Thousands of families are set to be hit with huge tax bills when they inherit homes and other assets this year.
And many are in for a shock, as half of people mistakenly believe their family home is exempt from inheritance tax.
It comes as Revenue figures show the money paid in inheritance tax has doubled since 2010, reflecting sharp rises in the value of homes.
Close to €500m is expected to be paid this year in what is often dubbed ‘death taxes’, accrued from older parents passing on homes, farms and businesses.
Strong rises in property values have left thousands vulnerable to large tax bills, but many do not realise they will have to pay Revenue when they inherit the homes.
A survey from Irish Life shows one in five of those over the age of 55 expects to leave more than €500,000 in inheritance to their families.
Half of those surveyed expect to leave more than €100,000, indicating there is a lot of money being passed between family members. The survey was carried out by Coyne Research on 1,000 adults.
The survey shows 84pc of people in Ireland don’t know the current inheritance tax rate, which could seriously affect inheritance for their family. Inertia is evident as less than half of people have made a will.
Irish Life protection manager Kate Connor said a huge amount of inheritance tax is expected to be paid this year, with rising property values putting more families into having to do so.
Reductions in the tax-free thresholds during the downturn, together with increases in the inheritance tax rate, have resulted in more people needing to take action now to plan ahead for the tax bills that their family could face.
The survey lays bare the wealth accumulated in middle Ireland.
Some 20pc of those over the age of 55 expect to leave more than €500,000 in inheritance. A quarter of over-65s expect to leave the same amount to their families.
But the survey shows the younger generation has far less. Only 7pc of those between the ages of 35 and 54 expect to leave more than €500,000 in inheritance to their families.
Almost half of people surveyed plan to leave more than €100,000.
The survey shows that there is a widespread lack of awareness of the levels of inheritance tax that may have to be paid by families in the coming years.
As well as most people being unaware of the current inheritance tax rate, two-thirds of people do not know what the different thresholds are.
The current tax-free allowance for children is now €310,000, significantly lower than the €542,000 threshold prior to the financial crisis.
Solicitor Susan Murphy of MakeMyWill.ie said there was a tendency for people to put off making a will, and also to fail to find out about inheritance tax.
“People like to put their head in the sand about such matters. Perhaps it’s an Irish thing. Quite a few times I’ve been told ‘Sure I’ll be dead and buried, it won’t matter to me’.”
Ms Connor of Irish Life advised families with assets to get professional legal, tax and financial advice to put a plan in place, including a will, to ensure an estate is taken care of in a tax-efficient way.
An option, she said, was a Section 72 life insurance plan, which is specifically designed to pay inheritance tax.
Article Source: http://tinyurl.com/kbwqb42
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