Benefits Of A Section 72 Policy

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What is a Section 72 Policy?

• Section 72 CATCA 2003 provides for an exemption from Capital Acquisitions Tax (CAT) for the proceeds of certain life policies taken out by a disponer specifically to pay inheritance tax on bequests made by him or her.

Here are some of the Benefits;

 1. Pays Inheritance Tax (CAT) Tax-Free

• The proceeds of a Section 72 whole-of-life policy are exempt from CAT, if used to pay inheritance tax.

• This prevents heirs from having to sell assets (e.g. a family home, land, or business) just to pay the tax bill.

 2. Protects Family Wealth

• Ensures that valuable assets stay in the family by covering the tax liability with a separate fund.

• Commonly used when there are illiquid assets like property or a business that heirs want to keep.

 3. Quick Access to Funds

• Payout is usually released faster than probate assets, allowing for timely payment of tax (due within 4 months of inheritance).

• Helps avoid interest or penalties for late payment to Revenue.

 4. Guaranteed Tax Treatment

• If the policy meets Revenue rules, it qualifies for full CAT relief.

• No tax is deducted from the proceeds if used for inheritance tax.

  
  

 5. Simple and Predictable

• Unlike complex trusts or investments, Section 72 is a straightforward life policy with a clear payout at death.

• Premiums can be fixed and predictable.

  
  

6. Joint-Life Options

• Often arranged on a joint life, second death basis - ideal for married couples

  passing assets to children.

• Tax is usually only due on second death, when children inherit.

  
  

7. Estate Planning Tool

• Forms part of a comprehensive inheritance plan, alongside wills, trusts, and gifting.

• Allows you to leave more to your family and less to the taxman.

Summary:

A Section 72 policy is a Revenue-approved, tax-efficient life insurance plan designed to help families pay inheritance tax without sacrificing assets - ensuring smoother and less stressful wealth transfer.

Contact us today and book your consultation and see how Quigley Financial Brokers can help you choose the best options available.