Tax implication -Life Insurance policy

[ACCK01]

[FONT=Times New (W1)]I was wondering if anyone knows what the tax implications are if you receive money as a beneficiary of a life insurance policy? Do you have to declare monies received to the revenue? Do you have to pay gift/inheritance tax on monies received? Any advice would be greatly appreciated.[/FONT]

 

[jpd]

That depends on you owned the policy and who paid the premiums.

If the policy is yours, ie you took it out on the life of a third person and you paid the premiums, then the money is yours and I don't think there is any tax liability.

If someone else paid them then it considered a gift or inheritence from the owner of the policy or his estate and CAT could be chargeable.

If the policy is a Section 60/118 explicitly taken out to pay Gift/Inheritence tax then the rules are more complicated.

Joe

 

[ACCK01]

Thanks Joe for the information. It would be where someone else has paid into the life Insurance policy and has named a third party as the beneficiary upon their death. The third party was wondering what the tax implications would be for them upon receiving the money.

 

[jpd]

Depending on their relation to the donor it would be

(Amount of gift ie value of policy minus group threshhold ) x 20%

assuming they have received no other gifts from donor in the same group since Dec 1991

There are 3 groups which are (in a simplified form)

I: received from parents - threshold about 450,000 euro

II: received from brothers/sisters/grandparents/uncles - threshold about 45,000 euro

III: everyone else - threshold about 22,500 euro

CAT is calculated on the accumulated gifts/inheritences received since Dec 1991. If there were prior gifts/inheritences from someone in the same group, then the threshold may already have been used up or partially used up.

Joe

 

[jpd]

Oops - forgot that if the recipient is the wife of the donor, then no CAT is due - all gifts/inheritences between spouses are exempt from CAT