If you are seeking to transfer your assets by way of a gift or inheritance to another person, it is essential you seek expert legal advice before you do so. Our estate planning solicitors have the latest understanding of finance, tax, and estate law and will advise you on the best possible options given your circumstances. By doing so, you can be assured the process will be completed smoothly, and no unexpected consequences will be encountered at a later date.
What are the tax implications of transferring assets by gift or inheritance?
When transferring assets by way of gift it is important to note that there are a number of tax consequences that can arise from that single transaction (e.g. stamp duty, Capital Acquisitions Tax, and Capital Gains Tax).It is also important to note that lifetime transfers of property can result in tax consequences for the donor (person giving the gift).
Under present legislation (the Finance Act 1985 and 1990), gifts and inheritances between Spouses are not subject to Capital Acquisitions Tax (CAT), and likewise, if the asset being transferred is a property, no Stamp Duty will be due. It is important, however, to know that if co-habitants are not married or in a civil partnership, CAT relief will not apply. In addition, there is an annual exemption from tax for gifts of less than€3,000 .
Otherwise, CAT of 33% is payable on gifts and inheritance in Ireland; however tax-free thresholds will apply depending on the precise circumstances and the relationship between the beneficiary and the person passing on the gift / inheritance.
Group A: a tax-free threshold of €320,000 which applies where the beneficiary is a:
- child (including an adopted child, stepchild and certain foster children), or a;
- minor child of a deceased child of the disponer (donor), or a;
- parent where they take an absolute inheritance following the child’s death
Group B: a tax-free threshold of €32,500 which applies where the beneficiary is a:
- parent where threshold A does not apply, or a;
- brother or sister, or a;
- nephew or niece, or a;
- lineal ancestor or lineal descendant of the disponer
Group C: In all other cases the tax-free threshold is €16,250
What are the other implications of gifting your home?
For most people, their home is their most valuable asset. This is especially so given the rapid growth in house prices in recent decades. You may have decided in good faith to gift your own home to a loved one, but there are implications which you should be aware of before doing so. You will need to decide whether the gift should be made outright to the individual/s in question, or to a trust. Our team of specialist estate planning solicitors can advise on the best option given the circumstances. And while all may be amicable now, it is important to think about what would happen to you in the event of a disagreement which means you are forced from your own property. There are also implications for the person receiving the gift, as they may lose entitlement to state benefits as a result.
You also should consider what would happen if the person you are gifting your home to dies before you; who would then inherit the property?
While these events may never occur, our job is to consider all eventualities and plan for them. Doing so will ensure you can protect your long-term interests and security.
Why choose Lavelle Partners to assist you in transferring assets by gift or inheritance?
- We are a partner-led firm, meaning the partner you meet will manage your case and be available to you if you have any questions.
- We have relationships with Dublin-based wealth managers and accountants who can provide additional support when planning your estate for CAT.
- One of our Nicola Walsh holds a Diploma in Trust and Estate Planning (Law Society and STEP) 2004.
- Jennifer Morrow has just completed the 2018 /2019 STEP course.
- Our solicitors are approachable, intelligent, and pragmatic. When it comes to transferring assets by gift or inheritance, we will assess your situation objectively and create a clear strategy for ensuring your wealth remains within your family.
- Our clients remain with us long-term and most of our new clients come to us via referrals. We get to know our clients, their families, and their businesses thoroughly, and this helps us provide exceptional service, tailored to their individual requirements.
For further information regarding transferring assets by gift or inheritance in Ireland, please contact Lavelle Partners in confidence on (01) 644 5800.