Protection Cover for Cohabiting Couples
The trend for couples to co-habit, rather than marry, has become increasingly more common in Ireland. Most people are aware that all benefits passing between married couples and registered civil partners are exempt from Inheritance and Gift Tax.
All other cohabiting couples are still treated as strangers for Inheritance and Gift Tax purposes. The stranger threshold for inheritance Tax is €15,075 (from 6 Dec 2012). Inheritances in excess of €15,075 are subject to tax at 33%.
Example of haw it may affect you.
John Brown and Mary Smith take out Cover of €150,000. John and Mary are joint owners, and pay premiums out of their joint account. John dies and the €150,000 is paid to his cohabiting partner Mary because she is the surviving policy owner. Assuming Mary inherited no other assets, and Revenue agree that she has paid 50% of the premiums, she will be taxed on 50% of the benefit. So, Mary’s taxable inheritance is €150,000. Threshold €15,075 exempt. Balance €134,925 taxed at 33% =
Total tax to be paid €44,525.25.
This is a problem that your current financial adviser may not have addressed when they sold you your policy. This is easily solved and is just one of the many problems that we at Southeast Financial Services can help you with. Contact us for full details. Please remember our advice is provided free at a time and place that suits you and with no obligation.
Philip Cullen t/a Southeast Financial Services is regulated by the Central Bank of Ireland