Two readers, Mr S in Dublin and Mr R in Louth, are concerned about the costs involved in leaving property and other assets to their dependants. Mr S has left all his property to his wife and has made her sole executrix, though she is uneasy about taking on this role. He is also wondering if transferring her name on to the deed of their house would lessen any inheritance tax due and whether she will encounter any difficulties (of access and tax) over their joint ownership of four building society accounts if he should pre-decease her.
There is no inheritance or probate tax liability between spouses, so Mrs S will not be facing any tax bill on the inheritance of their family home after her husband dies. There will be a small charge for transferring the family home into her name and if he so wishes he can do this now to avoid extra work later. Since both their names are on their joint accounts, Mrs S will also have immediate access to their funds should he pre-decease her. The building society will remove a deceased account holder's name from a joint account, if informed. As for Mrs S being sole executrix of his estate, he is quite right in his letter when he says: "As I see it, one of our children could do all the work and my wife's role would be merely to sign whatever is necessary." Settling an estate, if there is a will and the assets are relatively straightforward, is not a complicated business.
Meanwhile, Mr R in Louth wants to leave the family home to his daughter, but wants to lessen any inheritance and probate tax she may have to pay. The house is worth £100,000. "Which is the better option? To leave the house by will? Does this incur the 2 per cent probate tax? Or hand over the house now as a gift? Does this incur stamp duty? Of what percentage?"
The value of Mr R's house falls within the tax-free threshold for inheritances or gifts between a parent and child - currently just under £190,000, so there is no CAT liability. Probate tax is only payable on the proceeds of an estate upon the death of the disponer, which also does not apply in this case. Stamp duty is payable only when a house is sold. Aside from minor legal and/or land registration fees to register the change of ownership, (something Mr R could do himself) there are no significant costs involved in gifting a property to a child. This assumes that the child has not already inherited from other sources. If she has, her personal CAT tax free threshold will have been partly used and could result in a tax liability in this case.
