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



## Brendan Burgess (31 Aug 2021)

How to give away your money before you die
					

Know your options, whether you wish to transfer wealth to your offspring or donate




					www.irishtimes.com
				




No stamp duty or CGT on death.


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## Brendan Burgess (31 Aug 2021)

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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## Brendan Burgess (31 Aug 2021)

​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.


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## Brendan Burgess (31 Aug 2021)

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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## Steven Barrett (31 Aug 2021)

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.
> 
> ...


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


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## Horatio (3 Sep 2021)

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.
> 
> ...


So true.


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## mtk (3 Sep 2021)

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 ?


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## noproblem (3 Sep 2021)

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?


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## phoenix53 (4 Sep 2021)

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?


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## Roro999 (4 Sep 2021)

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.


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## Roro999 (4 Sep 2021)

The X above would be 4k a year.


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## NoRegretsCoyote (4 Sep 2021)

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.


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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## Brendan Burgess (4 Sep 2021)

phoenix53 said:


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



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


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## Marc (4 Sep 2021)

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.


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.









						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


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## Marc (4 Sep 2021)

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.


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


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## twofor1 (4 Sep 2021)

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?


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.


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## Itchy (4 Sep 2021)

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.



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.


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## 8till8 (4 Sep 2021)

Brendan Burgess said:


> How to give away your money before you die
> 
> 
> Know your options, whether you wish to transfer wealth to your offspring or donate
> ...


I'd like to read this article but don't have a sub to the paper and its too late to buy it in the shop -- could someone be so kind as to PM me a pdf of the article?

Thanks


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## Shelby219 (5 Sep 2021)

8till8 said:


> I'd like to read this article but don't have a sub to the paper and its too late to buy it in the shop -- could someone be so kind as to PM me a pdf of the article?
> 
> Thanks


Weekend Times stay on sale all day Sunday


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## Baby boomer (5 Sep 2021)

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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## almostthere (6 Sep 2021)

Timing is important when you do this....we gave away various lump sums......some of our children received this most graciously while others weren't as appreciative......outwardly anyway.  It is nice to see the money being spent on something that can enhance their lives.

After giving the larger lump sums, we now give donations toward family summer holidays or helping out with costs when grand children are returning to school.


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## presidenttttt (10 Sep 2021)

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.
> 
> 
> 
> ...


@Marc 

Is this something that should be tied up in an agreement, perhaps backed by a lawyer, not so much for the event of a family fall out but more for any queries from revenue about whether it was a gift or a proper loan? Is there any limitations around private individuals ability to issue large loans to people?


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## Protocol (10 Sep 2021)

I suspect a reason many people/couples don't give away more is fear of future care costs?


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## ohnostopgo (13 Sep 2021)

Protocol said:


> I suspect a reason many people/couples don't give away more is fear of future care costs?


Surely that's a point in favour of giving gifts though? I know I'd hate to end up in a nursing home at all, but it would be even worse knowing the care costs were going to burn through money that could have helped my family.


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## Horatio (13 Sep 2021)

A relevant article 









						Buying siblings out of inherited family home at a discount – but what about tax?
					

Disclaiming the inheritance might work but timing is crucial




					www.irishtimes.com


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## Protocol (13 Sep 2021)

ohnostopgo said:


> Surely that's a point in favour of giving gifts though? I know I'd hate to end up in a nursing home at all, but it would be even worse knowing the care costs were going to burn through money that could have helped my family.



That may be true, but you still need the money to pay the care bills.


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## SlurrySlump (14 Sep 2021)

ohnostopgo said:


> Surely that's a point in favour of giving gifts though? I know I'd hate to end up in a nursing home at all, but it would be even worse knowing the care costs were going to burn through money that could have helped my family.


My father was paying €1000 a week for 3 years in a nursing home. He never claimed back any tax on his payments because he was afraid of the Revenue. His house sat idle for the 3 years.  He would only listen to one family member when it came to advice about anything......this family member did not even know how to pay an ESB bill nor had ever completed a tax return for themselves during their lives.  Other family members who had worked in Financial services all their lives were never asked their opinion on anything. 

