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Capital gains tax, gifting and taxes, trusts and savings plans

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Q. I have 450 shares which I would like to give to my son. Will he have to pay tax on them and if so, how much? Should I sell them and just give him the money?

A. Firstly, if you sell the shares you may have to pay capital gains tax of 33 per cent on any profit made on the sale. Talk to an accountant to confirm taxation etc. on the sale prior to selling.

You can gift your son up to €3,000 per annum without any tax being due on the gift and if the value of the shares is above the €3,000 you can spread out the gift over a number of years. You can choose to gift the money immediately or put it in a special savings plan under a Trust. This way, all premiums paid are deemed to be paid to the child at the time of payment and belong to the child. This Trust is useful, for instance, if your son is young and you’d like the money to be used for college fees in the future..

The Trust is a legal arrangement that allows a trustee(s) (chosen by you) to hold assets given by a Settlor (you) on behalf of a beneficiary (your son). This is done as part of the application process when setting up the special savings plan. Setting up a Trust also removes the need for it to be included in your will.

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If you gift more than the €3,000 in any year, the excess will be liable to tax and as a result it will reduce the lifetime Threshold (currently €335,000) from a parent to a child. Any gifts and/or inheritance above this lifetime Threshold will be taxed at 33 per cent. If you have a partner/spouse, they can also pay €3,000pa to your child. Anyone can gift anyone up to €3,000 tax free each year.

In conclusion: the Child Savings Plan is primarily designed for wealth extraction for minor children who legally cannot take out a policy in their own name, hence the policy can be assigned to them. All contributions are treated as gifts to the child and do not impact on the threshold for capital acquisitions tax (CAT) purposes.

An adult child may take out any savings plan in their own name to which parents or grandparents can contribute the Small Gifts Exemption amount. The Child Savings Plan is primarily for minor children. Using the General Trust Form ensures that the sum insured goes directly to those named as beneficiaries, without the assets of the policy becoming part of the deceased’s estate. It’s an ideal way of estate planning to specify who gets the value of a policy upon the life insured’s death.

Financial Advice Corner with Philip Cullen of Southeast Mortgages & Financial Services

This article aims to give information, not advice. Always do your own research and/or seek out advice from a regulated financial broker and/or professional tax adviser before acting on anything contained in this article.


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