Introduction
Planning for your children’s financial future whilst navigating Ireland’s tax landscape can feel overwhelming. With Capital Acquisitions Tax (CAT) potentially taking a significant chunk of what you hope to pass on, understanding Inheritance Tax Savings Plans For Children has never been more crucial for Irish families.
At Money Maximising Advisors Limited, we understand that every parent wants to secure their child’s financial future without unnecessarily enriching the taxman. Whether you’re based in Dublin, Galway, or anywhere across Ireland, strategic planning can help your family make the most of available exemptions and reliefs whilst staying fully compliant with Irish tax legislation.
In this comprehensive guide, we’ll explore practical, tax-efficient strategies that Irish parents and grandparents can implement in 2026 to maximise wealth transfer to the next generation.
Understanding Capital Acquisitions Tax Ireland
Before diving into savings strategies, it’s essential to grasp how Capital Acquisitions Tax Ireland works. CAT is the tax applied to gifts and inheritances received in Ireland, and it affects thousands of families each year.
The tax applies when someone receives assets—whether through inheritance (following someone’s death) or as a gift during their lifetime—above certain tax-free thresholds. The current CAT rate stands at 33%, which means that without proper planning, a third of your hard-earned wealth could go to the Revenue Commissioners rather than your children.
The Group A Inheritance Tax Threshold
The Group A inheritance tax threshold applies to transfers between parents and children. As of 2026, this threshold stands at €335,000 per child from each parent. This means each child can receive up to this amount tax-free from their parents over their lifetime before CAT becomes payable.
Whilst this might sound generous, when you consider property values in Dublin and other Irish cities, along with savings and investments, many families find themselves exceeding this threshold. This is where strategic Inheritance Tax Savings Plans For Children become invaluable.
Smart Gift and Inheritance Tax Planning Strategies
The Small Gift Exemption: Start Early, Give Often
One of the most underutilised tools in gift and inheritance tax planning is the small gift exemption. Each year, you can gift up to €3,000 to any individual—including your children—completely tax-free. This gift doesn’t count towards the CAT threshold for children.
Here’s the powerful bit: both parents can make this gift independently. So a married couple can give €6,000 annually to each child without any tax implications. Over 18 years (from birth to adulthood), this amounts to €108,000 per child—a substantial nest egg that never touches their lifetime CAT threshold.
Top tip: Consider investing these annual gifts in a savings or investment account in your child’s name. The compound growth can significantly boost the benefit. For more guidance on where to invest these funds, explore our article on Best Savings Account Ireland 2025 – Where to Get the Highest Rates.
Section 73 Savings Policies: Life Insurance That Saves Tax
A Section 73 savings policy represents one of Ireland’s most tax-efficient inheritance tax relief Ireland strategies. These specialised life insurance policies allow parents to build up a fund that pays out tax-free to children upon the parent’s death.
The key advantage? The payout doesn’t count towards your child’s CAT threshold for children, meaning they receive the full benefit regardless of what else they inherit.
These policies work particularly well when:
- You have assets likely to exceed the CAT threshold
- You want certainty around inheritance tax costs
- You’re looking for long-term, disciplined saving
Enquire now about whether a Section 73 policy suits your family’s circumstances.
Child Inheritance Trust Ireland Options
Bare Trusts: Simple Yet Effective
A child inheritance trust Ireland solution that’s gaining popularity is the Bare Trust. Unlike complex discretionary trusts, Bare Trusts are straightforward: assets are held for a named child, and they gain absolute entitlement at age 18 (or 21, depending on the trust deed).
Benefits include:
- Assets grow outside your estate for CAT purposes
- Income and gains are taxed at the child’s rate (often lower)
- Simple administration compared to discretionary trusts
- Flexibility in investment choices
However, remember that once assets are in a Bare Trust, you cannot reclaim them—the child has an absolute right to them at the specified age.
Discretionary Trusts: For Larger Estates
For families with more substantial wealth, discretionary trusts offer greater control and flexibility. Whilst more complex and requiring professional administration, they allow trustees to decide when and how much beneficiaries receive, protecting immature or vulnerable children from sudden wealth.
Considering your trust options? Book now for a consultation with our experienced advisors.
Life Insurance for Inheritance Tax: Protecting Your Legacy
Life insurance for inheritance tax serves a dual purpose in smart estate planning. Firstly, it can provide funds to cover any CAT liability, ensuring your children don’t need to sell inherited assets (like the family home) to pay the tax bill. Secondly, certain policies can be structured to fall outside your estate entirely.
