritance tax code occur quite regularly and need to be considered when planning the allocation of an estate.
Changes in tax systems can warrant adjustments to wills on an annual basis if the estate is such that it could incur huge tax liabilities for beneficiaries. Variations to inheritance tax-free thresholds and the various tax reliefs could seriously impact tax efficiency.
Referring specifically to recent changes in agricultural and dwelling-house relief, presenter Kevin Doughan, senior solicitor, trust practitioner and tax advisor with Holmes O’Malley Sexton said that they will profoundly affect the ultimate inheritance payable on death.
“Be aware of the qualifying conditions,” he keenly stressed.
“Planning is important and doing so at the earliest opportunity is crucial. Consideration of family partnership agreements can be useful to ensure that gains pass to family while the beneficial taxation of approved retirement funds and appropriate structure to incorporate in wills is also a consideration.
Doughan explored options for trusts and how these structures are taxed. He talked through discretionary trusts and the levies payable and how these can be minimised for beneficiaries with disabilities and the exemption from inheritance tax for approved medical expenses.
The in-depth presentation also focused on double taxation agreements that Ireland has with the UK and the USA and how they can help reduce taxation in both countries as well as an interesting discussion on capital gains and income tax as it applies to estates.
His advice to attendees was to have a well thought-out will, which should always include power of appropriation as this allows executors or trustees to re-direct assets to specific beneficiaries who may qualify for reliefs on death but perhaps not so when the will is made.
“This gives flexibility. None of us are clairvoyants,” he stressed.
Shannon Chamber’s chief executive Helen Downes commenting on the take-aways from the seminar said that attendees were particularly struck by the changes to dwelling-house relief under the Finance Bill 2016.
“To reduce a beneficiary’s tax liability, it might be worth considering giving children or siblings monetary gifts valued up to €3,000 rather than leave a huge inheritance. This is an effective way of passing on wealth while alive and equates to being able to pass €60,000 tax free to a person over a twenty-year period,” Ms Downes added.
The final breakfast seminar in the series, presented by Kevin Doughan of Holmes O’Malley Sexton will deal with enduring powers of attorney and capacity issues. It will be held in the Oakwood Hotel, Shannon on Friday, 19 May from 8:00am -9:30am.