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Mr & Mrs Reid, 45 & 42, Ireland.

Posted in on Mar 23, 2020

Investment Concerns:

a) A large property portfolio that has been in negative equity.
b) The revival of the economy and rise in property prices.

Motivation to move to a Wealth Management firm:

Potential tax loss for the estate, should both parents become deceased. The Inheritance Tax would be substantial.

Mr & Mrs Reid have a large property portfolio that has been in negative equity. The renewal of the economy and rise in property prices has concerned Mr & Mrs Reid. They envisage that their net worth is €5 million and aware that the thresholds of Inheritance Tax is low and the Tax Rate is high.

They value their assets at:
Business Value €2 million, Property Portfolio €2.5 million Cash €500 K

This means that the potential tax loss for the estate, should both parents become deceased, will be quite high. Assuming all assets were passing from the deceased parents to the children today, the following would apply:
Estate Value €5,000,000,
Inheritance Tax;
€840,000 (€280,000 relief x 3 children) = €4,160,000
Tax Rate 33% €1,386,667
*The above figures do not reflect the associated Business Reliefs for Estate Planning.

What Walfrid Private offered

Walfrid Private effected a Section 72 Inheritance Plan to shelter this large liability (a Joint Life Second Death Life Policy)

Result:

The amount of the Tax liability is insured. Once the proceeds of the policy are used to pay the Inheritance Tax Liability, it won’t form part of the Estate. The Revenue Commissioners are paid the Tax liability due and the value of the Estate is not depleted. If the Clients did not plan for Inheritance Tax they would pay a large percentage of their net worth in Inheritance Tax.