Inheritance from parents whilst on state welfare, is income affected?

[peggy14]

Per hour?

Remuneration - children with special needs - Financial Wellbeing

www.financialwellbeing.ie

they

FB charge a once of fee for an full hour consultation - mine at was 100/150.
They made me aware of Household benefits package for my DD so this more than covered the cost with one months payment.
I have received further advises from them at no cost.
As an intermediary they are also obliged to quote the fees they get for other products. For me they get commission on a Whole of Life Policy.
I get a free monthly newsletter with contributions from all with team at FB.
I get free access to booklets re setting up a trust, booklet for Guardians & Trustees and so much more e.g. how budgets effects me.

 

[peggy14]

I actually attended one of their free webinars and that was very informative regarding
- disability allowance
- household benefits scheme
- car tax refunds (very specific criteria)
- special needs bank accounts

They also did cover the area of wills and necessity to have this in place, but I wasnt clear on what service they actually offer on this.
There were some financial products highlighted, but I didnt focus too heavily on that and i dont know how they stack up on the market. These seem to be commission based, but looks like they are also getting commission from consultation fees but I stand to be corrected on this! Ive never purchased or tried to purchase policies through them.

At the webinar I attended, they were taking consultations at a reduced rate. I didnt sign up for that but I think there was a once off payment, however it does look like there is a separate pricing model.

Mine was a one to one consultation (also at reduced rate think c 100/150).
It was so worth it for me..I had all my specific details prepared so advise was very specific.
You get access to their files for free following one on one which has super information / guidelines.
I attended a Free Teams meeting recently for those who had undertaken one to one and who may need extra advise to help them along the 'trust' process - super meeting - no financial gain to FW as they do not recommend Solrs to complete the trust and no products on offer for sale.
They recommend you plan for 5 years and then review, as life with disability can change so much within 5 yrs, and its hard to look any further.
I have spoken to FW many times and there has been no further charges they encourage contact so that information can be shared.
It does take time to understand the Trust mechanisms for your own personal situation, my time is precious to me but well spent on this matter.
Disability needs to be proven when Trust actually put in place which is DOD - but tax exemptions will defo apply and my trustees will ensure this.
I did purchase a Whole of Life Policy from FW and they are paid a commission on this - I am very happy with the product.
Main cost Too rust will be my solicitor but I don't mind paying the extra to have a Will in place that secures by daughters x2 future.
I won't comment any further as my posts on this thread are being deleted as they are deemed to be offensive.

 

[Early Riser]

So if i were to make a will specifying that I wish to have a discretionary trust set up for my son, following my death, do you know when the medical sign off/evidence must be provided?

Sorry, I can't advise on this. I understand that the medical evidence is submitted whenever the Trust is set up. (This is for the tax exemption - that may not be the only reason someone considers setting up a trust, eg, a son/daughter with alcoholism/drug addiction).

I would imagine some conditions are more straighforward to verify, eg, when there is a pervasive developmemtal disorder throughout the childhood years. I understand from other posts that your son has been diagnosed with Asperger/Autism. Have you spoken with any of the Autism organisations who may be able to offer some guidance? I know Inclusion Ireland have been making members aware of Trusts for years. Possibly they may have some pointers? (https://inclusionireland.ie/information-for-family-members/)

 

[dubdub123]

Sorry, I can't advise on this. I understand that the medical evidence is submitted whenever the Trust is set up. (This is for the tax exemption - that may not be the only reason someone considers setting up a trust, eg, a son/daughter with alcoholism/drug addiction).

I would imagine some conditions are more straighforward to verify, eg, when there is a pervasive developmemtal disorder throughout the childhood years. I understand from other posts that your son has been diagnosed with Asperger/Autism. Have you spoken with any of the Autism organisations who may be able to offer some guidance? I know Inclusion Ireland have been making members aware of Trusts for years. Possibly they may have some pointers? (https://inclusionireland.ie/information-for-family-members/)

Thank you, I havent been in contact with them so I will check them out as well. Appreciate the pointer. Its all relatively new regarding official diagnosis. I did initially start to look at updating my will, but had to just step away ftom it, and im going to focus on it again soon, so any information is helpful. I'll check out their site and recommendations. Thanks

 

[BrokeBroker]

Best of luck with it. But just be aware that the tax exemption for the discretionary trust is not straightforward. The relevant chapter from the Revenue manual is here: https://www.revenue.ie/en/tax-profe...ains-tax-corporation-tax/part-07/07-01-20.pdf

Does the tax exemption come into effect only for inheritance greater than what the other poster mentioned, something like 330 thousand?

Only above which does CAT apply?

i.e. if inheritance was lower than this, one wouldn't go looking for a tax exemption; it wouldn't be a consideration.

The primary reason by far for wanting to establish a trust would be to avoid having benefits discontinued by way of means testing.

 

[AAAContributor]

I think we probably need to be clear here on what the 'exemption from tax' is that we are talking about - as there are a lot of them!

The proposal under consideration, if I have it right, is for the OP's parents (the settlors) to establish a will trust whereby a discretionary trust (DT) would be established on the last of their deaths for the OP (beneficiary) into which assets are 'settled'.