When considering life insurance for inheritance tax purposes, think about:
- Cover amount: Calculate potential CAT liability based on your estate’s projected value
- Policy ownership: Who owns the policy affects whether it’s part of your estate
- Beneficiaries: How you nominate beneficiaries impacts tax treatment
- Policy type: Section 73 policies versus standard life insurance
Our article on Saving Vs. Investing: Do Both Have a Place in Your Financial Plan? provides broader context on balancing different financial products.
Family Savings Strategies That Work
Building Multiple Pots of Money
Smart family savings strategies involve diversifying where money is held and who owns it. Consider:
- Parent-owned investments: Traditional savings or investments you control
- Child-owned accounts: Savings accounts in your child’s name (taxed at their rate)
- Trust-held assets: Assets held in trust for future benefit
- Pension provisions: Your own pension planning (reducing estate value)
Each “pot” has different tax implications and accessibility. The right mix depends on your timeline, risk tolerance, and family circumstances.
Pension Planning: An Indirect Benefit
Whilst pensions don’t directly pass to children as inheritance, maximising your pension contributions serves two purposes. Firstly, it reduces your estate’s size (and potential CAT liability). Secondly, it secures your own retirement, meaning you’re less likely to need financial support from your children later.
Learn more about Pensions Plan Ireland: Discover the 3 A’s to Successful Savings.
Estate Tax Savings Strategies Ireland for Grandparents
Grandparents play a crucial role in Inheritance Tax Savings Plans For Children. Each grandchild has a separate CAT threshold for gifts and inheritances from grandparents (currently €32,500 under Group B).
Whilst this is significantly lower than the parent-to-child threshold, strategic planning can still achieve substantial tax savings:
Grandparent Strategies:
- Annual €3,000 gifts: Just like parents, grandparents can use the small gift exemption
- Direct education costs: Paying school or university fees directly (not giving money to the child) may qualify for exemptions
- Skip-generation planning: In some cases, assets passing directly to grandchildren can be more tax-efficient
If you’re exploring options, our guide on How Much Money Can You Gift to a Family Member Tax-Free in Ireland? provides detailed exemption information.
Are Children Taxed on Savings Plans?
A common question parents ask is: “Are children taxed on savings or investment plans?” The answer depends on the structure.
Key points:
- Deposit interest: Children pay DIRT (Deposit Interest Retention Tax) at 33% on interest earned, same as adults
- Investment income: If investments are in a child’s name, gains and income are taxed at their rate
- Parental gifts invested: No tax on receiving the gift (within exemptions), but returns on investments are taxable
- Trust structures: Tax treatment varies depending on trust type
This is where professional advice becomes invaluable. Contact Us to discuss your family’s specific situation.
Alternative Savings Approaches
Beyond traditional inheritance planning, consider these complementary strategies:
Educational Investment Plans
Many parents invest specifically for education costs. Whilst these funds will ultimately benefit your children, if structured correctly, they can grow efficiently and be used before inheritance questions arise.
Property Investment in Children’s Names
Some parents purchase property in their children’s names. This approach has both advantages (asset growth outside parents’ estate) and complications (capital gains tax, ownership control). It requires careful legal and tax advice.
For broader perspectives on where to place savings, read Looking for an Alternative Home for Your Savings Ireland?
Creating Your Family’s Estate Tax Savings Strategies Ireland Plan
Developing effective estate tax savings strategies Ireland requires coordination across multiple areas:
- Inventory your assets: Understand your estate’s current and projected value
- Map family relationships: Different thresholds apply to different relatives
- Timeline planning: When do you want transfers to occur?
- Review regularly: Tax laws and family circumstances change
- Professional guidance: Complex rules require expert interpretation
The most successful families start planning early and review their strategies regularly. What works when children are young may need adjustment as they reach adulthood.
Book an Appointment with our Qualified Financial Advisors to create a personalised inheritance tax strategy for your family.
Common Mistakes to Avoid
When implementing Inheritance Tax Savings Plans For Children, watch out for these pitfalls:
- Starting too late: The earlier you start, the more exemptions you can use
- Ignoring lifetime gifts: Gifts made within three years of death may still incur CAT
- Poor record-keeping: Revenue may challenge undocumented gifts years later
- Forgetting about growth: Assets that grow significantly can push estates over thresholds
- DIY complex structures: Trusts and Section 73 policies need professional setup
- Not updating plans: Marriage, divorce, births—all require plan reviews
Why Professional Advice Matters
Irish inheritance tax legislation is complex and frequently updated. What seems straightforward on the surface often has nuances that significantly impact outcomes.
