Help your clients transfer their assets tax efficiently

This article is for Financial Broker use only

The lifetime transfer of an asset can give rise to a gift tax liability for the beneficiaries of the gift. To fund for this gift tax liability, your client can endorse their Aviva Savings Plan under Section 73 of the Capital Acquisitions Tax Consolidation Act (CATCA) 2003.

The benefit of using an Aviva Savings Plan to fund for a future gift tax liability is that if the qualifying conditions, prescribed by the Irish Revenue Commissioners (“Revenue”), are met, the proceeds of the policy (to the extent used to pay the gift tax liability of the beneficiary) are exempt from CAT and will not increase the gift tax liability of the beneficiary.

Some of the Revenue qualifying conditions of section 73 CATCA 2003 are:

• The policy must be in a form approved by Revenue. The Aviva Savings Plan is approved by Revenue for the purposes of section 73 CATCA 2003.
• The life insured and policyholder must be the same person. Jointly owned policies will only qualify for endorsement under section 73 CATCA 2003 where the joint owners are a married couple or registered civil partners. The premiums must be paid by the policyholder. The Aviva Savings Plan  is written on a joint life second death basis.
• The policy must specify that it has been effected under section 73 CATCA 2003 from the outset. You cannot add the endorsement to existing Aviva Savings Plan.
• Premiums must be paid annually (including a derivative of an annual premium such as monthly premiums) for a minimum of 8 years. The net premium paid (the annual premium in any continuous twelve-month period less any benefit received from the policy e.g. a partial encashment) cannot be less than 50% of the net premium paid in any other continuous twelve-month period or less than 50% of the net premium paid in the first continuous twelve-month period.
• On encashment, if all Revenue qualifying conditions have been adhered to, the policy proceeds will allow your client to pay gift tax on a lifetime gift made within one year of the policy being encashed, without it giving rise to another taxable gift.

The policyholder is under no obligation to use the proceeds of their Aviva Savings Plan policy that has been endorsed under section 73 CATCA 2003 for the payment of gift tax, making this a flexible succession planning option for your client.

Resources

Download Regular Saver Section 73 Customer Brochure

Download Regular Saver Section 73 Broker Guide

Talk to your Aviva Account Manager today about using an Aviva Savings Plan to help your client fund for a future owing gift tax liability.

Warnings

Warning: If you invest in this product you may lose some or all of the money you invest.
Warning: Past performance is not a reliable guide to future performance.
Warning: The value of your investment may go down as well as up.
Warning: These funds may be affected by changes in currency exchange rates.