The taxes that are potentially involved here are:

1. Stamp duty,
2. Discretionary Trust Tax (DTT),
3. Income tax on income earned by the trust and capital gains tax (CGT) on trust gains,
4. Surcharge on undistributed income, and
5. Capital acquisitions tax (CAT) on distributions out of the trust.

1. No stamp duty charge arises on the transfer of assets into the trust (on death) or on appointments of assets from the trust to the beneficiary.

2. The charge to DTT kicks in if the settlor is dead and the there are no beneficiaries under the age of 21. It looks like that will be the case here. Revenue recognise that there may be a genuine need to provide a DT as a measure of a financial protection for a vulnerable beneficiary such as an incapacitated adult and there is an exemption from DTT where a trust is for this purpose. It would have to be verified if the OP meets this hurdle. This is not an automatic exemption - it is necessary to make an application to Revenue when the trust is established providing them with a medical certificate from a doctor confirming the beneficiary meets the conditions for the relief to apply. Exemption has to be claimed on Form IT4 and agreed by Revenue. https://www.revenue.ie/en/tax-professionals/tdm/capital-acquisitions-tax/cat-part05.pdf

3. A protective trust (like what is being proposed here) is subject to income tax (and CGT too, though I'd have to double check this).

4. Any income not distributed out of the trust is subject to a surcharge even if it is a protective trust.

5. Assets distributed from the trust are in scope for CAT. If the total amount distributed is less than the Group A threshold of €335,000, then there is no CAT. Also, if you are permanently incapacitated because of physical or mental infirmity, distributions exclusively for the purposes of discharging 'qualifying' expenses are exempt from CAT. Qualifying expenses are expenses for medical care, including the cost of maintenance associated with medical care.

It is difficult at this remove to advise as the level of assets, the extent of your incapacity and what you intend to do on the death of your parents is unclear. For instance, the plan is to inherit the one-bed property that is ear-marked for you and a share of the family home which will most likely be sold. What is the status of the one-bed property now? Is it rented out? When you inherit the property on death will you come off HAP and move in to the property? Your principal residence is outside the scope of means testing if I understand correctly. How much extra do you intend to inherit from the sale of the family home?

 

[dubdub123]

This is excellent information.
In relation to point 2, its difficult to know if a person will meet the criteria set by revenue. It seems very specific.
If they dont agree to exemption, might it still make sense to setup trust? The person would still have same difficulties regarding being financially independent.
Should a will take into account the tax exemption, or no need and just set up trust and pay the associated taxes.

 

[AAAContributor]

I'd be careful of a single-minded focus on a trust here.

The OP wants to utilise assets that are potentially coming their way to get back on their feet without jeopardising their DA.

A much wider look at what the inheritance involves is key here. For instance - what level of estate and assets are we talking about? What about the 3 beneficiaries of this estate (OP + 2 siblings) - what is the proposed split here? Are the OP's siblings in a position in life to take a lesser share etc.?

Say for instance the estate comprises the one-bed property and the family home that the OP has already mentioned. The 1-bed is worth €250k and the family home €500k. The plan is that the OP gets the one-bed and a 1/3rd share of the proceeds from the sale of the family home. That's an overall inheritance of €417k or 55% of the estate.

If that is the plan, would there be a case to instead leave the family home to the OP and then the 1-bed to the 2 siblings? The inheritance of €500k would not be hugely more than what the OP would be currently getting. This could allow the OP a larger residence and the ability to utilise rent-a-room relief for some extra income and not have it affect their social welfare payment: https://www.thejournal.ie/social-welfare-rules-5768336-May2022/

In this instance they would have a CAT bill of €55k on the inheritance of the house ((€500k - €335k) x 33%). However, a trust could be used here for the family home to allow the OP time to claim Dwelling House Relief and pay no CAT (they would have to live in it for 3 yrs as a condition of the relief, amongst other conditions). Best case is that they meet the hurdle to pay no DTT. Worst case they don't and have to pay the initial charge of 3% DTT in year 1 (it's actually 6% but half is refunded if the assets are appointed out of the trust within 5yrs) and an annual charge of 1% DTT in years 2 & 3 for a total tax bill of €25k. Alternatively, the OP could move back home now and get the clock started on meeting the condition for dwelling house relief and not have to use a trust at all, but this may not be a runner.

OP - I'd advise you to clarify with your parents and siblings what the estate will be and what the proposed split is and only then start looking at the next steps.

 

[Brendan Burgess]

Folks

Let's be absolutely clear. We have Posting Guidelines on askaboutmoney.

We have deleted posts which were in breach of them.

1) Use of bad language - we have zero tolerance - so don't waste your time posting long posts containing bad language.
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No posts are deleted for the opinions expressed in them.

I don't want to close this thread but if posters continue to breach the guidelines and then complain about their posts being deleted, I will close the thread.

Brendan

 

[Ryan]

If you have been in Disbikity long term I suggeat you look into Invalidity because it’s not means tested.

On the issue in question, I am aware of a couple who had a dependant adult child and both died without making a will. The family agreed that the sum of their estate would be used to purchase their daughter a suitable hone so as she could continue to live independentl. Social welfare asked lots of questions and did threthen to cut her off but it got sorted