– Estate planning
The estate planning process involves the solicitor taking full instructions from the client regarding all of their assets and the intended beneficiaries including those beneficiaries’ personal circumstances so that the solicitor can use his/her specialist knowledge of capital taxes, particularly Capital Acquisition Tax (CAT), to assist the client in making the most tax efficient Will.
Capital Acquisitions Tax
Capital Acquisitions Tax (CAT) is charged based on the relationship between the disponer (the person gifting or willing the property) and the beneficiary. Previous gifts/inheritances received by the beneficiary from that disponer and/or one of a similar relationship (since 5th December 1991) will also affect the charge to CAT. The disponer can be reminded to use the entire capital acquisition tax thresholds of his beneficiaries, take for example where a disponer has used up the entire threshold of a child, he/she may decide to leave a gift to a grandchild.
On consideration of the particular circumstances, it may be possible to avoid or reduce a potential Capital Acquisition Tax liability. Many tax reliefs have been curtailed in recent times however, some still exist, the most common being the following:
Business Relief and Agricultural Relief: Where the client has a business or farm, detailed discussions on the possibility of the successor being able to avail of business or agricultural relief will be very important. It is crucial that the successor is made aware of the conditions attaching to the relief and ensuring that he/she will be in a position to satisfy those conditions.
Dwelling-house Relief: The conditions attaching to dwelling-house relief have altered in recent years however the relief is still available and can be a valuable tool in tax planning.
It is important to note that the potential of the estate planning process depends on the circumstances of the individual client and will involve a detailed discussion of the assets, the potential beneficiaries and their circumstances. It should also be noted that the tax regime changes from time to time, very frequently in recent times, which may mean that wills previously made may no longer be appropriate. It is advisable that each person who has property to dispose of by Will (or perhaps during his/her lifetime) should undertake some form of estate planning with a view to making a Will or perhaps updating their Will to suit their current circumstances.
Consideration must also be given to other potential taxes particularly Capital Gains Tax (CGT) and Stamp Duty.
Clients who would like to be fully advised of potential tax savings in the distribution of their assets, whether during their lifetime or by Will can avail of a once-off consultation for €350 plus VAT following which they will receive a detailed letter outlining their options. Contact us for further details.
12 Camden Row, Saint Kevins, Dublin 8. D08 FP38