| 13.4°C Dublin

Understanding wills and taxes


Stock image.

Stock image.

Stock image.


IF a person dies and has made a will, then their assets pass to the beneficiaries. However, if there is no will, then Letters of Administration are taken out and the assets pass in accordance with the Succession Act.

Nowadays, most people with assets will have made a will.

If the assets are income-generating, then the deceased is not liable to taxes on post-death income but the executors will be. If there are substantial assets, then the Estate will have to register for income tax and file tax returns. By concession, if all the beneficiaries are resident in Ireland the Revenue may treat them as succeeding to the income from the date of death. This avoids the need to register the estate as a separate taxpayer.

Prior to making a will, a farmer would be well advised to talk it over with the family rather than just going with legal advice. The traditional farm will meant that it was very unlikely that the family’s affairs could go to another legal firm. The advice locked them into the legal firm.

This is Wicklow Newsletter

The local stories that matter in the Garden County, delivered directly to your inbox every week

This field is required

Inheritance tax will have to be considered if the beneficiaries are in line to receive more than €335k each. The tax can be calculated based on the date of death or the date of Grant of Probate which is often about a year later. Using the later date gives time to reorganise one’s affairs and also more time to pay the inheritance tax without an interest bill for late payment.

In farming, eligibility for Agricultural Relief is vital as it reduces the value of the assets by 90 per cent. To qualify then a person must have 80 per cent of their assets in agri-property on receipt of the inheritance. Between the date of death and the date of Grant of Probate a person who did not qualify for Agri Relief could transfer their non-agri assets to their spouse if it is property or switch investments, such as a Deposit Account, to cattle so that at the Grant of Probate date then 80 per cent of the assets will be in agri-property.

A very useful method of saving Inheritance Tax where cash funds are passing to a beneficiary is to require the beneficiary to invest the funds into forestry or farmland within two years so that the cash funds are regarded as agricultural property. As a result an inheritance of €1m is treated tax wise as only €100,000 after the 90 per cent discount is applied. In order to retain the Agricultural Relief the beneficiary is required to hold the assets for at least six years.

With a view to assisting the expansion of full-time farmers’ holdings there are now conditions attached to qualifying for Agricultural Relief which are based on weekly hours worked. Effectively, they exclude part-time farmers. If one cannot qualify on an asset basis for Agricultural Relief then one can still claim Business Relief, which also gives a 90 per discount from market to taxable value.