The Gazette 1993

GAZETTE

NOVEMBER 1993

Assets X - House (sole name): X» Contents (sole name): 15,000 • Bank account (sole name): 30,000 X • Shares in PLCs joint names with spouse: 100,000 X • Bank account joint name with spouse: 50,000 X • Life policy - children nominated beneficiaries: 20,000 X • Bank account joint names with children: 20,000 Gross Estate £315,000 £100,000

if the surviving spouse was to die leaving a dependant child the tax shall not be charged on any property on which tax was already paid 20 . The new probate tax makes the necessity of careful estate planning all the more relevant to disponers. As practitioners we should review all our wills with our clients. The new probate tax makes the necessity of careful estate planning all the more relevant to disponers. As practitioners we should review all our wills with our clients, as while they may have made provision to minimise Capital Acquisitions Tax on their death, their estate might still be liable to probate tax which in the case of farms or business assets could place a considerable additional financial strain on a beneficiary. As joint property is currently totally excluded from the scope of the tax, it is one route a disponer could consider, especially where a spouse is to be the principal beneficiary. As practitioners we have an opportunity to impress upon our clients the necessity for estate planning, especially as if past experience is any guide, we can expect the Revenue to attempt to increase the tax take from this tax by increasing the percentage charge in years to come. It must always be remembered that unlike Capital Acquisitions Tax, whereby a spouse Appendix 1. Section III (c) Finance Act, 1993. In addition each person entitled to an interest in possession to a share of the estate of the deceased or for whose • benefit any of the property subject to a relevant trust is applied or appointed shall also be responsible. Section III (d) Finance Act, 1993. This charge applies as if each of those persons were a person referred to in section 35 S.S.2 Capital Acquisitions Tax Act, 1976. takes from another totally free of tax, same is not the position with probate tax.

4. Section 117 (b) Finance Act, 1993. The interest is charged at simple interest rates. If the tax is paid within nine months the amount of the tax should be reduced by multiplying the amount of the tax by 1.25%, and multiplying that figure by the number of complete months outstanding to the ninth month

from the valuation date. If tax is overpaid by the taxpayer it will be

funded with interest of 0.06% per month. The amount of interest cannot exceed the amount of the tax - section 117 (d), 1993.

5. Section 116 Finance Act, 1993.

Debts

6. Section 118 Finance Act, 1993. The Revenue have indicated that only in

• General: • Mortgage:

5,000

20,000

exceptional circumstances will a postponement of tax be granted.

• Funeral Expenses:

2,000

• Administration Expenses (estimated):

5,000

7. The Revenue have indicated that if the securities are lodged with them with a consent to have a stop placed on the securities, and an undertaking to execute a formal transfer when the personal representative is legally empowered to execute a transfer, they will accept same as complying with section III (h) Finance Act, 1993. 9. Section 10, sub-section 4, Succession Act, 1965. "The references in this section to the real and personal estate of a deceased person are to property to which he was entitled for an estate or interest not ceasing on his death, and include property over which he exercised by will a general power of appointment." 10. Section 112 (c) and (d). A dependant relative has the meaning assigned to it by sub-section (9A) (a), (as inserted by the Finance Act, 1979) of section 25 assigned to it by section 109 Finance Act, 1993. For the exemption to apply to a dependant child or dependant relative, they must ordinarily reside in the premises. 11. Section 109 Finance Act, 1993 as enacted, gives the taxpayer the option of nominating which residence the exemption applies to where more than one residence is used equally. 12. Section 109 Finance Act, 1993 - see definition of "the net market value of the dwelling house". (Continued on page 358) Capital Gains Tax Act, 1975. A dependant child has the meaning 8. Section 109 Finance Act, 1993.

The assets exempt from probate tax are marked X

Net Value of assets over which power of disposition: Deduct House and Contents:

£145,000

115,000 35,000

Deduct Debts, Mortgage and Funeral Expense:

27,000

8,000

Taxable Value:

As value is less than £10,000 no tax is payable.

If "A" died with all the above assets in sole name the following is the tax calculation.

£315,000

• Value of Estate • Deduct House and Contents • Deduct Debts, Funeral and Mortgage:

115,000

27,000

173,000

Taxable Value:

Tax at 2% = £3,460

The tax where payable is borne proportionally by each beneficiary, to the extent of the amount of the value of their inheritance, unless their particular inheritance is exempt from probate tax 19 . The Revenue have given relief in respect of quick succession in the case where a spouse dies leaving a spouse and a dependant child, if the surviving spouse dies within one year, or within five years

2. Section 113 Finance Act, 1993.

3. Section 117 Finance Act, 1993.

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