Q: My father died at Christmas after an illness and left me the family home (worth €500,000) in his will, which surprised me and caused some anger for my three siblings.
I think he did that because I’m the only one who isn’t ‘settled down’, ie with my own family, and that bothered him a lot (although I’m perfectly happy!), and I’m the youngest and only girl. I moved back in to look after him during Covid last year and was there during his final months.
It saved me rent so I didn’t complain but I never tried to leave the house but I’m not sure any brother and especially his wife believe me. The whole thing has caused some dissent. I do not know what to do. I assumed the house would be left to the four of us. I want them to have something.
On the one hand, your father was clear in his desires. He made a will that left you the house for reasons neither of you may agree with, but which you should probably honor. That’s the point of a will, and whatever you think that’s what he wanted.
However, there can be disagreements in families when a will is considered “unfair” to some parties. Is there any suggestion that your siblings would legally challenge the will (so called Section 117)?
If this were the case, it would be extraordinarily difficult to succeed and legally expensive. You want your siblings to get “something,” and that’s commendable.
Taxback.com’s Mark Corcoran has reviewed the options: “Assuming this is the only gift and inheritance you receive within your Group A (parents) threshold, your capital gains tax liability is estimated at: €500,000 – €335,000 € = €165,000 x 33 percent tax = €54,450 due.”
That’s your bill no matter what you do and it needs to be paid quickly.
“Secondly, it is your right to turn down a legacy and if you do so the house falls within the remainder of the estate, meaning you would each receive a quarter (€125,000) without it going through you first probably wouldn’t mean a CAT bill, but you can’t do that if you’ve “accepted” the inheritance.
“If you ‘gift’ your siblings €125,000 and now ‘gift’ €125,000, their tax-free amount from you is €32,500, leaving a bill of around €29,000 to pay for each. If you intend to share the proceeds with your three brothers, an amount equal to your entire tax bill should be set aside.”
Q: I took out a mortgage with bank-bought life insurance in 2005. I received a message that I need to increase the premium from €67 to €140 because there are not “sufficient funds” to cover the cost of cover.
They own the policy because of the mortgage and I don’t see how that can happen. The bank said it depends on the type of policy I have but how many types can there be?
Do I have to pay?
That sounds suspiciously like you were sold a life insurance policy. By far the most expensive form of life insurance has a savings element, part of which pays for coverage by building up a pot over the term, but given the exceptionally low returns, cannot match the level of the underlying premium.
Mike Knightson, a broker at KM Financial, agrees it looks like unit-linked life insurance. “It also looks like it will be indexed annually.” He adds that these policies are rarely sold in conjunction with mortgages anymore, which is good.
“What you need is mortgage protection or a diminishing term policy or at most an equal term plan if it is an interest free loan. All are cheaper than what you have.
“A new client of mine received a similar letter on a policy that started at £31 (€40) a month 20 years ago and the insurer now wants €202 a month, with the likelihood of it coming back at the next review increases When asked if you have to pay, the answer is no.
“You can buy a replacement policy for basic needs, which is also significantly cheaper in old age and which the bank can allocate for its own purposes.”
However, Mr Knightson rightly makes a reservation. “If your health has deteriorated badly or you have started smoking, keeping it up may be the most cost-effective option.
“But if that’s the case, compare your mortgage balance to the policy coverage. There is likely to be a large overhang and you could always request a reduction in the coverage ratio. Your review document should have a few options for that on it.”
He recommends using a broker who will match prices between different insurers, but warns that not all services are created equal. “Life insurance comes in all shapes and sizes and only a broker who reviews your current plan can properly replace it to keep the bank happy.”
You will lose commissions on the plan you give up, but don’t let that stop you.
https://www.independent.ie/life/home-garden/homes/my-father-left-his-500k-property-to-me-and-its-causing-trouble-in-the-family-whats-the-best-way-to-share-the-inheritance-with-my-siblings-41483886.html My father left me his €500,000 fortune and it’s causing trouble in the family – what’s the best way to share the inheritance with my siblings?