09 Sep 2018

Your 2019 Financial Checklist

  • Financial Advice

We are bombarded with advice at this time of year, from diet to decluttering, exercise and energy bill switching. It’s also a great time of year to take stock of your financial health and the following brief list serves as a quick reminder on some important financial arrangements..

Pension Term Assurance – be tax efficient on your life cover

While most of us fully intend on living to a ripe old age, unfortunately the fact of the matter is that we won’t all be that lucky.  With this in mind it is important that cover is in place to protect your spouse and family. The most efficient way to do this is to use a Pension Term Assurance Plan (as opposed to a regular life insurance plan) and the reason why is that you are entitled to tax relief on the premiums with it, so it can be it up to 40% cheaper for you. This is totally separate and unrelated to any other pension savings you may have. There are limits to the amount of cover you can get and some other rules must be adhered to but nothing too onerous, so make sure you get good advice on it.

Income Protection

Simply put, your income is your most important financial assets. Without it, you cannot pay a mortgage, car payments, household & family costs, fund your savings and pension and the other myriad of every day costs. In addition, the HSE locum benefit does not cover the total cost of a locum.

If you are a self-employed, the state invalidity benefit of €203.50 per week is unlikely to go very far in meeting your personal and practice costs. The financial burden of missing work due to illness or injury can be hugely stressful and certainly not conducive to a quick recovery. Income protection policies provide a replacement salary in the event of illness of injury. You can choose from policies that commence from the first day of illness or a deferred period such as 4, 8, 12, 26 weeks which is more appropriate for those who are employed or have limited HSE sick leave cover.

Funding for Children’s Education & Tax Efficient Gifts

One day your child is starting school, and suddenly they are looking to start driving, turning 21, getting married and buying a house. When you plan in advance, you can put yourself in a position to help your child without it being a sudden or major impact to your finances.

 ‘Give early and give often’. This simple statement is the best methodology when it comes to passing on money in the most efficient way.

You are allowed to gift €3,000 per person, per child each year without having to pay CAT (Capital Acquisitions Tax) or affecting their inheritance tax threshold. €250 per month saved in trust growing at a rate of 5% per annum could be worth €60,000 after 15 years. By doing so from an early age a substantial nest egg can be built up for when it is needed.  A simple bare trust can accommodate this for parents with the maturing funds being gifted to their children at a time they see fit down the road.