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

It had not occurred to me that if someone gets a gift of a commercial property, they have to pay 7.5% (?) stamp duty on it, but if they get left it, there is no stamp duty.

The article does not mention the Fair Deal Scheme. If the home owner gives away their assets at least 5(?) years before they need nursing home care, the state will pay for their nursing home care.
 

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Is this correct?

Charitable donations​

Giving money away during your lifetime may also involve giving it to worthy causes outside your own family. However, while a business may be entitled to [broken link removed] on a [broken link removed], an individual isn’t.

Instead, when an individual makes a charitable donation of €250-€1 million, the charity is entitled to tax relief, of up to 31 per cent, on this donation. And this is true in life, as upon death.



If I give a gift of €1,000 today to a charity, the charity can get a top up of €450 from Revenue.
But if I give a gift of €1m, they won't get €450,000 because I have not paid €450,000 tax this year. It would be limited to the income tax(?) I have paid this year.

I was not aware that a charity could claim this on an inheritance?

People get confused by the 31%

Gross donation: €1,450
Tax relief at 31%: €450
Net donation: €1000

So if I donate €1,000 , the charity gets €1,450.
 
I have seen quite a few cases where very wealthy and healthy 70 year olds had 30 year old children in deep financial distress.

It would make much more sense in many of these cases to give a gift at that time. Instead, they wait until they die 20 years later when the child is now 50 and has got through the financial difficulty but only with years of stress.

An example would be helping a child to buy a house or trade up. Helping out in a separation.

I hate seeing a child paying 4.5% interest on their mortgage to Bank of Ireland when I know that their parents have the same amount of money in a deposit account with BoI earning 0% interest.

Brendan
 
Brendan Burgess said:
I have seen quite a few cases where very wealthy and healthy 70 year olds had 30 year old children in deep financial distress.

It would make much more sense in many of these cases to give a gift at that time. Instead, they wait until they die 20 years later when the child is now 50 and has got through the financial difficulty but only with years of stress.

An example would be helping a child to buy a house or trade up. Helping out in a separation.

I hate seeing a child paying 4.5% interest on their mortgage to Bank of Ireland when I know that their parents have the same amount of money in a deposit account with BoI earning 0% interest.

Brendan
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I agree with this concept Brendan. You get no enjoyment out of giving your kids money when you are dead. Being able to help them out financially when they are in their 30's/40's with big mortgage and the cost of young kids is a lot more beneficial and gives the parent the enjoyment of knowing that they have helped them out.

The big question for the parent is how much do I need? Not knowing how long you are going to live for or what your health will be like makes this difficult. People understandably want to ensure that they are financially secure and don't want to give too much away too soon in case they need it themselves.


Steven
www.bluewaterfp.ie
 
Was
Brendan Burgess said:
I have seen quite a few cases where very wealthy and healthy 70 year olds had 30 year old children in deep financial distress.

It would make much more sense in many of these cases to give a gift at that time. Instead, they wait until they die 20 years later when the child is now 50 and has got through the financial difficulty but only with years of stress.

An example would be helping a child to buy a house or trade up. Helping out in a separation.

I hate seeing a child paying 4.5% interest on their mortgage to Bank of Ireland when I know that their parents have the same amount of money in a deposit account with BoI earning 0% interest.

Brendan
Click to expand...
So true.
 
I may be a lone voice but Is there not an element of over parenting . I may do the same if that happened …But from a distance should grown up kids not learn to deal with adversity ?
 
All things being equal I would agree with helping out children as much as possible, in so far as one can. In calling them children, we are in most cases talking about 35/40 year old babies, and some unfortunately take advantage of the parents and their assets. It's a pity there aren't financial products/incentives out there that would allow parents to do this and still make sure the money/asset cannot be taken from them without consequences. Once the parents give the money away, even if it's understood to be only helping out, then it's gone. Giving it to family in order to secure free stay in a nursing home is a form of tax avoidance in some peoples minds, is it not? Everyone's talking about having a nice amount in their pension pot to have a great life, but a great life for what? What they need is enough money to have a few holidays, pay private health insurance and have a few bob for eating out, keep reliable car ticking over, etc, from about 66 until 80. Doesn't matter too much after that, a lot less will do. Is there too much emphasis being put on pension pots and all that goes with that? I sure think so and i'm in that group now. What will I do with my excess cash now? I have way too much, keep looking at ways to increase it, etc, but for bloody what? Jeez, I could conk it tomorrow and herself only spends what she needs to. We've helped out our grown up kids in a good way, some would say generously, with weddings, house purchase help, car help, children help, etc. They're good kids and we're lucky but at what stage do we say" here's a big lump of dosh, do what you want with it? Or, do we keep it and pay for our own nursing home costs if they ever arise and be honest with it. Doing the latter is the correct thing to do, but some would say we would be eejits to do that. I suppose what i'm thinking is, give my money to my family or let the state have it for nursing home care that I could get for nothing? Morals, I guess, whatever they are nowdays?
 
