Despite record levels of wealth and an ageing population, people in Ireland aren’t properly planning for how they will pass on their wealth after they die.
Recent research conducted on behalf of Irish Life has found that although people in Ireland intend to leave significant sums as inheritance to their family, there is a stark lack of awareness around inheritance and tax implications.
Having accumulated more wealth over their lifetime, 20 percent of over 55 year olds expect to leave in excess of €500,000 in inheritance and a quarter of over 65s expect to leave the same amount to their families.
This is contrasted with the ‘squeezed middle’ generation, where just seven percent of 35-54 year olds expect to leave more than €500,000 in inheritance to their families. Almost half, 47 percent, of people plan to leave over €100,000 in inheritance.
There is a widespread lack of awareness of the levels of inheritance tax that may have to be paid by families in the coming years, with 84 percent of people not knowing what the current inheritance tax rate is and two thirds of people do not know what the thresholds are. The current tax-free allowance for children is now €310,000, significantly lower than the €542,000 threshold prior to the financial crisis.
The research also found that half of people think that their family home is totally exempt from inheritance tax. With strong increases in the value of property and stock-markets over the last five years, thousands of people risk leaving big tax bills behind for their family to face in the future.
The lack of planning for inheritance is also evidenced by the fact that only 43 percent of people in Ireland claim to have a will in place, and a quarter of over 55-year olds have no plan for transferring their assets in the future.
The research also found that only half of people have discussed their inheritance plans with a solicitor, while another third haven’t yet discussed their financial plans with anyone.