Did I get a gift, an advancement or not?

F

France

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I got divorced 10 years ago
During the divorce negotiations, my father, who was there with me, wrote a cheque to my husband to buy out his equity in the family home, which also had a mortgage on it
No money entered my account as my father paid my ex husband directly.
My father has now died and has divided his estate equally between me and my siblings. He made the will the year after my divorce

Does this count as a gift to me for inheritance purposes as it indirectly benefited me and therefore should be declared to Revenue?
 
Although I only indirectly benefitted and was not mentioned in the will, nor were other monies that he gave to my siblings during his life mentioned in the will
 
Does it matter other than potentially for CAT purposes?
Are your siblings looking for some quid pro quo because of the money that your father used during your divorce or something?
If not then why don't the beneficiaries just accept their shares of the estate?
 
The will is simple, 5 way split, does it benefit the estate in any way if I'm deemed to have received a gift? Or just the Revenue if they regard it as such, like my family don't benefit, only the taxman?
 
France said:
Although I only indirectly benefitted
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You very much benefited directly from an €80k gift to help settle a divorce.

France said:
does it benefit the estate in any way if I'm deemed to have received a gift?
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No. It’s a matter between you and Revenue. Tax is levied on the beneficiaries, not the estate itself in Ireland.

You have €320k of the Group A threshold yet assuming no inheritance from your mother. With an even five-way split your father’s estate would need to be €1.6m (5x€320k) for there to be any CAT obligation on you.
 
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France said:
The will is simple, 5 way split, does it benefit the estate in any way if I'm deemed to have received a gift?
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It could benefit your siblings.

Succession Act 1965, s. 63: "Any advancement made to the child of a deceased person during his lifetime shall, subject to any contrary intention expressed or appearing from the circumstances of the case, be taken as being so made in or towards satisfaction of the share of such child in the estate of the deceased . . ."

An "advancement" is a gift intended to make permanent provision for the child, such as assistance with the purchase of a house, which is exactly what you got here.

So, strongly arguable that the €80k your father paid should be treated as an advance on your share of the estate, which means you should now get 80k less than each of your siblings gets — unless there is some evidence that that was not your father's intention. For example, his will (if made after the date of the gift to you) might expressly say that that gift is to be disregarded and not taken into account in the divvying up of the estate.
 
TomEdison said:
So, strongly arguable that the €80k your father paid should be treated as an advance on your share of the estate, which means you should now get 80k less than each of your siblings gets
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In which case all other gifts/advancements to other siblings should be factored in too?
France said:
Although I only indirectly benefitted and was not mentioned in the will, nor were other monies that he gave to my siblings during his life mentioned in the will
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Succession Act 1965 s. 63:

(6) For the purposes of this section, “advancement” means a gift intended to make permanent provision for a child and includes advancement by way of portion or settlement, including any life or lesser interest and including property covenanted to be paid or settled. It also includes an advance or portion for the purpose of establishing a child in a profession, vocation, trade or business, a marriage portion and payments made for the education of a child to a standard higher than that provided by the deceased for any other or others of his children.

So, I educate you, set you up in a trade or profession, buy a house or business premises for you, transfer the farm to you, that kind of thing — that;s an advancement. But I pay for your holidays, a flash car, your own children's school fees — not an advancement.
 
Sounds like there's still a lot of subjectivity to deciding whether something is a gift or an advancement? Who has the final say? Executor? Court? ...?
 
Although presumably I'd need to tell Revenue about it as there is no direct link to me? And as you say, my siblings won't benefit? I'll just have a lower threshold
 
France said:
Although presumably I'd need to tell Revenue about it as there is no direct link to me?
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Only if/when gifts/inheritances bring you to more than 80% of the relevant CAT group exemption threshold. In this case group A. I.e. 80% of €400K = €320K.

Capital Acquisitions Tax (CAT) thresholds, rates and aggregation rules

This page outlines CAT thresholds, rates, and aggregation rules
www.revenue.ie
You must file a Capital Acquisitions Tax (CAT) IT38 Return if the total taxable value of the benefits taken exceeds 80% of the relevant group threshold.
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ClubMan said:
Sounds like there's still a lot of subjectivity to deciding whether something is a gift or an advancement? Who has the final say? Executor? Court? ...?
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If there's a dispute, in the last analysis, a court decides whether a gift is an advancment or not. In this case, though, there isn't a lot of doubt; assisting with the purchase of a home is a classic example of an advancment.

(Of course, some of the gifts made to the OP's siblings might not be so clear-cut.)

There's also room for arguing about whether "any contrary intention appears from the circumstances of the case". Did Dad mean for advancements to be taken into account? He obviously wasn't ungenerous to his children when they were in need, and perhaps he made gifts to others who weren't quite so needy in order to ensure a degree of overall fairness. The sibling may well agree amng themselves that Dad did not intend any of the gifts made during his life to be taken into account in the divvying-up of his estate. And they are the only people who are affected by this, so if they are all happy to have the net estate divided five ways without any regard to previous advancements, then nobody is in a position to object to that (or has any reason to want to).
 
My siblings and I are likely to exceed the 400k threshold each
I suppose that I just want clarity on whether including the 80k that was paid to my ex husband by my Dad will benefit my siblings if declared by me, or whether they wouldn't get any more money from the estate, ie it's of no benefit to them, just I'll be paying more inheritance tax
Like if it's good for my siblings then I'm happy, paying tax, not so happy
 
Let us assume there are four of you and your father's net estate is €2 million. You previously got an advancment of €80k. To keep the example simple, lets pretend your siblings got no advancements.

So, if the advancement to you is ignored in the distribution of the estate, everyone gets €500k.

You aggregate gifts and inheritances from your father is €580k (€80k advancement plus €500k inheritance). Subtract the threshold of €400k; that leaves €180k on which you will pay tax. Your siblings have only received €500k each; subtract the threshold, and they pay CAT on €100k each.

What if we don't ignore the advancement? Then the picture looks like this:

Aggregate of advancements and inheritances from your father: €2,080,000

Divide this four ways: Everbody gets €520k.

You've already had 80k so you now get another €440.

So your total of gifts and inheritances is €520. Subtract €400k; pay tax on €120k.

Each of your siblings also gets €520k, and pays tax on €120k

So the effect of taking your advancement into account in the distribution of the estate is that:
  • You get 60k less in total, and pay tax on 60k less; and
  • Each of your three siblings gets 20k more, and pays tax on that 20k.
You can see that the total amount of tax paid is going to be the same in both cases. So the Revenue don't care which way you do it. The only issue is fairness between you and your siblings, and giving effect to your father's wishes, as best you know them, about the way he wanted his estate divided. The strict legal position is that the advancement should be taken into account, unless there is reason to think that was not what your father intended. If you and all your siblings agree that it shouldn't be taken into account, because you all think your father wouldn't want that, then you don't need to take it into account.
 
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