"How to give away money before you die" Irish Times article

Timing is important when you do this....we gave away various lump sums......some of our children received this most graciously while others weren't as appreciative......outwardly anyway. It is nice to see the money being spent on something that can enhance their lives.

After giving the larger lump sums, we now give donations toward family summer holidays or helping out with costs when grand children are returning to school.
 
Marc said:
This is something we recommend all the time. Cash rotting on deposit with no interest and kids struggling under the weight of mortgage payments and child care costs. Bank of mum and dad gets a good deal for both.

m.independent.ie

Your Questions: We are getting nothing on savings so should we invest in Prize Bonds?

Q My wife and I are in our 70s and have savings which are earning paltry interest rates. Would we be just as well investing some or all of these savings in Prize Bonds? We would be categorised as very cautious investors and don't want to go down the investment route.
m.independent.ie m.independent.ie
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@Marc

Is this something that should be tied up in an agreement, perhaps backed by a lawyer, not so much for the event of a family fall out but more for any queries from revenue about whether it was a gift or a proper loan? Is there any limitations around private individuals ability to issue large loans to people?
 
Protocol said:
I suspect a reason many people/couples don't give away more is fear of future care costs?
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Surely that's a point in favour of giving gifts though? I know I'd hate to end up in a nursing home at all, but it would be even worse knowing the care costs were going to burn through money that could have helped my family.
 
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ohnostopgo said:
Surely that's a point in favour of giving gifts though? I know I'd hate to end up in a nursing home at all, but it would be even worse knowing the care costs were going to burn through money that could have helped my family.
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That may be true, but you still need the money to pay the care bills.
 
ohnostopgo said:
Surely that's a point in favour of giving gifts though? I know I'd hate to end up in a nursing home at all, but it would be even worse knowing the care costs were going to burn through money that could have helped my family.
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My father was paying €1000 a week for 3 years in a nursing home. He never claimed back any tax on his payments because he was afraid of the Revenue. His house sat idle for the 3 years. He would only listen to one family member when it came to advice about anything......this family member did not even know how to pay an ESB bill nor had ever completed a tax return for themselves during their lives. Other family members who had worked in Financial services all their lives were never asked their opinion on anything.

Families can be complicated. I saw my father deny himself any heating in his home to save money despite being a relatively wealthy individual. There can be extremes of thinking. Yet he helped us all financially toward our first home and gave us financial gifts during his latter years.

I think that we can loosen the purse strings now before we become over concerned about care costs for ourselves.
 
We just completed our wills and the discussion moved onto CAT and based on our assets our 2 won't be short neither will the Revenue.
Our solicitor was adamant that we start to strategically plan how we are going to pass on what's left after we are gone, and advised that it might be better if we were to give each child money at key times in their lives, and spend the rest on ourselves.
That would be a novelty but it got me thinking, pensions now have a value of €850k and are forecasted , by me to be about 1.3 m by 2026 when I'll be still in my 50s and herself 62 .

It's the first time in our lives we have substantial money saved and her job will add non payroll income (shares) of 240k over those years after tax.

Both of us are of the opinion that we will help but want to them to " make it " on their own too, whatever they decide to do and not simply throw money at them.

They have an Aunt who will be leaving another heafty wodge of cash too, unless she marries or her live changes .

To be honest I find the entire area head wrecking and never seem to arrive at a plan that makes sense or is equitable for everyone and to minimise the tax impact of CAT.
 
Our house alone, when sold after we pass on, and after the proceeds have been split 3 ways, will still mean a payment to the revenue.
If we downsize now we could make a substantial payment to our circa 40 year old children.
Except we don't want to downsize.

We have savings, most of which we will need for ourselves. (We think). We can afford to give them annual gifts. Which we do.

We have thought that we will start increasing the amount given to each of them. As we get older we need less. We won't need big cars, we will cut back on our travel, material things are not important. We just need to keep warm, fed and pay the bills.

Long term care is our main concern.

If we downsize to a smaller house or apartment we could give each about €150k just from the left over proceeds of our home.

Or do we just let things happen.

They will still inherit a large sum but the Revenue, in my opinion is going to do very well getting more tax from money that has already been taxed.
 
Kimmagegirl said:
They will still inherit a large sum but the Revenue, in my opinion is going to do very well getting more tax from money that has already been taxed.
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I often hear this idea and it confuses me. Surely that is how tax works? My employer makes money - they are taxed on the income. Employer pays me wages - I am taxed on that income. I pay my electrician, cleaner, mechanic, etc. - they pay VAT + income tax on that. Each time the money changes hands it is taxed. I wouldn't expect it to be any different if my parents leave me money, it's income for me after all. In fact, as inheritance is unearned income surely tax should be higher!!!

If inheritance tax is low or absent, people are encouraged to hoard assets until death. Wealth is then passed on much later in life, probably when beneficiaries need it less, and they are also more likely to hoard it. That capital is of much greater value to society circulating in the economy rather than frozen in the Prize Bonds account of a retired couple in their 60s.

Many of us know people who inherit the family home only for it to lie idle for years as they figure out what to do with it. Sentimentality, nostalgia, grief, guilt, family rows delaying everything. I can think of 5 in my community off the top of my head. If they were taxed fully on the inheritance and taxed on vacant housing they would soon sell up and the house would be back on the market.

I can't tell if this makes me a socialist swine or a capitalist pig.
 
Inheritance isn't income.

Income is earned by supplying factors of production.

Labour ---- wages
Land ---- rent
Capital ---- interest
Enterprise ---- profits

Income tax applies to incomes, not to capital gains or acquisitions.
 
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