I read with interest your article on gifting Kerry shares. I also have a considerable amount of Kerry Group shares, some jointly owned with my wife but the vast majority in my own name only. Since reading your article, which I realise concerned gifting rather than inheriting, these issues are causing me considerable concern – which has led to me write to you for clarification, if possible. I don’t want to gift them yet, in case they are required for health or care for my wife or myself in old age. It is my intention to use the most of the value of these shares for our retirement, but in case of this not materialising, I have included them in my will. What are the taxable implications for the receivers if inherited along with my estate? Would my wife be left with a large tax bill?
I got a lot of correspondence from Kerry farmers after the article on gifting Kerry shares to their children. What was most interesting, was that many were in the exact same situation. They had been dairy farmers and had built up a considerable holding of Kerry shares. It is like one generation is passing over to the next. The fact that the company has done so well, now gives them options.
One thing was clear – none of them relished the prospect of paying the capital gains tax highlighted in my last article. I will deal with the query and bring in the issues a number of other people brought up as examples. These will hopefully have implications for Glanbia farmers in the future as well.
Passing over YOUR shares in A will
The plan to pass over the Kerry shares in your will would of course mean that there would be no capital gains tax to pay by you. It would also not leave a bill for your wife or your estate.
The first point here is you have to have a will. If there is no will, the rules of the State will see your assets split between your wife and children. In that case, the shares in your name would not automatically go to your wife. So it is good to hear that you have a will.
Passing to YOUR wife
You said that most of the shares are in your name and only a few are in your wife’s name. One question is: are there any tax implications in putting them in your wife’s name? The answer to that is no. You can gift assets, including shares, between spouses without any capital gains tax implications. However, the initial base value will not change if they are just transferred when you are living. This is because this is not deemed to be a crystallisation event for capital gains tax purposed when assets are transferred between spouses when living. The wife assumes the base costs of when the assets were initially received by the husband.
If the farmer dies and the shares are willed to his wife, this is deemed to be a crystallisation event and the new value that your wife has received the shares at will be the market value. Again, there is no inheritance tax implications. It does mean that if your wife sells the shares after inheriting them, the capital gains tax bill will be smaller as the initial market value will be higher – the share price when your wife received them.
Passing to children
For the children, the inheritance falls under Group A, which means they are allowed to inherit or receive a gift of up to €225,000 tax-free, without capital acquisitions or tax liability. This is cumulative and takes into account any other gifts/inheritance they have received from you or your wife since 5 December 1991. Anything they inherited or were gifted over that amount, will then fall under gift tax at a hefty 33%.
One farmer asked about the threshold for passing shares to his brother. This threshold is at €33,500, above that inheritance tax of 33% would have to be paid.
Gifting co-op shares
I got a number of queries around the tax implications of gifting co-op shares. Most centred on the value they would be. From my enquiries, the grey market of co-op shares would likely to be taken as the value. A valuation can be got from someone who has traded co-op shares in the past and would have evidence to back up the valuation. It would be one way to reduce the potential capital gains tax bill, especially for Glanbia farmers who are looking to have a spin-out of shares in the near future.
Living off your shares
One farmer’s view was that he was going to use the Kerry shares to fund his retirement. He was already selling shares each year to make use of the €1,270 capital gains allowance that both him and his wife had each year. Taking a share price of €68 and a base price of say €5, it would allow them to sell around 40 shares a year and bring in €2,742 without any capital gains tax. This is a good idea and should be done well before you start needing the money, as the thresholds cannot be carried forward if unused.
The one problem I see is that if the Kerry shares are all your retirement assets, you are leaving yourselves exposed to a major drop in share price. Kerry farmers would never believe that it could happen, but it could. One final thing to consider, is that if you went into a nursing home and availed of the Fair Deal Scheme, the shares would be treated like money and sold off to pay for nursing home bills. The capital gains would still have to be paid in that scenario. I will come back to the issues around the Fairy Deal Scheme again.
The whole area of Kerry shares is a complex issue and you should get individual advice from a professional. Many consultants and accountants in Kerry have experience in this area.
Key points
• No capital gains tax for deceased estate on shares.• Inheritance tax for those receiving is similar to gift tax.• Use your capital gains tax threshold of €1,270 each year.• Look at implications of holding shares and the fair deal scheme.• Get individual advice from professionals.
