The net wealth of Irish households has reached €1.2 trillion, of which €812 billion is property wealth
The new Goodbody Guide to Inheritance and Estate Planning, published today, aims to help people manage the efficient transfer of wealth to the next generation.
The report highlights how wealth is unevenly distributed across households with 49% of the total being held by the wealthiest 10% of households and a further 16% held by the next 10%.
The bottom 50% of households now holds 9% of net wealth, which is up from 2% a decade ago due to lower mortgage liabilities and higher home price values.
27% of wealth is held by retired households even though retired people account for just 16% of the Irish population.
The wealth of this grouping now amounts to €290 billion and will continue to grow over the coming years as the share of population in retirement continues to increase.
Housing accounts for the majority of this wealth at €201 billion, while over €50 billion is on deposit among this grouping.
A further €20 billion is in financial investments and €23 billion is in business wealth.
Many older people, not just the wealthy, are sitting on assets such as housing, something that seems out of reach for many young people.
Over the next two decades there will be a significant transfer of wealth intergenerationally, according to the report.
Catriona Coady, Head of Tax at Goodbody and author of ‘A Lasting Legacy: Guide to Inheritance and Estate Planning in Ireland’, describes the issuing of managing wealth for the benefit of the next generation as a serious issue for people with property and other assets.
“There’s lots of people in Ireland who might not consider themselves wealthy, but simply by being property owners, they have valuable assets and have decisions to make regarding inheritance and making sure they do the best for the next generation, particularly when many of them will be trying to help their children buy their own home themselves,” she said.
“And this applies to farmers, whether they have large land holdings or small, helping them to figure out how best to manage the succession planning and distribution of their assets so that they are maximizing it for their children and crucially, avoiding an unexpected tax bill,” she added.
Ms Coady advises the people in the older age profile, the boomers and the so-called builder generation, where a lot of wealth is concentrated to really plan how they will transfer their wealth in the coming years.
“The basic starting point is really around listing your assets and liabilities. That sounds very basic, but often people haven’t had the time to stand back and quantify it and they need to assess their own needs over the coming years,” she said.
“For example, people often want to maximize cash gifts to their children on the basis that it can be tax efficient, but they need to be careful about their own needs and that they are looked after,” she stated.
“It’s also about being clear regarding who is to inherit and how much, and how to ensure that beneficiaries aren’t left with an unintended tax bill,” she added.
Article Source – Irish household’s net wealth reaches €1.2 trillion – RTE