At Money Maximising Advisors Limited, our team of Certified Financial Planners (CFP) and Qualified Financial Advisors (QFA) stay current with legislation changes and understand how different strategies interact. We’ve helped countless Dublin and Galway families—and families across Ireland—navigate these complexities.
Frequently Asked Questions (FAQs)
1. What are inheritance tax savings plans for children in Ireland?
Inheritance tax savings plans for children are structured financial strategies designed to transfer wealth to children whilst minimising Capital Acquisitions Tax liability. These include Section 73 policies, trust arrangements, strategic gifting programmes, and life insurance solutions tailored to Irish tax legislation.
2. How does Capital Acquisitions Tax (CAT) apply to gifts and inheritance for children?
Capital Acquisitions Tax Ireland applies to gifts and inheritances that exceed the tax-free threshold. For children receiving from parents, the Group A inheritance tax threshold is €335,000 per child (lifetime total). Any amount above this is taxed at 33%, though various exemptions and reliefs may reduce the tax burden.
3. What is the current tax-free inheritance threshold for children in Ireland?
The current CAT threshold for children receiving gifts or inheritances from parents is €335,000 per child as of 2026. This is a lifetime limit covering all qualifying gifts and inheritances, not an annual allowance. The threshold is significantly higher than those for other relatives.
4. How can parents use the small gift exemption to save on inheritance tax?
Parents can gift up to €3,000 per year to each child completely tax-free under the small gift exemption. This doesn’t count towards the lifetime CAT threshold. Both parents can give independently, potentially transferring €6,000 annually per child, which compounds to substantial amounts over time.
5. What is a Section 73 savings policy and how does it help with inheritance tax?
A Section 73 policy is a specialised life insurance product that pays out tax-free to children upon a parent’s death. Crucially, the payout doesn’t count towards the child’s CAT threshold for children, making it an extremely tax-efficient inheritance planning tool.
6. Can grandparents use tax-efficient savings plans to benefit their grandchildren?
Yes, grandparents can utilise several strategies including the €3,000 annual gift exemption, educational expense exemptions, and strategic inheritance planning within their Group B threshold (€32,500). Combined with other family savings strategies, grandparents can significantly contribute to grandchildren’s financial security.
7. How do Bare Trusts work for saving for a child’s inheritance?
Bare Trusts hold assets for a named child who gains absolute entitlement at a specified age (typically 18 or 21). Assets grow outside the parents’ estate for CAT purposes, and income/gains are taxed at the child’s rate. They’re simpler than discretionary trusts but offer less control once established.
8. Are children taxed on savings or investment plans in Ireland?
Children pay tax on investment returns at the same rates as adults—33% DIRT on deposit interest and standard rates on investment income and capital gains. However, the fact that assets are in a child’s name can affect overall estate planning and future inheritance tax calculations.
Conclusion
Implementing effective Inheritance Tax Savings Plans For Children requires strategic thinking, early action, and ongoing review. With CAT rates at 33%, the difference between good planning and no planning can amount to hundreds of thousands of euros for Irish families.
Whether you’re concerned about passing on the family home in Dublin, protecting savings for grandchildren in Galway, or simply want to make every euro count, the strategies outlined here provide a solid foundation. From maximising annual gift exemptions to implementing Section 73 policies and trust structures, multiple tools are available to Irish families.
At Money Maximising Advisors Limited, we specialise in creating personalised estate tax savings strategies Ireland that reflect your unique circumstances, values, and goals. Our experienced team of Tax Advisors, Certified Financial Planners, and Qualified Financial Advisors can help you navigate the complexities of Capital Acquisitions Tax Ireland and implement strategies that protect your family’s wealth across generations.
Don’t leave your children’s inheritance to chance—or to unnecessary taxation. Contact us today or book an appointment to start building your family’s tax-efficient inheritance strategy for 2026 and beyond.
(Disclaimer: This article provides general information about inheritance tax planning in Ireland and should not be considered personalised financial or tax advice. Irish tax laws, including Capital Acquisitions Tax thresholds and rates, are subject to periodic change by the government, and individual circumstances vary significantly. The strategies discussed may not be suitable for everyone, and their effectiveness depends on proper implementation and ongoing compliance with Revenue regulations. Always consult with qualified financial advisors or tax professionals at Money Maximising Advisors Limited before making significant financial decisions regarding inheritance planning, trust establishment, or wealth transfer strategies. Past performance and current tax treatments are not guarantees of future results or benefits.)
