Bequest for care of parents

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Mayo1969

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So, I've been fortunate enough to get a substantial bequest from my deceased aunts estate overseas for the care of my elderly parents.
To manage this I've opened a specific joint account with my foreign based cousin and am keeping careful record (and receipts) of all expenditure from the account.

So my question is, how do I fare in terms of tax liability on this bequest? If I declare it solely in my own name (even though it's intended for and being directed solely for the care of my parents) I will be adjucitated on the basis of a category 3 exemption, with the remaining taxed at 33%, leaving me liable for inheritance tax in the tens of thousands of Euros.

On the other hand I notice from my research that I'm potentially entitled for tax relief of up to €75k per annum on expenditure for live in care for my parents, which is where the situation is unfortunately rapidly headed, as I'd be loath to put them into residential care when the finance is there to potentially care for them at home while finances allow.

Also, since I have a number of siblings, were I declare the bequest to revenue, could I make the argument that myself and my siblings agreed to pool individual bequests into this joint bank account for care of my parents and all of us could separately avail of the individual bequest exemptions and considerably reduce the tax liability?

In any case, it's a rather stressful time, alongside trying to care for both my failing parents, having access to all this considerable finance, yet worrying about the tax liabilities of same and wondering/worrying how to stretch the finance to the maximum if for example both parents survive for more than two years and still require live in care beyond that stage, by which time I would expect a considerable portion of the finance to be exhausted.

Any insights or advice greatly appreciated.
 
Mayo1969 said:
Also, since I have a number of siblings, were I declare the bequest to revenue, could I make the argument that myself and my siblings agreed to pool individual bequests into this joint bank account for care of my parents and all of us could separately avail of the individual bequest exemptions and considerably reduce the tax liability?
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The bequest was left to you and not to your siblings. So forget that.
 
Mayo1969 said:
a substantial bequest from my deceased aunts estate overseas for the care of my elderly parents.
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What was the wording of the will?

Was it left in trust to you to look after your parents or was it just left to you on the understanding that you would spend it on your parents?

In any event, it will be subject to CAT so you should just pay it. You will still have 67% of the money.

If you are paying tax at 40% you will get tax relief on medical expenses and nursing home care and care at home(?)

So I doubt you are going to lose out.

Brendan
 
Thanks Brendan. Nothing specific in a will. This was a decision by my cousins on behalf of their mother to bequeath money from their mam's estate to care for my mam. They asked me the best way to administer this and I suggested opening a joint account with one of my cousins to administer the money and provide full accountability and transparancy. So yes technically the money has been given to me ("on the understanding that... would spend it on ... parents") but since it is in a joint account with a non Irish resident, am I only liable for 50% of the CAT liability and can I share this out among my siblings (or is there any vehicle for doing this?)
 
Mayo1969 said:
Thanks Brendan. Nothing specific in a will. This was a decision by my cousins on behalf of their mother to bequeath money from their mam's estate to care for my mam. They asked me the best way to administer this and I suggested opening a joint account with one of my cousins to administer the money and provide full accountability and transparancy. So yes technically the money has been given to me ("on the understanding that... would spend it on ... parents") but since it is in a joint account with a non Irish resident, am I only liable for 50% of the CAT liability and can I share this out among my siblings (or is there any vehicle for doing this?)
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You first need legal advice on the ownership status of this money and then maybe tax advice on foot of that.
 
In essence your cousins are giving your parents a gift. And you are an administrator. It may make more sense tax wise if this was made crystal clear by the cousins in writing.

At the end of the year you can calculate from your vouched expenses how much the gift was and pay the gift tax on behalf of each parent, if any.

Then do the same the following year, etc. Once you know what the tax is you can pay it from the joint account and add that to the gifts for the following year.
 
Mayo1969 said:
Thanks Brendan. Nothing specific in a will. This was a decision by my cousins on behalf of their mother to bequeath money from their mam's estate to care for my mam.
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So the will was crystal clear?

I leave €100,000 to John Mayo.

It was not your cousins. It was your aunt. It is your inheritance, not your mother's and not your cousins'.

The stuff you do with your joint account is irrelevant to the tax treatment.

Brendan
 
Brendan Burgess said:
So the will was crystal clear?

I leave €100,000 to John Mayo.

It was not your cousins. It was your aunt. It is your inheritance, not your mother's and not your cousins'.

The stuff you do with your joint account is irrelevant to the tax treatment.

Brendan
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Apologies Brendan - Maybe I wasn't being clear, but I also don't entirely understand the points you are making?

There was no will stipulating this bequest. It was my cousins generously following what they believed to be the wishes of their mother and hence they said they wished to make a payment for my mothers upkeep and care out of the family trust left to them from their mothers estate.

They contacted me about this and I made some inquiries about the best way to do this to both administer it and try to minimise tax liability. One of the options suggested (rightly or wrongly) was for me to open a join account with my cousin to receive and administer the funds.
I'm guessing from what you seem to be saying is that this, nor any other financial slights of hand are sufficient to avoid paying the inheritance tax due and that I should just declare it, make the appropriate settlement and then claim back any care allowances due, even if I don't regard it as my money? (albeit being in an bank account bearing my name for administration purposes)
 
It looks to me like this statement is false:

"So, I've been fortunate enough to get a substantial bequest from my deceased aunts estate overseas"


In reality, your cousins kindly gave you a gift OR your cousins are giving a gift to your parents.
 
I dont know how many cousins are involved but you and your parents can receive a E3000 gift annually from any person with no tax liability.
If you have 2 cousins, they can each gift each of you E3K which would be E18K this year and they could do the sme next year, This may reduce the tax liability . You should document these gifts for future reference.
 
Mayo1969 said:
One of the options suggested (rightly or wrongly) was for me to open a join account with my cousin to receive and administer the funds.
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It is completely different from what you said in your original post that you received a bequest.

Nothing permanent has happened here as far as I can see. You can return the money and close the account.

Then take tax and legal advice on the question "How do my cousins overseas best help my parents with their care costs? "
 
My apologies if my initial posting was misleading - perhaps I should have said "my siblings and I and my elderly parents have been lucky enough to have been offered/given a substantial sum of money for my parents care by 2 cousins abroad out of their deceased mothers estate" so the bottom line question as suggested by Brendan is "How do my cousins overseas best (financially) help my parents with their care costs?"
 
elcato said:
I would start with the advice from huskerdu above. Is 18k per annum enough ?
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It's clearly bad advice.

The object here isn't to gift money from one branch of the family to specific relatives across the ocean, but to fund care for an elderly couple.

If you gift money to others, you relinquish control over how it's spent or used thereafter.
 
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