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Tuesday 18 June 2019

Home Economics: Our property finance expert answers your questions

 

(Stock image)
(Stock image)
Sinead Ryan

Sinead Ryan

Q My husband and I wish to leave our family home to our youngest son who isn't married as our other children are settled with families of their own. We have decided this is best as he is renting and wouldn't be on the same level of earnings as the others. In lieu we are distributing assets to our three other children which won't be worth as much but we know they won't mind. My question is whether this is allowed (or do we have to share our estate equally?) and furthermore whether it would be beneficial if we transferred the house to his name now while we are still alive. We are both in our early 80s and are well, although we would like to get our affairs in order.

A First of all, yes, it is allowed. You can distribute your estate to whomever, and in any proportion that you wish, so your younger son can inherit whatever assets you wish to leave him. That said, more acrimony is caused in families by uneven bequests than practically anything else I hear about. I'd strongly advise, if you haven't already done so, to make a will. If you don't, then your wishes will come to naught and a court may end up deciding who gets what after the lawyers take their share.

It is a very good idea to sit everyone down and discuss your wishes and your reasons for them. This is often an uncomfortable thing to do and certainly your children may not even want to have the conversation. You may be quite right that they "won't mind", but it's worth clarifying so there are no surprises later on.

From a tax point of view, a child is allowed to inherit up to €320,000 from a parent tax-free (this includes an accumulation of lifetime gifts). It may be the case that leaving one son the entire property creates an unintended tax liability (the tax applied on amounts over this is 33pc). So, in fact, you may find you can avoid him being saddled with a bill by leaving the property to more than one child. There are legal measures you can put in place so that he can stay there, or at least be able to buy somewhere else with his proceeds. Transferring the house while you are still alive would make no difference.

Talk to your solicitor, and your children. It will be a smoother path if you explore all options.

 

Q I have received the renewal on our house insurance which has risen by 15pc. We have not had a claim and have no idea why it has increased. We rang the company which told us it was in line with other increases and the 'market', which I don't understand. I rang another company and it was even higher. I heard you mention a company that will value your house for insurance to help lower the premium. Can you advise what I should do?

A There's far too little space here to get into the vagaries of why insurance companies quote as they do. Suffice to say it's an enormous bugbear of mine. There's huge lack of transparency in the market and even though you may not have had a claim, other customers have, and that's caused premium increases across the board.

Shopping around is important, so well done on starting that. Continue, by calling three or four, or let a broker do the work for you (it's usually free as they are paid a commission by the insurer which won't reflect in your premium and can even be a cheaper quote than one you get yourself).

I think the organisation you may be referring to is the Society of Chartered Surveyors (www.scsi.ie). I usually mention them in regard to properly valuing your house as it's often the case people mistakenly insure property for what it's worth if they were to sell it, when the correct valuation is the cost of re-building it, which is substantially lower. The SCSI (and many insurance companies) have valuation calculators on their websites so you can get a better idea of this. You can instantly reduce your quote by changing this figure. Then, be realistic about your contents. Many of us insure for far more than we would actually get in the event of a claim. Only list genuine valuables (say over €2,000) on the 'All Risks' section (which will be priced individually), everything else can go under general contents.

 

The Ryan Review

What's good for the goose is good for the gander and while some banks haven't been slow in cutting interest rates for mortgage borrowers… they haven't forgotten depositors.

The beleaguered saver is a hardy species. Over €100 billion is on deposit from ordinary households in banks, credit unions and post offices - an enormous sum languishing for no purpose other than to be minded. Indeed, inflation can mean a net negative return, which would normally see the cash withdrawn rapidly and put into better return vehicles, or spent. That we're not doing that means people are still smarting from financial fallout and despite the economy booming again, we have long memories.

Both AIB and KBC have announced cuts to savings rates, albeit from a drastically low base (1pc to 0.9pc in the former's case which will hardly amount to a hill of beans for either bank or customer). The only comfort customers should get is that it signals nobody expects mortgage rates to rise now.

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