New solutions exist for people who are managing their wealth and wish to ensure that the transfer of a property or other inheritance is done in the most tax-efficient way.
For example, if you were to inherit a house in Dublin there is every likelihood that it could be valued at over half a million euro.
If this is the case the inheritance tax on this could be very high. If you don’t have the money to pay this tax you will be obliged to sell the property simply to pay the tax on the inheritance.
If the property is your family home you may not want to sell it but without the cash to pay the tax bill you will have no choice.
For this reason some people choose to take out an insurance policy called a Section 72. This is a policy that pays out on death so that your dependents do not have to worry about the tax implications of the value of a property.
You pay into the policy monthly as per any other insurance policy and when you die the proceeds of this policy are used to pay any tax bill that arises through inheritance.
It is similar to a life insurance policy but unlike the value of a life insurance policy which will be taxable when transferred as part of an inheritance, the Section 72 policy is tax exempt. Therefore the full value of the policy is available for tax bill purposes.
To qualify for a section 72 you must begin the process of paying into it monthly before the age of 75 and you must continue to pay into it until you die. If you stop for any reason the policy becomes void.