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CHOPPING YOUR CHILDREN’S INHERITANCE TAX

STICK within inheritance tax thresholds, which allow relatives and others to inherit a certain amount of wealth from you tax-free over their lifetime. Doing so could eliminate inheritance tax entirely for those to whom your leave your estate. A son or daughter can get up to €280,000 over their lifetime taxfree; a brother, sister, niece, nephew or grandchild can get up to €30,150; an in-law, friend or stranger can get up to €15,075. Make full use of the tax-free thresholds by passing on your inheritance to your extended family, rather than restricting it your children. “If leaving an inheritance to three of your own children (and) those three children are married and have children of their own, pass on some of your inheritance to your grandchildren and in-laws so you can use up all of your tax-free thresholds,” says Oonagh Casey Grehan of Fagan & Partners. For example, let’s say your son is married and has two children. Rather than leaving €350,000 to your son and triggering a tax bill in doing so (because the inheritance is over his €280,000 tax-free threshold), you could eliminate the tax bill altogether by leaving €30,150 to each of his two children, €9,700 to his wife and €280,000 to your son. Get up to speed on any exemptions which might get a child off the hook for inheritance tax, such as the small gift exemption (which allows a child to get €6,000 worth of tax-free gifts from his parents a year) and the dwelling house exemption. “The conditions to be met for retirement relief are different to the conditions which must be met for business relief,” says Michael Gaffney of KPMG. So hire a tax advisor if passing on a family business — then you can take full advantage of retirement and business relief.