Section 60 Inheritance Policies

Discussion in 'Wills, inheritances and gifts' started by elainem, Jan 31, 2009.

  1. elainem

    elainem Frequent Poster

    Just did a review of possible inheritance tax liabilites for my kids recently with my solicitor - lot less to inherit now though!! He reckons that Inheritance Tax Policies are very poor value for money - mine is E147.00 per month for E300k, and that I would be much better sticking with my two life policies, one for E500k and the other for E100k, even though these are actually taxed for CAT, and using the proceeds of these for inheritance tax - the cost of these two policies is E100 per month. Any advice greatly appreciated.
  2. mercman

    mercman Frequent Poster

    When you are looking at these kind of financial products you must look a little further than the present investment and asset market. I'm not sure of your age profile, marital status etc., but it may be prudent to search the market for better quotes. Have you tried Hibernian where I did mine with albeit some time ago. Remember recessions don't last forever in the same way booms don't either. PM me if you want my Section 60 Policy details.
  3. Brendan Burgess

    Brendan Burgess Founder

    Any further views on these policies? Are they popular?

    I read the Revenue Guide

    Are there any guidelines whether to go for them or for ordinary life insurance instead?

    Leaving aside the tax issues, I would have thought that paying life insurance for someone who is well off enough to be paying CAT is not good value. You would be better saving the premium in a separate policy anyway.

    If I have a valuable home and the person I want to leave it to has been living in it for 3 years, then it is not subject to CAT.

    If I am worth €2m and I leave the money equally between 5 children, there won't be any CAT.

    If I am worth €10m and have one child, then it might be worth it.

    If I am worth €100m and leave it to my spouse or to a charity(?) , she won't be paying any CAT.
  4. mercman

    mercman Frequent Poster

    The view of the Irish people has always been to look after the family after death. Whilst in being we are all very generous to charities, after death it becomes a different story.
    In the latter of your examples above, surely the setting up of a joint life second death policy would be appropriate. The CAT would have to be paid sometime, so therefore they might be best to prepare early.
  5. LDFerguson

    LDFerguson Frequent Poster

    Hi Brendan,

    In many instances, the estate may not be in the form that the child may want to sell. For example, if a sole child inherits a house worth a few million and a modest amount of cash, the CAT bill could force a sale of the property to pay the CAT. Or if a big chunk of the inheritance is made up of shares (traded or otherwise), the timing of the death might be lousy from the point of view of selling the shares or there may be other reasons why the child might not want to sell the shares to pay the CAT bill.

    In these examples, a CAT life assurance policy can remove the need to sell assets to pay a CAT bill.

    On a related note, it's important to review cover on a CAT policy regularly as CAT thresholds change, as does the value of the estate.