Families can be complicated. I saw my father deny himself any heating in his home to save money despite being a relatively wealthy individual. There can be extremes of thinking.  Yet he helped us all financially toward our first home and gave us financial gifts during his latter years.

I think that we can loosen the purse strings now before we become over concerned about care costs for ourselves.


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## Paul O Mahoney (17 Sep 2021)

We just completed our wills and the discussion moved onto CAT and based on our assets our 2 won't be short neither will the Revenue. 
Our solicitor was adamant that we start to strategically plan how we are going to pass on what's left after we are gone, and advised that it might be better if we were to give each child money at key times in their lives, and spend the rest on ourselves. 
That would be a novelty but it got me thinking,  pensions now have a value of €850k and are forecasted , by me to be about 1.3 m by 2026 when I'll be still in my 50s and herself 62 .

It's the first time in our lives we have substantial money saved and her job will add non payroll income (shares) of 240k over those years after tax.

Both of us are of the opinion that we will help but want to them to " make it " on their own too, whatever they decide to do and not simply throw money at them. 

They have an Aunt who will be leaving another heafty wodge of cash too, unless she marries or her live changes .

To be honest I find the entire area head wrecking and never seem to arrive at a plan that  makes sense or is equitable for everyone and to minimise the tax impact of CAT.


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## Kimmagegirl (17 Sep 2021)

Our house alone, when sold after we pass on, and after the proceeds have been split 3 ways, will still mean a payment to the revenue.
If we downsize now we could make a substantial payment to our circa 40 year old children. 
Except we don't want to downsize.

We have savings, most of which we will need for ourselves. (We think). We can afford to give them annual gifts. Which we do.

We have thought that we will start increasing the amount given to each of them. As we get older we need less. We won't need big cars, we will cut back on our travel, material things are not important.  We just need to keep warm, fed and pay the bills.

Long term care is our main concern.

If we downsize to a smaller house or apartment we could give each about €150k just from the left over proceeds of our home.

Or do we just let things happen.  

They will still inherit a large sum but the Revenue, in my opinion is going to do very well getting more tax from money that has already been taxed.


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## mtk (17 Sep 2021)

This thread reminds of David mc williams' references to the accidental millionaires in one of his books
referenced here. 


			The Generation Game | David McWilliams


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## arbitron (17 Sep 2021)

Kimmagegirl said:


> They will still inherit a large sum but the Revenue, in my opinion is going to do very well getting *more tax from money that has already been taxed*.



I often hear this idea and it confuses me. Surely that is how tax works? My employer makes money - they are taxed on the income. Employer pays me wages - I am taxed on that income. I pay my electrician, cleaner, mechanic, etc. - they pay VAT + income tax on that. Each time the money changes hands it is taxed. I wouldn't expect it to be any different if my parents leave me money, it's income for me after all. In fact, as inheritance is unearned income surely tax should be higher!!!

If inheritance tax is low or absent, people are encouraged to hoard assets until death. Wealth is then passed on much later in life, probably when beneficiaries need it less, and they are also more likely to hoard it. That capital is of much greater value to society circulating in the economy rather than frozen in the Prize Bonds account of a retired couple in their 60s.

Many of us know people who inherit the family home only for it to lie idle for years as they figure out what to do with it. Sentimentality, nostalgia, grief, guilt, family rows delaying everything. I can think of 5 in my community off the top of my head. If they were taxed fully on the inheritance and taxed on vacant housing they would soon sell up and the house would be back on the market.

I can't tell if this makes me a socialist swine or a capitalist pig.


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## Protocol (18 Sep 2021)

Inheritance isn't income.

Income is earned by supplying factors of production.

Labour   ----   wages
Land ----   rent
Capital   ----    interest
Enterprise    ----   profits

Income tax applies to incomes, not to capital gains or acquisitions.


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