Thursday 1 September 2016

Does the deposit guarantee scheme cover all our joint savings should one of us pass away?

Your questions: Jim Hegarty, Chairman, Hegarty Financial Management

Jim Hegarty

Published 11/10/2015 | 02:30

Email your questions to
lmcbride@independent.ie or write
to ‘Your Questions, The Sunday Independent
Business Section, 27-32 Talbot Street, Dublin 1’.
Email your questions to lmcbride@independent.ie or write to ‘Your Questions, The Sunday Independent Business Section, 27-32 Talbot Street, Dublin 1’.

My husband and I have €200,000 in a joint savings account. Under the deposit guarantee scheme, I understand the entire savings in this account are guaranteed because up to €100,000 of savings per person are protected.

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However, should one of us pass away, what is the guarantee for the remaining spouse? That is, would the entire €200,000 of savings in the joint account still be protected - or only €100,000?

Denise, Drumshanbo, Co Leitrim

The Deposit Guarantee Scheme is designed to protect depositors in the event that a bank is unable to repay your deposits. Under the scheme's rules, a maximum of €100,000 of savings per individual per institution are protected.

Therefore, in the event of you or your husband's death, the maximum claim either of you could make, should the bank be unable to repay your deposits, is €100,000 against that bank.

Your question highlights the need to diversify your savings. Consider splitting your joint savings account between another bank so that you held €100,000 in joint names in two separate banks. By doing this, you would be entitled to claim the full €200,000 in compensation in the event that one of the banks failed.

My father passed away recently and when clearing out his house, I came across an old Shield Life life assurance policy. My father never left a will - or details of any investments or assets he may have owned.

How can I find out if this life assurance policy is worth anything - and how would I go about cashing in that policy should it be worth something? I am the only surviving relative in my family.

Kathleen, Ardattin, Co Carlow

Your question highlights the importance of always checking financial papers before disposing of them. Shield Life has had two changes of titles since the policy was set up - namely Eagle Star and now Zurich Life.

As a broker-only company, your father would have used one to set up this policy so if you have the broker's contact details, he would be only too happy to follow up on this for you.

If you have no contact details for the broker, then I would suggest that you write to Zurich Life directly with the policy number and a copy of the death cert. You should allow them approximately 10 working days to respond.

Meanwhile, I would recommend that you check your father's bank statements to see if there were payments made not only to Zurich but to any other insurance company. If the policy had a claim value or a fund value at the time of your father's demise, then the executor of the estate will finalise matters for you.

We bought our first home in December 2013 and took out a 35-year mortgage of €161,000 at the time. We are currently in a three-year fixed term and are repaying €805 per month. Is this a good deal or could we get better elsewhere? We took the mortgage out with AIB.

Johnny, Naas, Co Kildare

As you are half way through your fixed period, regardless of rate, you have availed of the certainty and security of a fixed mortgage repayment since late 2013.

You would be likely to incur a penalty cost if you were to break now.

As your mortgage is for your home, I have no doubt AIB will treat you fairly if you wait until your fixed mortgage period matures before trying to get a better deal on your mortgage. Like most of the other lenders out there, AIB is beginning to realise the value of existing customers.

I am an Irish citizen and resident - but I worked in the United States for some time and so have retirement account investments in the United States including a 401K plan and a Roth IRA.

Would I be able to cash in these accounts and transfer the funds to Ireland - and if so, would I have to pay tax to the Irish government?

Jim, Killarney, Co Kerry

It is difficult to give a generic answer on any overseas transfer. The transfer of US retirement investments will be complex given that citizenship might impact on the taxation position. Certain foreign pensions that would be exempt from tax if you were resident in the country paying the pension are also exempt from tax in Ireland. However, this is a complex area - and one which you will need to get advice on.

In general, the Irish Revenue Commissioners are happy to see inward flows of pension monies. So the broad rule of thumb is that if the US provider will allow the funds to be transferred to Ireland, then Ireland will accept it.

You will need to confirm whether the provider in the US will permit a transfer in the first instance. Then you will need to take advice to establish if it makes financial sense to do so - that is, you need someone to clarify the benefits being sacrificed and compare them to what's available here.

Get advice on US taxation - and the taxes that could arise from such an overseas transfer - from a suitably qualified and authorised body before making any decision on this.

I would like to check something before filing my tax return for 2014.

In early September 2014, I gave up a full-time job and became self-employed. In the tax return, I am given an option to claim the PAYE tax credit of €1,650. Can I claim the full PAYE tax credit of €1,650 for 2014?

If not, do I claim only two-thirds of it to reflect the two-thirds of the year that I was a PAYE employee? I earned about €40,000 as a PAYE employee between January and September 2014.

Claire, Cootehill, Co Cavan

The PAYE tax credit is only granted against PAYE income. Once your PAYE income for the year is above €8,250, you are entitled to claim the full amount. So you can claim the full credit for 2014.

However, when calculating your preliminary tax for 2015 this year, bear in mind that you won't be able to claim the PAYE tax credit for 2015 - unless you return to full-time employment before the year is out and earn PAYE income of more than €8,250.

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