Inheritance and Tax - A Recent Query

Cover Image for Inheritance and Tax - A Recent Query

| Lisa Cosgrave

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.

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

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