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info@eastcorkjournal.ie East Cork Business Post Family & Business Succession Planning


make sure the real value of these assets is not reduced by Inheritance Tax.


What is Capital Acquisitions Tax (CAT)?


by GERARD O’BRIEN


Death is understandably a topic that people don’t like to think a lot about. But as we all know, it’s an unavoidable part of life. By putting financial measures in place now you may be able to make this time less difficult for your loved ones. In the past, “Estate plan- ning” was something we believed to be only for the few wealthy individuals and their families. However, as a result of increasing asset values and lower tax-free thresholds, this is not the case anymore.


If you are planning to leave your house, your es- tate or any other assets to your family – you need to


Inheritance Tax comes under the heading of Capi- tal Acquisitions Tax. Capi- tal Acquisitions Tax (CAT) is the tax you are charged when you receive a gift or an inheritance. CAT encom- passes two distinct taxes - a Gift Tax payable on lifetime gifts and an Inheritance Tax payable on inheritances re- ceived on a death. The benefit (the gift or in- heritance) is taxed if its val- ue is over a certain limit or threshold. Different tax-free thresholds apply depending on the relationship between the disponer (the person giving the benefit) and the beneficiary (the person re- ceiving the benefit). There are also a number of exemp- tions and reliefs that depend


on the type of the gift or in- heritance, a few of which I have addressed later in this commentary.


What is the rate of tax?


Capital Acquisitions Tax


is charged at 33% on gifts or inheritances made on or af- ter 5 December 2012. This only applies to amounts over the group threshold. For example, if you have received gifts from your parents with a taxable value of €550,000, you only pay tax on the amount over the appropriate group threshold (Group A threshold from 12 October 2016 is €310,000). So, in this example, the amount of €240,000 would be


providing the benefit (the disponer).


Reliefs and Exemptions


There are certain reliefs and exemptions available and they apply to certain types of assets. These have been introduced over the years primarily to encour- age private initiative and family / business succession planning.


Reliefs and ex-


emptions can help avoid the forced sale of a family farm, business or the family home in certain circumstances. The main exemptions/re- liefs are:


taxed at 33%, which would equate to a tax bill of €79,200 for the beneficiary. It is important to note that it is the person receiving the gift or inheritance (the bene- ficiary) who is liable to CAT and not the person or estate


- Spouse Exemption- Gifts or inheritances re- ceived by one spouse from the other are totally exempt from CAT. - Agricultural Relief –the value of farmland, buildings and stock can be reduced by 90% where the beneficiary is a qualifying farmer and he or she holds the property


Legal Matters Wills by KAREN WALSH


Typically, when peo- ple feel they “have” to do something, the opposite occurs and they avoid it. It’s often the same with creating a will. If you know you should do one, you put pressure on yourself to do it. But that pressure can be what drives you to not do it, ironically. Often, I find that peo- ple think that the will they make now is the “be all and end all” doc- ument and they are just not ready to make such huge and overwhelming


decisions at this stage. A will is something you create for right now— not for some time in the future—with what you currently have, what your thoughts are for giving them away, and who you know now that you would like to give them to. Next year, all that can change. Peo- ple often say that they are not sure who yet is interested in farming, who is interested in the family home, who in- tends to move away etc. Change is inevitable, and the child you may think will go farming may not, and vice versa. All you have to do at that point is revise your will. The best part is, once you’ve


made your first will, the next one becomes much easier. Then you get to a point, as you go along through life, where you get clear ideas of what you should change, ena- bling you to easily keep your will consistent with how you feel today. As they say, “Igno- rance is bliss.” Most often, those that don’t make their wills simply aren’t aware of what are the effects of not making a will. Without a will, your estate is distributed according to the rules of intestacy, which means that your assets could pass to a person or per- sons whom you would not want them to pass at all! If you are mar-


ried, your spouse would receive some or all of your property, then your children; and if there are no children, then to your parents; and if there are no parents, then to your brothers and sisters or their children; etc. You get the idea. And the pro- cess to figure all this out costs money, which your estate pays for. So, if that is what you intend, then great. But most people’s intentions are not reflect- ed in the rules of intes- tacy, so that’s why it’s good idea, to plan ahead. You would not leave an- yone dictate what you do with your assets now, so why would you let some- one dictate as to who ac- quires your assets after your death!


