Whether your children are young or old it is important that you make provisions for your children in the best possible way. Tax planning is a big part of making a Will but not everything has to be passed after you die – in fact it is often far more efficient (and cheaper) to sign over some of your assets during your lifetime.
It is important to consider Estate and Inheritance planning now as there were hints from Minister Lenihan last year that the generous CAT and CGT relief’s available to children and relatives may be reduced or written out of the law. The Budget in December 2009 certainly saw them reduced slightly.
If you have adult children and you intend to leave them any property there is no time like the present to transfer property. Any transfer of property during your lifetime will be subject to Stamp Duty and Capital Gains Tax (if it is not your family home). It will also attract gift tax or Capital Acquisitions Tax (CAT). However the benefit of transferring it in today’s market is that the stamp duty and other taxes will be assessed on the market value of the property – which is likely to be significantly lower than it was a few years ago. You can protect your own future by retaining a life interest in the property but transferring the ownership to your children or relatives. This means you will have somewhere to live for the rest of your life but you will have got some benefit out of this recession by transferring the property at its lowest valuation.
If you have young children then making provision for their care and financial security is even more important. You need to appoint a guardian in your Will to look after the day to day care of your children. You also need to make provision for them financially. The most efficient way is normally through a discretionary trust – where you appoint a trusted friend or relative to look after their inheritance until they are mature enough to deal with it themselves. Revenue assesses discretionary trust tax once the youngest child reaches the age of twenty one. The person you appoint as a Trustee does not necessarily need to be the Guardian of the children although they certainly need to be able to work with them to ensure that there is no conflict over providing for the children in the best possible way.
Careful estate planning with your Solicitor and your Accountant is very important. You can provide for the worst in the best possible way, reducing the costs and the stress of dealing with your assets after you are gone.