Monday, 31 March 2014 06:07

Inheritance Tax Planning

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The tax free way of passing on wealth to your Children or Grandchildren

The Thresholds for passing on wealth to your children has reduced considerably over the last few years. The current Threshold for Capital Acquisitions Tax to a child is now at €225,000.

If you are a parent, with two children and the net worth of your estate is over €450,000 then all distributions to your children will be taxed at 33%.

In the case whereby the net worth of the parents was say €1,000,000 on death then the two children would have an inheritance tax bill of €181,500.

How to reduce this tax

There is an annual gift exemption of €3,000.00 which means a parent can gift up to €3,000.00 to each child and there is no inheritance tax in respect of this amount.

So, if there are two parents they can gift up to €6,000.00 every year to each child.

If there are two children and two parents a total of €12,000.00 a year can be gifted without there being any tax liability applicable to the children.

If the parents gifted the maximum each year for 10 years to their two children then this would mean that they gifted a total of €120,000 without any inheritance tax liability applicable to their children.

This would considerably reduce the Inheritance Tax liability by the children.

The parents can gift €3,000 per annum to their grandchildren also. Talk to us about the range of saving plans that are suitable to gifting your children this amount each year.

Last modified on Monday, 16 February 2015 13:46
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About Cregan Kelly O'Brien


In 2007 Maurice Cregan and Colm Kelly established CK Financial Services to provide financial planning and advice to business owners and individuals. Tommy O'Brien, a General Insurance expert, then joined them in 2010, enabling them to meet the full financial needs of their clients. Financial Life & Planning Limited would deliver Financial Services, and O'Brien Cregan Kelly Insurances would deliver Insurance Broking services. Two Business Names were registered Cregan Kelly O'Brien Financial Planning and Cregan Kelly O'Brien Insurances

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