Inheritance tax, gifting, property and the financial decisions that affect the people you leave behind. Most of this is simpler than you think, and the cost of not planning is almost always higher than the cost of planning.

Why estate planning matters

Nobody enjoys thinking about this. But the difference between a family that has planned and one that has not is stark.

Without a plan, an inheritance can trigger a tax bill that forces a property sale. With a plan, that same inheritance passes smoothly, the tax is covered and nobody is scrambling to find money they do not have.

Estate planning is not just for the wealthy. If you own a home, have savings, run a business or simply want to make sure your children are looked after, there are things you can do now that will make a significant difference later.

Inheritance tax: The basics

In Ireland, the amount a person can receive tax-free depends on their relationship to the person who dies.

Group A (child): €400,000 threshold.

Group B (sibling, niece, nephew, grandchild): €40,000 threshold.

Group C (everyone else): €20,000 threshold.

Anything above the threshold is taxed at 33 per cent. These thresholds are lifetime cumulative.

For a family home worth €600,000, a child inheriting it faces a potential tax bill of €66,000. That is a significant sum to find, especially if the rest of the estate is tied up in the property itself.

What you can do about it

Use the annual gift exemption. You can give up to €3,000 per person per year without it counting against their lifetime threshold. A couple can give €6,000 per child per year. Over 20 years, that is €120,000 moved outside the tax net entirely.

Consider a Section 72 life insurance policy. This is a life insurance policy specifically designed to cover an inheritance tax liability. The proceeds are used to pay the tax bill so the estate itself does not have to be sold or diminished.

Think carefully about lump sums and mortgages. A lot of people inherit money and immediately clear their mortgage. That instinct makes sense emotionally. Financially, it is not always the best move. A mortgage is typically the cheapest borrowing you will ever have. If the interest rate is low and the term is long, putting that inheritance to work in a pension or an investment may deliver a better outcome over time.

Review your will and your beneficiaries. Policies, pensions and savings accounts all have nominated beneficiaries. If those nominations are out of date, the money may not go where you intend it to, regardless of what your will says.

If you have recently inherited money

If you have recently inherited money or received a large gift, the instinct to pay off a debt or park it in a savings account is understandable. Before you act, it is worth a conversation about whether that money could work harder somewhere else. The conversation is free, and there is no obligation.

Estate planning for business owners

If you own a business, the estate planning picture has additional layers.

What happens to the business if you die? Is it sold? Does a partner take over? Does your family inherit shares in a company they have no involvement in?

Business relief can reduce the taxable value of business assets by 90 per cent, but it has conditions around the type of business, how long you have owned it and who inherits it. Getting this wrong, or not planning for it at all, can leave your family with a tax bill on an asset they cannot easily sell.

Where to start

If you have not thought about estate planning, or if your circumstances have changed since the last time you did, start with a conversation.