Section 72 Policies
No parent or relative wishes to see their children issued with a hefty Capital Acquisitions Tax (CAT) bill upon their death. The children will be forced to sell the property just to cover the inheritance bill in Ireland. This is because under Irish law, it is the beneficiaries of the estate who are liable to pay the taxes – not the disponer/person giving the gift.
But that won’t happen if you invest in a Section 72 life insurance policy. This policy calculates the expected tax bill of the property beforehand. So, upon your death, the proceeds of the Section 72 life insurance plan will cover the tax bill, allowing your children to inherit your property tax-free. The proceeds of the Section 72 life insurance policy are exempt from inheritance tax. But it must be used to pay the inheritance tax bills that arise at that time.
Who Qualifies For This Policy?
- Must be aged between 18-74
- Must be residing in the Republic of Ireland
- The policyholder must be the person leaving the inheritance
- The child/children can pay the monthly premiums by showing a copy of the will or proof of assets
- Must have sufficient funds to pay the monthly premiums
Pass On Your Estate In The Most Tax-Efficient Manner
Section 72 Policy is a type of Life Insurance Policy that parents buy in Ireland to pay their children’s inheritance tax bill. It is called so because it is defined in Section 72 of the Capital Acquisition Tax Consolidation Act 2003.
The Section 72 Policy works pretty much the same as regular life insurance policies. You take the policy, you pay the premium, and your benefactor gets a tax-free lump sum. But in the case of Section 72, the benefactor must use it to clear the inheritance tax.
Make sure your Section 72 Life Insurance policy provides enough cover to protect your loved ones from an inheritance tax bill. Otherwise, they will have to sell the family home or take out a loan to pay the tax. So, compare the market for the best Section 72 policies and find the best one for you. This way, your assets can be passed on and enjoyed by your loved ones rather than being used to pay a tax bill.
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- Save your kids from a huge financial burden and lot of potential headaches
- The proceeds of the policy are tax-free
- Provides a cash payment to your family when you die
- Avoid incurring potentially life changing and unexpected tax demands
- Whole-of-life Section 72 policy continues till you die regardless of your age