What better way to help our grandchildren?

  • What better way to help our grandchildren?
    Independent.t. E.
    Q I recently became the proud grandfather of two grandchildren. What is the most tax-efficient way I have made a financial contribution to the future of my grandchildren? I mean the annual contribution of different nature depending on my future ability to do so. Michael, County Kildare
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    https://www.independent.ie/business/personal-finance/article37207164.ece/bc0df/AUTOCROP/h342/2018-08-12_bus_43079542_I1.JPG

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Q I recently became the proud grandfather of two grandchildren. What is the most tax-efficient way I have made a financial contribution to the future of my grandchildren? I mean the annual contribution of different nature depending on my future ability to do so. Michael, County Kildare

As it is now (i.e., since the budget is announced in October 2016), each of your grandchildren has the right to receive up to a total of €32,500 for his life from you as their grandfather – without any tax liabilities. Gifts and inheritance above this amount are taxed on the purchase of fixed assets (the cat is also known as gift or inheritance tax) at the prevailing rate, which is 33pc.

You consider making an annual contribution of different nature depending on your ability to do so – in this case, using the annual gift exemption may help you.

This exemption from paying taxes, you can provide financial assistance of up to €3,000 per year for each of their grandchildren – and it is €3,000 will be exempt from tax and does not affect the €32,500 limit of life, referred to earlier.

We also note that the annual exemption gift you can receive each year from any number of people. For example, each of your grandchildren can receive an additional €3,000 from their grandmother, without incurring a gift tax liability.

The first steps in the development will be

Question I am in my early 40’s and my husband and I have three small children. It was in our mind for some time to make a will, but we never seem to get around to it. What information do we need to come together so that we can make a will?
Emma, County Wicklow

As a basis for financial planning, I would recommend to everyone that they will be in place. There are several good reasons why you should do will be, and indeed regularly to see what happens.

By making a will your estate will be distributed according to your wishes. You can appoint guardians for their children should both parents die when your children are minors. If you have significant assets, this will allow you to plan to mitigate (as possible) possible inheritance tax liabilities that may arise from the transfer of assets to children and others – for example, you can leave all property to your spouse free from inheritance tax. There is less legal delays and disputes for dependents, when a man died and left a valid will, rather than if left. When a person dies without leaving a valid will, the succession Act 1965 determines who should inherit the deceased estate and in what proportions. In your case (assuming your spouse and children survive you), two-thirds of his property will go to your spouse; the rest is divided equally among the children.

A lawyer should not write a will, and it can be argued that you don’t need legal help to make a basic will. In my experience, though, to do it is better to engage a lawyer. Homemade wills can be dangerous and lead to legal disputes after you die, if the wording is unclear.

To make a will, the following information is required: personal information about you and your spouse (for example, real names, date of birth), and the same for your children; information on current and previous marital status; a summary of your assets; a summary of your debts; plans of beneficiaries.

Pension investment strategy

Question I am 40 and recently took a new job with a new company. The company offers a Retirement plan, where it will match my contribution 10pcs. The company offers two different investment strategies. The first is the default setting that automatically changes my asset mix as you approach retirement. Under this option, as I near retirement, I have 25 PCs invested in a Fund of funds, and the rest in a Pension Fund or an approved Retirement Fund (ARF). The second option, where I get to make their own investment decisions when you choose what percentage of my contribution goes to the following funds (global equity Fund, multi-asset Fund, bond Fund and cash Fund). I have to go with the first option or the second option? If I go with the first option, which would be better: the Retirement Fund or ARF? If I go with the second option, what would be the best percentage of my pension savings?
John, Dublin 3

I think from the information you provided that the scheme company is a professional scheme, not the scheme proposed prsa.

It is worth noting that as you are in your 40s, you can contribute up to 25 PC of your salary – in the range of €115,000 for Pension plan and benefit from full tax relief at your marginal rate. The contribution of employer will not affect this.

For most individuals, their pension plan is the largest income productive asset they possess. Unfortunately, due to long-term planning, often accidental approach.

At this point I must stress that it will not be possible for me to advise what is the best strategy for you. To accurately and responsibly will advise You on investment decisions here the full risk analysis will be required so that there is no clarity about what your risk profile. People have different capabilities to fight short-term fluctuations in the value of investments.

My own opinion is that retirement is a distant, medium or high risk approach to investing your pension meaning.

You have no short-term use for the money, and if the downturn in the markets, you have time to wait for recovery. The fall of the market can also work in your favor, this means that the new pension contributions you can take advantage of lower market prices.

Your company must have a Pension consultant, or you can use the services of an independent financial Advisor or planner to give you better information based on your risk profile.

However, here is a sample list of parameters, referenced by you. The first strategy you mention plans Pension Fund (annuity) or OPN under the investment default strategy.

An annuity is designed to provide you with a guaranteed income for the rest of your life in retirement. Insurance is generally more suitable for people with low risk appetite and who would priorities a guaranteed income for their retirement years.

Single life income is the only source of income in your life. A joint life annuity, part of your pension paid to your spouse after your death.

ARF gives you more control over how your Pension Fund. XRF allows you to keep your funds invested, to control investment and flexible income during retirement.

It is suitable for long term estate and tax planning, as it can pass after the death of your spouse or civil partner and become an ARF in your name, or it can be transferred to your property – so he will not die with you.

The second strategy link takes you away from the default strategy and provide you with access to four different investment classes.

Most commentators would consider a global equity Fund should be high on the investment scale of risk – with money, with the lowest risk.

 

Patrick McGettigan-McGettigan’s Key financial planning (mcgettiganfp.t. E.)

And we will make every effort to accommodate your questions with the most appropriate expert for your inquiry, this article is not intended to replace professional advice

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