I often think about this. When is the right time to help your kids out money wise and how much to hold on to? Mine are in their early 20s. A time when they can get on with it themselves and build on the independence skills I feel they need to survive as they go through life. I keep an eye from a distance but let them at it. I'm hoping they have learned and will continue to learn how to deal with problems life throws at them and build up some resilience along the way. I don't want them to think we'll throw money at them every time they hit a problem. What happens when we are not here?

I think it will be if and when they buy a house, id like to help then.

What does happen if you give away a substantial chunk of your savings within 5 years of needing nursing home care? You more than likely can't get it back so what does happen?
 
An idea. If one say had 300k to help 3 kids out. When they need it most would be to say here's 100k. Repay me/us interest free x amount for the next 25 years or as long as I/we live. That way your helping them out too.
 
Brendan Burgess said:
It had not occurred to me that if someone gets a gift of a commercial property, they have to pay 7.5% (?) stamp duty on it, but if they get left it, there is no stamp duty.
Click to expand...
I think @Brendan Burgess makes a really good point here about the incentives in the tax system here. People with large unrealised capital gains are incentivised to hold until they are deceased rather than realising the gain during life. Why pay CGT at 33% and then CAT at 33% again a few years later?


I don't think this is generally the best use of wealth. You could imagine a family business being run badly or a rental property falling into disrepair. In most cases children during lifetime would make a better use of the wealth than ageing and sick parents.
 
phoenix53 said:
I think it will be if and when they buy a house, id like to help then.
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This is the right approach.

Giving a 30 year old money so they don't have to work and develop a career is not good for the donor or the recipient.

But if your money helps your son get on the housing ladder and avoid rent, then it's a good use of your money.

Or if they can get on the housing ladder under their own steam, but your help allows them to jump up a rung or two - e.g. to buy in Dublin rather than face a 50 km commute every day, then that is a good use of your money.

Too often, I see people in their 60s being left money when they don't need it.

Brendan
 
Roro999 said:
An idea. If one say had 300k to help 3 kids out. When they need it most would be to say here's 100k. Repay me/us interest free x amount for the next 25 years or as long as I/we live. That way your helping them out too.
Click to expand...
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
 
NoRegretsCoyote said:
I think @Brendan Burgess makes a really good point here about the incentives in the tax system here. People with large unrealised capital gains are incentivised to hold until they are deceased rather than realising the gain during life. Why pay CGT at 33% and then CAT at 33% again a few years later?


I don't think this is generally the best use of wealth. You could imagine a family business being run badly or a rental property falling into disrepair. In most cases children during lifetime would make a better use of the wealth than ageing and sick parents.
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Once you have used up the CAT A exemption you can claim a CGT/CAT offset as long as the asset gifted is held for 2 years.

Credit for Capital Gains Tax (CGT)

This page explains the credit that is available if CGT and CAT are chargeable on the same property
www.revenue.ie www.revenue.ie
 
phoenix53 said:
What does happen if you give away a substantial chunk of your savings within 5 years of needing nursing home care? You more than likely can't get it back so what does happen?
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You will be assessed as if you still have that substantial chunk of savings.

You will be told how much your weekly contribution is and you pay that amount directly to the nursing home on a weekly / monthly basis with Fair Deal paying the balance.

You will have to sign a contract with the nursing home, presumably if you don’t or can’t pay your assessed amount, the private nursing home can ask you to leave.
 
I think people in a position to consider passing on some of their wealth don't fully appreciate the utility that can be gained from the €3k tax free gift. In the case of a new family say, two partners and a child, that's 9k that can be passed on, €750 a month. Its a substantial pressure release from the day to day, not life changing, can be tailored down as required (it can be less than the threshold also) and no substantial portion of wealth is "lost". It should be feature of all long term inheritance plans anyway.

If your child is in their late 20s/30s, their habits are formed. You should know how they would react/treat a wealth transfer.

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.
Click to expand...

Agree with this. There are options to frame the help also, it needn't be a large lump sum transfer. Loan them a portion of their mortgage, for example, to ensure they can avail of a low LTV rate and accept a pay back over the mortgage lifetime or something like that. A relatively small amount could have a lot of utility for someone starting out.
 
We got great pleasure from helping out the next generation to buy and furnish that all-important first property. More pleasure than spending it ourselves and certainly more pleasure than watching it accumulate.

I'd strongly recommend it if you can do so without leaving yourself short.
 
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