Disclaiming an inheritance

J

J.P.

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51
Hi,

I have a query about disclaiming an inheritance, the background is as follows, my sister (let’s call her Mary) who while advancing in years, is in very good health thankfully, she recently made her will & asked me (let’s call me Mike) to be the executor to her will, which I was happy to agree to & I didn't expect to hear anything further about it. Having made her will with her solicitor, she insisted on sharing the contents of her will with me, and this is what has me troubled ever since. To illustrate my query, I will use the following to represent the broad contents of the will –

Mary leaves -
  • €xx,000 to my brother Mike
  • €xx,000 to my brother Mike’s wife
  • €xx,000 to my nephew Patrick (Mike’s son)
  • €xx,000 to my nephew Martin (Mike’s son)
  • Any residue to my brother Mike & his wife

My wife & I are both retired with some time & are financially OK & we do not wish to accept / need the inheritance. Patrick & Martin are trying to get on the property ladder with some time now & they would benefit a lot more from receiving such an inheritance. My concern is that my wife & I are not just named as beneficiaries of specified sums of money, but we are also named as inheriting the residue of the estate – my queries are :

  • Can my wife & I disclaim all of the inheritance as outlined above ?
  • If we can, what will happen the disclaimed sums / residue ?
  • Would my wife & I be seen as disclaiming in favour of Patrick & Martin & incur a CAT liability ?


Thanks,

J.P.
 
What sort of quantum are we talking about?
May make sense for you and your wife to inherit from your sister and then gift money to your sons to avail of the greater level of lifetime gift allowances to your sons. Group A is 335,000 whereas Group B (your sister to your kids) is 32,500.

Capital Acquisitions Tax

Capital Acquisitions Tax (CAT) is a tax on gifts and inheritances. You can get a certain amount of gifts and inheritances without paying CAT, depending on your relationship to the person you get them from..
www.citizensinformation.ie www.citizensinformation.ie
 
I think if you " Mike " and your wife disclaim the specific legacy it will revert to the residue of your sisters estate to which you are entitled to, and would also disclaim. Then a partial intestacy arises which assuming your sister has no civil partner and is unmarried without children, then you having disclaimed this intestate share of the residue would be divided up between any other brothers and sisters of the testatrix, or children of the predeceased brothers and sisters. If none of the latter I think then it would then be divided up amongst the nephews and nieces of the testatrix in equal shares.
I think the Revenue would view the disclaimed share as coming from your sister rather from the party disclaiming the benefit. Do seek legal advice before taking action.
 
A lot of this is all hypothetical so I would not get too worried. There are a lot of unknowns so if it was me I wouldn’t give it a second thought until it became an issue

I wouldn’t worry too much about the will as it is. If you inherit the funds you can then gift it to your siblings who were omitted under the same tax band, this will result in them receiving the same amount.
 
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