Weekly Blogs

Published on August 8th, 2016 | by BoyleToday.com

The Financial Column

Welcome to the Financial Column in association with Money Plus, the award winning Financial Services company on Bridge Street in Boyle.

Now that we’re into August, many of us are focussing on leaving cert results, college places, accommodation and the cost of funding third level education. Finding the money to finance this can be a major challenge – having a medium and long term investment plan in place can help to ease the burden of this.
Sometimes grandparents may wish to assist with this in a tax efficient way if they are in a position to do so.
As one example of this I re-print a question from a reader which we addressed late last year.

Q. My wife and I have 2 grandchildren. We are reasonable secure financially and would like to make provisions for our grandchildren’s education. What would you recommend as the best way for us to do this ?

A. In the current economic climate, many grandparents are helping or contributing to the cost of their grandchildren’s education or college fees. When doing so, it is important to remember that this could create a Capital Acquisitions Tax (also known as inheritance tax or gift tax) bill for your grandchildren unless you plan this properly.

However, under the CAT rules, there is an annual small gift exemption where you can each give your grandchildren up to €3,000 a year tax free without affecting your grandchild’s CAT tax-free threshold of €30,150 – this is the total lump sum which a grandchild can receive from grandparents before they are subject to CAT at 33%.

In the current low deposit interest rate environment, and particularly if your grandchildren have a considerable length of time before they reach the age of 18, it would be a good idea to set up a savings or investment plan under what is known as a bare trust. This allows the trustees (which are often the grandparents/parents) to invest money on a child’s behalf in a tax-efficient way.

For advice on investment planning for funding education for children/grandchildren please consult Belinda McCauley at Money Plus, your local independent financial broker. Belinda and her colleagues at Money Plus, Bridge St, Boyle would be delighted to help you. Belinda can be contacted at 071-9194000/086-7847827 or by email: belinda@moneyplus.ie.

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