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Management of an estate in terms of family inheritance, the equitable distribution of an estate between siblings and being the executor of a will requires careful consideration of a number of legal and tax aspects.
Caitriona Gahan, Head of Wills, Probate & Estate Planning, recently contributed to an Irish Independent article answering reader’s questions about maximising inheritance for children, the equitable distribution of a family home between siblings as set out in the terms of a will and managing credit union savings as the executor of a will.
Inheritance Tax
In answering a reader’s question about inheritance tax, Caitriona outlined how best to maximise the tax-free thresholds and the merits of both a fixed and a discretionary trust.
“Maximising on the tax-free thresholds applicable at the date of death is the correct approach.”
“There is not much else that can be done to limit your son’s exposure to capital acquisitions tax (“CAT”). Your inclusion of your grandchild or grandchildren to broaden the tax-free threshold available is sensible.”
“If your son was living with you for the three-year period prior to the death of the survivor of you or your husband, and did not have an interest in any other residential property anywhere else in the world at the date of your death and your family home was the only residential property he inherited from you, he would most likely be entitled to claim dwelling house exemption.”
“This would mean that he would take the property free of CAT. However, he would have to continue living in the property (or a replacement property) for a period of six years post-death to retain the relief.”
“Neither a fixed trust nor a discretionary trust would give any advantage. They would defer the payment of tax on the assets held on trust but would expose your son to additional CAT on the assets held on a fixed trust for a specified period. Holding assets for a fixed period is considered an asset in its own right.”
“In the case of a discretionary trust, assets held on trust are subject to payment of discretionary trust tax (“DTT”) at a rate of 6% on the capital value of the trust assets in the first year of the trust and 1% annually thereafter until the trust is terminate.”
“CAT would still be payable by your son on the value of the assets appointed to him from either trust.”
“Both you and your husband could over the years make an annual gift to your son and grandchild of up to €3,000, if you so wished, which would fall within the small gift exemption and would not be taken into account in reducing the tax-free thresholds applicable.”
Read more about Estate Planning and Family Partnerships
Family Inheritance
Gahan answered a reader’s question about a parent’s will and the equitable sharing of a family home between siblings where one sibling has a lifetime interest in the house.
“Your brother has a life interest in your parents’ home.”
“You and your siblings along with your brother hold the remainder interest which only vests in you, or if you predecease your brother, your estate, on your brother’s death.”
“You can bequeath your remainder interest, if you predecease your brother, to one or more of your three children. Your brother is not obliged to sell or transfer his share of the property to his siblings on his death.”
“You cannot demand rent from your brother as he has an entitlement to live in the house.”
“I would recommend that you have your solicitor check the terms of your parents’ will to ensure that your understanding of the terms of their will is correct.”
Read more about Managing Wills, Trust Wills and Inheritances
Credit Union Savings
Caitriona answered a reader’s question about being an executor of a will and what happens to credit union savings.
“A credit union member can nominate a person to be a beneficiary of their savings following their death.”
“The nominee can receive funds up to €27,000. Any amount in excess of this balance will form part of the deceased’s estate.”
“As executors, you and your wife will have to file a Statement of Affairs (Form SA2) with Revenue. You will need details of the nominee and the amount of the savings nominated or received for inclusion in the SA2.”
“A copy of the will showing your appointment as executors should be produced to the credit union with a request that the information be provided for inclusion in the SA2.”
‘How much inheritance tax will our son have to pay when we die?’ (Irish Independent, April 2025)
Further Information
For further details on Estate Planning or Inheritance Tax, contact Caitriona Gahan, Head of Wills, Probate & Estate Planning.