Minor Child of a Deceased Child Relief

12 June 2024

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When talking to clients, I always mention the question of gift over. That is catering for a beneficiary pre-deceasing the testator. In the situation of advising clients who have both children and grandchildren, the common option adopted by clients is that in the event of a child pre-deceasing that they wish for the asset to drop down to grandchildren.

All very reasonable.

It should also be worthwhile pointing out to clients the relief is known as “Minor Child of a Child relief”.

You may or may not be aware but Schedule 2 of the Capital Acquisitions Tax Consolidation Act 2023 is the part of the Act that deals with the computation of tax; it is where the tax thresholds sit and also where the rate of tax is set out. As it is in a Schedule, from a parliamentary draftsman point of view it is easy to change rates of tax and thresholds with a stroke of a pen (or at least Finance Act). This Schedule also sets out who fits into the Class A threshold. We of course know that a child is a Class A threshold, but some of you may need reminding that this Schedule also provides that a minor child of a child is also Class A.

So for example

John is drafting his will. He has four children, Pat, Mary, Alice and Neil. Alice has three children, Paul, Tom and Barry. John provides in his will that he leaves his house to Alice, but in the event of she pre-deceasing him to her children surviving and if more than one in equal shares.

John passes and his house is worth €1 million. When he dies, Alice has pre-deceased him. She is survived by Paul, Tom and Barry. Paul is over 18 but Tom and Barry are under 18 at the date of death of John. Tom and Barry have no tax liability as their inheritance of €333,333 is below their tax free threshold of €335,000.

This is helpful in advising clients. Many clients are very fond of their grandchildren (even more so than their children at times!). It will be an added incentive to them to leave assets down to their grandchildren by way of gift over, if they know that the child will have the benefit of a Class A threshold.

Now, it may be the case that your client is of an age where all their grandchildren are over 18, but, it may be a useful tool in other circumstances.

Hope that helps and if you have any tax, will drafting or probate queries, please reach out to me a colm@theprobatehub.ie