I read with interest your article on gifting Kerry shares. I also have a considerable amount of Kerry Group shares, some jointly owned with my wife but the vast majority in my own name only. Since reading your article, which I realise concerned gifting rather than inheriting, these issues are causing me considerable concern – which has led to me write to you for clarification, if possible. I don’t want to gift them yet, in case they are required for health or care for my wife or myself in old age. It is my intention to use the most of the value of these shares for our retirement, but in case of this not materialising, I have included them in my will. What are the taxable implications for the receivers if inherited along with my estate? Would my wife be left with a large tax bill?
I got a lot of correspondence from Kerry farmers after the article on gifting Kerry shares to their children. What was most interesting, was that many were in the exact same situation. They had been dairy farmers and had built up a considerable holding of Kerry shares. It is like one generation is passing over to the next. The fact that the company has done so well, now gives them options.
One thing was clear – none of them relished the prospect of paying the capital gains tax highlighted in my last article. I will deal with the query and bring in the issues a number of other people brought up as examples. These will hopefully have implications for Glanbia farmers in the future as well.
Passing over YOUR shares in A will
The plan to pass over the Kerry shares in your will would of course mean that there would be no capital gains tax to pay by you. It would also not leave a bill for your wife or your estate.
The first point here is you have to have a will. If there is no will, the rules of the State will see your assets split between your wife and children. In that case, the shares in your name would not automatically go to your wife. So it is good to hear that you have a will.
Passing to YOUR wife
You said that most of the shares are in your name and only a few are in your wife’s name. One question is: are there any tax implications in putting them in your wife’s name? The answer to that is no. You can gift assets, including shares, between spouses without any capital gains tax implications. However, the initial base value will not change if they are just transferred when you are living. This is because this is not deemed to be a crystallisation event for capital gains tax purposed when assets are transferred between spouses when living. The wife assumes the base costs of when the assets were initially received by the husband.
If the farmer dies and the shares are willed to his wife, this is deemed to be a crystallisation event and the new value that your wife has received the shares at will be the market value. Again, there is no inheritance tax implications. It does mean that if your wife sells the shares after inheriting them, the capital gains tax bill will be smaller as the initial market value will be higher – the share price when your wife received them.
Passing to children
For the children, the inheritance falls under Group A, which means they are allowed to inherit or receive a gift of up to €225,000 tax-free, without capital acquisitions or tax liability. This is cumulative and takes into account any other gifts/inheritance they have received from you or your wife since 5 December 1991. Anything they inherited or were gifted over that amount, will then fall under gift tax at a hefty 33%.
One farmer asked about the threshold for passing shares to his brother. This threshold is at €33,500, above that inheritance tax of 33% would have to be paid.
Gifting co-op shares
I got a number of queries around the tax implications of gifting co-op shares. Most centred on the value they would be. From my enquiries, the grey market of co-op shares would likely to be taken as the value. A valuation can be got from someone who has traded co-op shares in the past and would have evidence to back up the valuation. It would be one way to reduce the potential capital gains tax bill, especially for Glanbia farmers who are looking to have a spin-out of shares in the near future.
Living off your shares
One farmer’s view was that he was going to use the Kerry shares to fund his retirement. He was already selling shares each year to make use of the €1,270 capital gains allowance that both him and his wife had each year. Taking a share price of €68 and a base price of say €5, it would allow them to sell around 40 shares a year and bring in €2,742 without any capital gains tax. This is a good idea and should be done well before you start needing the money, as the thresholds cannot be carried forward if unused.
The one problem I see is that if the Kerry shares are all your retirement assets, you are leaving yourselves exposed to a major drop in share price. Kerry farmers would never believe that it could happen, but it could. One final thing to consider, is that if you went into a nursing home and availed of the Fair Deal Scheme, the shares would be treated like money and sold off to pay for nursing home bills. The capital gains would still have to be paid in that scenario. I will come back to the issues around the Fairy Deal Scheme again.
The whole area of Kerry shares is a complex issue and you should get individual advice from a professional. Many consultants and accountants in Kerry have experience in this area.
Key points
• No capital gains tax for deceased estate on shares.• Inheritance tax for those receiving is similar to gift tax.• Use your capital gains tax threshold of €1,270 each year.• Look at implications of holding shares and the fair deal scheme.• Get individual advice from professionals. 
SHARING OPTIONS