Not wanting to deal with family issues is a big reason a lot of people don’t make their wills. Having to confront is-


Tel: 021 463 8000 • Email: info@eastcorkjournal.ie • Web: www.eastcorkjournal.ie


While issues with past relationships, an ad- dicted family member, or more can seem unresolv- able, there are solutions. One way is to work with a solicitor, who, in these types of situations, can help, as they generally have experience tailoring wills to deal with more complex or delicate fam- ily dynamics.


sues of the past can be extremely uncomforta- ble and sometimes pain- ful.


Not knowing how to start a will can trip some people up, but using it as an excuse to not do one is not that convincing. You can start by organis- ing your thoughts on pa- per or by talking to your spouse or family. There are any number of ways to start—it all boils down to taking that first step.


It is not only people that are in the latter part


of their life that should make a will. It is very common for 20–30 year olds to not make a will, even after they have children and buy their first home. It is as im- portant for anyone who has assets to make a will. You’re never too young to start planning ahead.


The idea that only


wealthy people need wills is simply not true. Everyone needs a will, whether you’re old, young, rich, poor, male, female, married, single, childless or you have children. More than like- ly you have property and personal possessions that you would want to go to specific people. To put it all down on paper for your family and friends is not only a compassion- ate thing to do—it’s also a smart thing to do. So, it’s a New Year, a


eastcorkjournal


fresh start, and perhaps making a will should be added to your list of New Year Resolutions. Karen Walsh, from a farming


background at


Grenagh, Co Cork, is a solicitor practicing in Walsh & Partners, Solic- itors and Commission- ers for Oaths, 17, South Mall, Cork. Telephone: 021- 4270200 Email: info@walshan- dpartners.ie Web: www.walshand- partners.ie


Disclaimer: While every care is taken to ensure accuracy of infor- mation contained in this article, solicitor Karen Walsh does not accept responsibility for errors or omissions howsoever arising, and you should seek legal advice in re- lation to your particular circumstances at the ear- liest possible time.


@eastcorkjournal / #eastcorkjournal


for a minimum of 6 years. - Business Relief – can provide a similar reduction of 90% in the value of cer- tain businesses or private companies, where both the business and the beneficiary meet certain qualifying con- ditions.


- Small Gift Exemption


- The small-gift exemption allows anyone to gift up to €3,000 in any tax year to anyone else. It is a very tax efficient way of helping family members through a small financial emergency, or for those saving up for things like mortgage depos- its, starting a business etc. - Life Assurance Relief


- If you take out a life as- surance plan, specifically for inheritance tax purpos- es, the funds paid out on the plan will not be subject to capital acquisitions tax (CAT) – provided the funds are actually used to pay the CAT bill.


Making Your Will A will is a witnessed doc- ument that sets out in writ- ing the deceased’s wishes for his or her possessions, after death. It is important for you to make a will because if you do not, and you die without structuring your will proper- ly, the law on intestacy de- cides what happens to your property. A will can ensure that proper arrangements are made for your depend- ents and that your property is distributed in the way you wish after you die, subject to certain rights of spouses/ civil partners and children. It is also advisable to complete and keep an up- dated a list of your assets. It will make it easier to identi- fy and trace your assets af- ter you die. You should keep the list in a safe place ( keep one copy at home, another at your Solicitors).


Whilst some universal guidelines can be made


about inheritance and suc- cession planning, it is al- ways necessary to tailor a plan to meet with your spe- cific requirements and wish- es. Your detailed, bespoke plan must take account of your unique circumstances and goals.


Gerard O’Brien LL.B LL.M CFP® QFA is a Cer- tified Financial Planner and the Owner of Heritage Wealth Management, a Fi- nancial Planning practice based at 27 Cook Street, Cork. For more information, contact Gerard at gerard@ heritagewealth.ie www.her- itagewealth.ie


Disclaimer: All data and information provided within this article is for in- formational purposes only. Heritage Wealth Manage- ment Limited makes no rep- resentations as to accuracy, completeness, suitability, or validity of any information and will not be liable for any errors, omissions or delays in this information or any losses, injuries, or damages arising from its use.


Thursday, 4th


May 2017


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