– Inheritance tax – Married couples

My husband and I have been living together for two years. I own the house where we live. My spouse recently told me that he made a will and bequeaths his entire estate to me. He’s not particularly wealthy, but I understand he has a large life insurance policy. I don’t want to sound ungrateful, but if my partner died, would I end up with a really big inheritance tax bill?

A person has the right to receive a gift or inheritance up to a certain value without being liable for inheritance tax, also known as capital acquisition tax. The amount of tax payable depends on the amount of the gift or inheritance and the relationship between the parties. For tax purposes, relationships are classified into three different groups, namely Groups A, B and C.

Group A applies when the beneficiary, that is to say the person who receives the gift or the inheritance, is a child of the person who gives this gift or this inheritance (disponer). This includes a stepson and an adopted child. It may also include a parent, an adopted child and a favorite niece or nephew in certain limited circumstances.

Group B applies when the beneficiary is a grandparent, grandchild, great-grandchild, brother, sister, aunt, uncle, nephew or niece of the settlor. A parent who does not qualify in Group A will fall into Group B.

Group C applies to any relationship not included in Group A or Group B.

The amount that can be received tax-free is known as the threshold. The current threshold for Group A is €335,000, Group B is €32,500 and Group C is €16,250. A gift or inheritance up to the threshold amount does not attract capital acquisition tax. A gift or inheritance above the threshold will be subject to 33% tax on that amount above the threshold.

If you receive a gift or inheritance from your spouse or civil partner, you are exempt from capital acquisition tax. Unfortunately, the same exemption does not apply to partners living together. Therefore, if you live with someone and you are not married or in a PACS, you will only be able to inherit up to €16,250 from your partner tax-free. The rest will be taxed at 33%.

This column is prepared by Dolores Gacquin, notary. Byrne Carolan Cunningham has offices in Galway, Athlone, Moate and Lanesboro. A person should always contact their lawyer for legal advice specific to their own situation. This column above contains general advice and should not be considered legal advice. In litigious cases, an attorney may not calculate fees or other charges as a percentage or proportion of any award or settlement.

Call Byrne Carolan Cunningham on (090) 6478433.

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