3 Meaning of “on a death”

Summary

This section explains what is meant by the expression “on a death” which is the basis of the distinction between a gift and an inheritance. If a benefit is taken “on a death”, it is an inheritance (see section 10(1)). If it is taken “otherwise than on a death”, it is a gift (see section 5(1)).

Details

This section sets out what precisely is meant by the expression “on a death”.

(1)(a) The most obvious example is a legacy taken under a will or a benefit taken by a person under a deed when a life tenant dies. If a person takes a benefit at a time ascertainable only by reference to the death of a person, it will also be an inheritance e.g. a benefit taken under a will or deed to come into effect 1 year after the death of another person.

(1)(b) A person also becomes entitled “on a death” under a disposition where the date of the disposition is the date of death of the disponer. This arises in the case of a donatio mortis causa (i.e. a gift made in contemplation of death), a will or intestacy or a payment of a legal share under Part IX of the Succession Act 1965 to the surviving spouse or children of the deceased or any similar payment made, on the death of the deceased, to or for the benefit of any person under the law of another territory.

(1)(c) Where the benefit would otherwise be a gift but is taken under a disposition made within 2 years before the death of the disponer, it is treated as being taken “on a death” and thus subject to inheritance tax.

(1)(d) The taking of a benefit on the happening of an event referred to in subsection (2) after the cesser of an intervening life interest is also regarded as being “on a death”.

Examples of the events referred to in subsection (2) are:

• (2)(a) a benefit taken on the death of a life tenant;
• (2)(b) a benefit taken when a trustee appointed property to him/her;
• (2)(c) where a person takes property from time to time under a discretionary trust;
• (2)(d) a benefit paid to a person on the happening of a contingency e.g. A creates an inter vivos settlement (i.e. a settlement between living persons) where, following his life interest in the settlement, the property passes to his son, B, subject to the contingency that, in the event of his daughter, C, marrying, the son is to pay her €500,000. On her marriage, C takes an inheritance from A as disponer.

Relevant Date: Finance Act 2015