When you’re in the middle of the excitement of building a new life in Ireland, you can hardly be blamed for putting inheritance matters to the back of your mind. But with a bit of planning for the future, you can ensure the best interests of those you love the most are protected – and then you can crack on with your new start in Ireland!
We can’t stress enough how important it is to make a will in Ireland relating to your Irish assets.
Irish inheritance rules
We can’t stress enough how important it is to make a will in Ireland relating to your Irish assets. Without this you will be considered to have died intestate. This means the law will determine who will inherit your assets, rather than you. It also means your loved ones will have to deal with a complicated and possible distressing process as the administration of your estate is determined by the terms of the Succession Act (1965).
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Under this law, if there is no will, your assets will be automatically divvied up as follows:
• If you are married with no children, your entire state will automatically be granted to your spouse.
• If you are married with children, your spouse will inherit two thirds of the estate and the remaining third will be divided equally between your children.
• If you are single and have no children your assets will go to your parents if they are still around. They will share the estate equally between them. If you have no parents, your estate will be divided equally between your brothers and sisters. If any of your brothers or sisters have died, their share will be passed on to their children and divided equally between them.
• If you are single and you have children, your estate will be divided up equally amongst them. If one of your children has passed away, their share of your assets will automatically go to any children that they may have had.
• If you have no family members the state will attempt to determine your ‘next of kin’ – usually this will be your closest blood relative.
Don’t forget to make a will relating to your Irish assets.
Even if this is exactly how you would like your estate to be divided, to avoid any instances of family members falling out over their entitlements, it pays to have a will in place, with your name on, that expressly states your wishes.
While there are elements of the Succession Act that have been challenged, particularly in relation to the provision which states parents have a ‘moral duty’ to leave everything to their children, as of yet, no changes have been made to the law. Back in 2016, the Law Reform Commission suggested eradicating the term ‘moral duty’ and rewording the act to state that a parent has a duty to make a ‘proper provision’ for a child.
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If the law were to be changed in accordance with the Law Reform Commission’s proposal, children who are unhappy with how they are provided for will still be able to challenge the decision in court. However, it will be far more difficult for them to prove that they have not been sufficiently provided for. The commission’s proposal signals an end to the assumption that children are entitled to an inheritance. The proposal has been suggested to reflect the fact that people are having fewer children and parents are living longer, and therefore need to fund their own later life and healthcare requirements.
The new recommendations provide three exceptions to the new rule. Parents will continue to have a moral duty to provide for them:
• Where the child has a particular financial need arising from their health or from their decision-making capacity
• Where the estate contains an item of particular sentimental value to the adult child
• Where the adult child has provided care and support for the deceased.
Currently, any child who believes that their parent failed in their ‘moral duty’ to provide for them can apply to the courts for an increased proportion of the estate. The suggested changes wouldn’t remove this right to appeal; it would instead be designed to reduce the number of inauthentic claims made.
The Commission have also recommended that children be allowed to make a claim under section 117 in instances where parents die without leaving a will. Under the current law this is not possible. Instead, their estate is automatically distributed as outlined above.
Capital Acquisitions Tax
Those who receive an inheritance following a death may be liable to pay inheritance tax. The gift or inheritance sum will be taxed if it is over a certain limit or threshold dictated by the relationship between the deceased and the beneficiary. Capital Acquisitions Tax is charged at 33 percent on the amount above the threshold for the group they fall into.
Group A
Group A includes beneficiaries who are children of the deceased, including adopted children, step children and certain foster children. The tax free threshold for Group A is €320,000.
Group B
Group B applies to siblings, nieces and nephews or lineal ancestors of the deceased. There will be no tax applied until the gift exceeds €32,500.
Group C
In all other cases, you will be taxed on all gifts/ inheritances after the first €16,250.
The following are exempt from Capital Acquisitions Tax:
– Gifts/ inheritance from a spouse/ civil partner
– Compensation or damages payments
– Lottery, sweepstake, gambling winnings
– Benefits for those permanently incapacitated due to mental or physical illness
– Retirement benefits, pensions, redundancy payments
– Benefits received from a charity
If you inherit a house that has been your main residence, you may also be exempt from tax as long as you don’t own another property, or have an interest in another property.
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