Is there a financial checklist for someone with a terminal illness?
One item for the checklist:-
Where a spouse dies during a tax year, the taxation treatment of their income for that year depends on the method of assessment in force and which spouse dies.
If the couple are jointly assessed, the implications depend on which spouse dies.
If the
assessable spouse dies:
1. They are taxed on joint income to the date of death. They are entitled to married credits and tax bands.
2. The surviving spouse is taxed as a single person for the period from the date of death to the end of the tax year. They will be entitled to the widowed person's tax credit for the year of bereavement (this is equal to the married person's credit) and the single lower rate band.
If the
non-assessable spouse dies:
1. The assessable spouse is taxed on the joint income up to the date of death and on their own income until the end of the tax year.
2. The assessable spouse is not entitled to the widowed person's tax credit in the year of bereavement because they are already getting the married tax credit.
Therefore, there can be preferential tax treatment (doubling up of credits) if the couple nominate the assessable person as the terminally ill individual.
More info
here.
if a person with an active defined contribution fund dies, their estate, usually their spouse, gets the pension pot tax-free.
Yes, if it's a PRSA, Personal Pension, Personal Retirement Bond. However, if the terminally ill individual dies and was an active member of an occupational pension scheme, depending on their salary and the size of the pot, the surviving spouse may be required to put a portion of the fund into a Approved Retirement Fund. If a balance was required to be put into an ARF (calculation to be run well before death), the couple should seek advice on strategies to counter this.