The Freedom Kit: Your mini guide to the business of marriage

Marriage is often perceived as the union of two souls, but in the eyes of the law, it's also a financial partnership. Understanding the business aspects of marriage, particularly regarding inheritance and tax implications, is crucial for couples in Ireland. With changing societal norms and legislative updates, navigating these waters requires careful consideration and planning.

Inheritance

In Ireland, the Succession Act of 1965 governs the distribution of assets upon death, including those of married individuals. While marriage automatically grants certain inheritance rights, couples need to comprehend the nuances of these laws.

One critical aspect is the concept of "spousal share." Under the Act, a surviving spouse is entitled to a share of the deceased's estate, regardless of the presence of a will. This share depends on various factors, such as whether the deceased left children or parents behind. Understanding these provisions can help couples plan their estates effectively.

Moreover, Ireland introduced the Civil Partnership and Certain Rights and Obligations of Cohabitants Act in 2010, extending inheritance rights to civil partners and cohabitants. However, disparities may still exist, making it imperative for couples to seek legal advice to ensure their wishes are protected.

Tax Implications

Marriage can significantly impact tax obligations, both during one's lifetime and after death. In Ireland, the tax implications of marriage extend to income tax, capital gains tax, and inheritance tax.

The Revenue Commissioners govern taxation matters and provide various reliefs and exemptions for married couples. For instance, spouses are eligible for certain tax credits and can avail of joint assessment for income tax purposes, potentially reducing their overall tax liability.

However, concerning inheritance tax (commonly known as Capital Acquisitions Tax), marriage doesn't automatically provide exemptions. While transfers between spouses are generally exempt, transfers to other relatives or unrelated individuals may incur tax liabilities, depending on the value of the assets transferred.

To optimise tax planning, couples should explore available reliefs, such as the dwelling-house exemption or small gift exemption, and consider utilising trusts or life assurance policies to mitigate potential tax burdens.

When love breaks down

Divorce is a complex legal process with significant financial implications in Ireland. When a marriage ends, assets acquired during the marriage are typically subject to division between the spouses. This can include property, pensions, savings, and investments.

The Family Law Act 1995 and subsequent amendments govern divorce proceedings in Ireland. Courts will consider various factors when dividing assets, including the duration of the marriage, the financial contributions of each spouse, and the needs of dependent children.

Divorcing couples need to seek legal advice to understand their rights and obligations fully. Mediation and alternative dispute resolution methods are often encouraged to reach amicable settlements and avoid costly litigation.

Marriage does ensure a fairer distribution of assets and offers greater protection and easier access to a share of cash, pension or property. However, the legal position for “qualified cohabitants”, who prove their financial dependence on the other, has improved in recent years.

Planning Ahead

Effective planning is paramount in managing the business aspects of marriage in Ireland. Couples should engage in open discussions about their financial goals, estate plans, and tax strategies. Seeking professional advice from solicitors, accountants, or financial planners can offer invaluable guidance tailored to individual circumstances.

Moreover, regular reviews of estate plans and tax arrangements are necessary to adapt to changing laws and personal circumstances. As life progresses, such as the birth of children or the acquisition of assets, adjustments may be required to ensure that the intended beneficiaries are adequately provided for and that tax liabilities are minimised.

Carol Brick is Managing Director of CWM Wealth Management and HerMoney. A qualified financial advisor, she specialises in the area of Asset and Wealth Management. See hermoney.ie or cwmwealthmanagement.ie for more details.

About HerMoney

HerMoney provides tailor-made financial solutions to self-employed professional women and service contractors all over Ireland. With offices in both Cork and Dublin, the business is a sister company to the long-established CWM Wealth Management