Planning for the transfer of your wealth during your lifetime or after your death is an important aspect of financial and estate planning. In Ireland, there are specific rules, tax implications, and strategies that individuals should consider to ensure their assets are passed on efficiently, legally, and in accordance with their wishes. John Lowe of MoneyDoctors.ie in this article provides an overview of the key considerations when passing on wealth before death here in Ireland.
Understanding gift and inheritance tax in Ireland
In Ireland, the primary taxes associated with the transfer of assets are Capital Acquisitions Tax (CAT), which includes both gifts and inheritance. As of 2025, the standard rate of CAT is 33%, applied to the value of the gift or inheritance exceeding certain thresholds….
Thresholds (as of 2024’s Budget ‘25):
– Group A (children, stepchildren, adopted children): €400,000
– Group B (grandchildren, siblings, nieces, nephews, and their children): €40,000
– Group C (all others): €20,000
When you consider that in April 2009 the parent child inheritance threshold before CAT of 33% was applicable was then € 542,544, therefore there may be more increases in the future.
Gifting during your lifetime
Gifting assets during your lifetime can be a strategic way to transfer wealth while potentially reducing the overall tax burden and ensuring your loved ones benefit sooner. Common gifts include cash, property, shares, or valuable possessions. Parents may gift up to € 400,000 to their children which is why 7 out of 10 parents in Ireland currently DO gift their children to help with their first house deposit – an out of reach 10% of the purchase price for many new borrowers.
Key considerations for lifetime gifting:
– Tax implications: gifts above the relevant threshold are liable for CAT at 33%. However, if the gift is within the threshold, no tax is payable.
– Gift exemption threshold: you can gift not just your children but anybody up to a maximum € 3,000 per annum or € 250 per month and no tax liability applies to the beneficiary. These gifts are outside of the inheritance tax thresholds.
– Exempt gifts: certain gifts are exempt from CAT, such as gifts to a spouse or civil partner, or gifts for specific purposes like educational or medical expenses, provided they meet certain criteria.
Estate planning strategies
To optimise wealth transfer, individuals often employ various estate planning tools:
– Gifting in trusts: setting up trusts allows for controlled transfer of assets, potential tax advantages, and protection of assets from creditors or future claims. The process and maintenance can be expensive so it would want to be a substantial sum to warrant the consideration. Normally solicitors are involved in such trusts.
– Life insurance: taking out life insurance policies payable to beneficiaries can provide liquidity to cover inheritance tax liabilities or ensure financial security.
– Wills: even if you gift assets during your lifetime, a well-drafted will ensures remaining assets are distributed according to your wishes and can help mitigate potential disputes.
Legal considerations
– Documentation: proper documentation of gifts is vital, including receipts, bank transfer records, or formal deeds, to establish the value and timing of gifts.
– Professional advice: engaging with solicitors, tax advisors, or financial planners can help navigate complex rules, optimise tax efficiency, and ensure compliance with Irish law.
Planning for future generations
Early and strategic gifting can be beneficial, especially considering the potential for inheritance tax savings. It also provides peace of mind that your loved ones are taken care of and helps avoid the pitfalls of probate or estate disputes.
Passing on wealth before death in Ireland involves understanding the tax rules, leveraging exemptions, and employing effective estate planning strategies. By giving thoughtfully and within the legal framework, individuals can ensure their assets are transferred efficiently, minimise tax liabilities, and fulfil their wishes for their family and beneficiaries. Consulting professionals and keeping thorough records are essential steps to making the most of your gifting opportunities and ensuring your estate plan aligns with Irish law and your personal circumstances.
Email me if you need further advice.