Estate Planning : A Section 72 Insurance policy
Estate Planning : A Section 72 Insurance policy is to provide an additional lump sum on death that should cover the tax liability due on the inheritance of your assets.
A Section 72 Insurance policy is to provide an additional lump sum on death that should cover the tax liability due on the inheritance of your assets. The proceeds of this policy do not form part of the estate for tax purposes. This was previously known as a Section 60 policy.
When you die, and your estate is passed onto your nominated beneficiaries, and inheritance taxes, if payable, are deducted before assets are distributed. The current capital acquisition tax (CAT) rate payable is 33% on any amount over the personal thresholds allowable. There are three groups of thresholds. The thresholds vary depending on the relationship between the beneficiary and the deceased.
CAT thresholds peaked in 2009 at €542,544 for Category A. Have asset values such as house prices and pension funds increased or decreased since 2009? The current CAT threshold for Category A is €335,000. Apparently, there are only two certainties in life, death, and taxes.
In 2020, net receipts for CAT were Category A €156m, Category B €217m, Category C €57m for a total of €430million.
Key feature of a Section 72 insurance policy include:
Of course, this Section 72 insurance policy option is just one aspect of inheritance tax planning.
References:Revenue: Net Receipts for Capital Acquisitions Tax
Capital Acquisitions Tax (CAT) thresholds, rates and aggregation rules
Capital Acquisitions Tax (CAT) Guide
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