Q: I have three grandchildren, two of whom are under the age of 18 and have lived with me since they were very young. Their mother has been very unwell and lives elsewhere in the county. I intend on leaving these two grandchildren everything in my will. I have discussed my wishes with my other children and they are happy that these grandchildren are provided for. These grandchildren have their own difficulties and I would be worried that they would be an easy target for someone to get at any money that might be coming to them (including their own parents sadly). What can I do?
Inheritance queries of this nature can be difficult to give full advice on without knowing your precise circumstances, both financial and in terms of family.
The first thing to consider is the inheritance tax situation. Each of your grandchildren would fall under Category B of the Capital Acquisitions Tax (CAT) thresholds. They would each be entitled to inherit the sum of €32,500.00 from you as a grandparent. Any value over that was left to either or both of your grandchildren would be taxed at 33 per cent on the excess.
If certain conditions are met, the value of your home might be excluded from the calculations with regard to CAT. You should discuss the matter with an accountant or tax advisor.
Leaving aside the question of inheritance tax, you naturally want to ensure that any funds or assets you leave for your grandchildren are protected for them. You could provide for a trust to be set up in favour of your grandchildren in your will, for example.
Essentially, the property or monies would be left to a third party who would use the assets for the benefit of your grandchild, without the trustee being able to use them for their own benefit or your grandchild having any control over the funds.
You would need to ensure that the trustee is a person in whom you have absolute faith to administer matters in the best possible fashion for your grandchild.
Discretionary trust tax may be payable on the assets of the trust when your grandchildren reach adulthood and can vary depending on how long the trust is in being. Again, this is something that you should discuss with your own solicitor, accountant, or tax advisor.
This can be a relatively complicated area and you should ensure that you take all the necessary tax and legal advice from your solicitor and financial planner, who will assist you in tailoring a solution based on the needs of both you and your grandchildren.