Inheritance and Tax - A Recent Query

Cover Image for Inheritance and Tax - A Recent Query

A client died intestate and the child is now entitled to 1/3 of the dwelling house, how can this be transferred to the mother without any tax?

The most effective method would be a disclaimer under Section 12 CATCA2003, which in effect means the child decides not to accept the inheritance. It is the extinguishment of a right before it comes into possession. The timing of any disclaimer is important, as a person cannot disclaim after he/she has received any benefit from the inheritance. So this needs to be considered here. You need to assess if this time has passed and if the children have taken the benefit of the inheritance.

A disclaimer may be made formally by deed, in writing only, or may be implied from conduct. Therefore we recommend informing the solicitor dealing with the probate etc. Before a disclaimer is done, it is important all parties get legal advice here as this is a major decision - the solicitor should confirm for sure how the disclaimed interest will to.

The overriding principle of a disclaimer is that the person who is disclaiming cannot choose who should take his/her benefit. So the child cannot state they wish for the mother to receive the 1/3 share. If he/she is disclaiming a bequest under a will, the property will fall into the residue and pass to the residuary beneficiaries. Therefore, the 1/3 share of the property will automatically fall to the mother as she is the only other beneficiary of the property. This would need to be checked with a solicitor.

CATCA s12(1) provides that any liability to CAT on a benefit which is disclaimed etc. shall cease to exist as if the benefit, claim or right had not existed and the benefit will not be taken into account for aggregation purposes. In effect, the child is treated as if they were never entitled to the 1/3 share of the property. Therefore meaning it is not treated as a disposition and there are no CGT implications. It is also the case that the mother is not treated as having received the benefit from the child but from her husband the original disponer.

If you have a tax query you need solving, contact Lisa or John from the OmniPro Tax & Legal Team on [email protected] / [email protected] or call the office on +353 (0) 539 100 000.

**The contents of this article are meant as a guide only and are not a substitute for professional advice. The authors accept no responsibility for any action taken, or refrained from, as a result of the material contained in this document. Specific advice should be obtained before acting or refraining from acting, in connection with the matters dealt with in this article.

You could have gotten 3 mins of CPD for reading this BLOG with Per Minute CPD™

It only take a few mins to create an account and get access to over 300 on Demand CPD Certified Courses, twice weekly CPD Certified webinars and 10 Accountancy conferences a year, as well as Per Minute CPD™! Read and watch small bits of content and get CPD!

Image of Lisa Cosgrave

About the Author

Lisa is a key member of our tax technical support team, providing advice on all tax heads in response to queries submitted. In addition, she provides support within the tax department on company/business valuations, tax planning, restructuring and exit planning solutions for a range of clients, liquidations, and company secretarial issues. She also has experience in financial reporting and audit. A Chartered Certified Accountant and Chartered Tax Advisor, Lisa trained and worked in practice for six years prior to joining OmniPro, where she gained experience in financial reporting, tax compliance across all tax heads and audit. She has experience with a range of small and medium sized businesses assisting them with their financial reporting obligations and tax compliance across all areas

YOU MAY ALSO LIKE

Cover Image for Survivors Contributory Pension (SCP) Entitlement for Deceased Divorced Spouse or Civil Partner

Survivors Contributory Pension (SCP) Entitlement for Deceased Divorced Spouse or Civil Partner

 

In the intricate world of welfare entitlements, there exists a fascinating provision that ...

Cover Image for Corporation Tax Implications of an Irish incorporated Company with Non-Irish Resident Directors

Corporation Tax Implications of an Irish incorporated Company with Non-Irish Resident Directors

 

Under Section 23A TCA1997 a company that is incorporated in Ireland will be regarded for I...

Cover Image for The Benefits of Family Partnerships in Investment Decisions

The Benefits of Family Partnerships in Investment Decisions

 

Given the increasing property/share prices, now is a great opportunity to allow children t...