Life Insurance & property ownership for cohabiting couples is not so simple, as it can give rise to the tax on the benefit pay-outs, if not set up correctly. The good news is that we can show you how to avoid taxes on both life insurance proceeds and property inheritance.
Below is a summary of the points, and to learn how to address your personal situation you can reach us here.
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PROPERTY RIGHTS
Estate
The succession act allows registered civil partners automatic rights to each other’s estates on death. All other cohabiting couples can apply for a provision out of the deceased’s estate but must pay inheritance tax on it.
Mortgage Protection
Arranging mortgage protection on a joint life basis might give rise to a potential tax liability also.
There are several solutions here:
- Increase the amount of life cover to cover the inheritance tax liability.
- Take out a life of another policy
- Take out a section 72 policy.
LIFE INSURANCE
Personal Protection
Arranging the contract on a life of another basis will avoid any potential liability to Inheritance tax, but remember that in this case, the policy owner must pay the premium.
Family Protection
As cohabitants have no automatic rights to their deceased’s partner’s assets, unless they have a will in place the proceeds of a life assurance contract could end up in the hands of the deceased’s next of kin if the life policy isn’t structured properly.
Note
The small gift exemption which is currently €3,000 can be used to ensure that the policy owner is paying the premium where the policy owner doesn’t earn an income.
Ken O’Gorman – QFA
OneQuote.ie | Smart Financial Protection
