Inheritance tax - Married vs not married

TheMonster

I have heard that for a joint mortage that on the death of one partner you don't pay inheritance tax if married but do if not, seems strange to me.
The revenue site backs this up.
http://www.revenue.ie/services/ind_ber3.htm#42

Surviving spouse exemption from Inheritance Tax

If you take an inheritance from your late spouse you don't have to pay Inheritance Tax on that inheritance. The exemption is unlimited - it doesn't matter how much you inherit, it is entirely exempt. There is no necessity to claim this exemption and you don't have to fill in any Inheritance Tax forms.

Any one any insights - I would have thought spouse didn't necessarily mean married.

And I am not thinking of doing away with the other half before anyone asks

MorningStar

There was a change a few years ago. Something about if the property is your primary residency for two years you can inherit it without paying inheritance. This was really benificial to all cohabitating people.
I still think there is a problem though as any cash and insurance payments could be taxed which might include life insurance but I really don't know for sure. Either way a will is a really good idea. The heartache of trying to sort out estates without will is something I would not wish on anyone.
Marriage gives a lot of rights to both parties and any children. Company pensions may not go to the partner and I am sure there are other things. THere are a few horror stories where families take everything and leave the partner standing. Without a will everything goes to next of kin that would include the house without any will.

ck1

In this country what tax you pay on inheritance is dependant on the relationship you have with the deceased. If you are spouse than you receive the inheritance tax free, if you are a child of the deceased than the exemption is in the region of €450k, if you are a blood relative than the amount is in the region of €45k and the other band is others, which partner would fall into is around €15k. The regulation regarding receipt free of IHT is if you are over age 55 and have lived in the property for I think around six years and do not hold an interest in another property. No exactly sure of the exact working of the regulation as it has been ages since I have looked at it.

In relation to pensions, most pensions in this country state that the death benefit is payable to Spouse and the only way for this to be altered is by changing the Scheme Rules. In any event what someone gets from all sources whether it be the sale proceeds of the property and some Death in Service Benefits from life assurance or just plain life assurance than the accumulated amount is subject to IHT and any exemption is depending on the relationship to the deceased. Dont also forget that Gifts from that person also fall into the equasion after any cut off date stated by the revenue. Effectively the tax payable is called Captial Acquisition Tax. This is one area which is fundementally different than the UK whereby there is no gift tax and there is only Inheritance Tax and also the tax charged in this country is based on World Wide Assets.

Little story for you.

Richard Burton died after living in Hollywood for some 37 years. Effectively he was no longer resident nor domicile in the UK. You would think that his estate woudl not have been charged Inheritance Tax in the UK. However, some years prior to his death he bough a burial plot. The UK Revenue deemed that he always intended to retrun and therefore charged full IHT to his estate. Strange but True!!!!!

is_that_so

Inheritance on joint mortgage is OK, but anything else beyond that is not if you are unmarried. The estate is available to pretty much open to anyone else in the family. A will can help but as you can see here the legal family gets precedence.

http://www.oasis.gov.ie/death/legal_issues_following_a_death/making_a_will.html

This is one area of taxation and legality that needs addressing.

ck1

Inheritance on Joint Mortgages are still subject to the relationship as to the deceased. The way a mortgage is written really has nothing to do with Inheritance Tax. There are also two ways of writing a property (not the mortgage) - one is Tennancy in Common and the other is Joint Tennancy. One is where the deceases half passes over to his estate and the other is where the deceased half passes to the joint property holder. This is detailed on the Title Deeds. A common example where the deceased part passes back to his estate is Partnership Property.

Victor

TheMonster wrote:

I would have thought spouse didn't necessarily mean married.

Specificly it does mean married. "Partner" is (deliberately) more ambigous and has no legal standing.