Effective estate planning in Ireland often involves combining several tools to help manage inheritance tax and gift tax while ensuring your assets pass smoothly to the next generation. Bare Trusts, Section 72 policies and Section 73 policies are three of the most underutilised structures for tax efficient wealth transfer. This guide explains what each one does and how they work together as part of a long-term family wealth strategy.

What is a Bare Trust?

A Bare Trust is one of the simplest type of trusts used in Irish estate planning. The beneficiary is the full legal owner of the asset, but a trustee manages it on their behalf until they reach adulthood. Parents and grandparents often use Bare Trusts when gifting money or investments to children, as they provide oversight while still allowing the beneficiary to benefit from the asset.

Bare Trusts are especially useful for early-stage gifting as part of a broader inheritance tax strategy in Ireland.

In short: A Bare Trust is like putting a gift into a locker for a child. The trustee holds the key and keeps the gift safe, but the gift already belongs fully to the child and they can take possession when they are old enough.

What is a Section 72 Policy?

A Section 72 policy is a Revenue approved life insurance policy designed to cover inheritance tax liabilities under the Capital Acquisitions Tax Consolidation Act 2003. It allows beneficiaries to receive a tax-free lump sum when the policyholder dies, and this payment can be used specifically to pay the inheritance tax bill.

How Section 72 works:

• The policyholder pays regular premiums.
• The beneficiaries receive a tax-free lump sum on the policyholder’s death.
• The lump sum is used to pay the inheritance tax due.

Section 72 policies are widely used in Ireland to protect assets such as the family home and prevent beneficiaries from needing to sell property to fund the tax bill. The person leaving the inheritance must take out and fund the policy.

In short: A life insurance policy designed specifically to settle your inheritance tax, ensuring your family receives the estate without facing a tax bill.

What is a Section 73 Policy?

A Section 73 policy is intended to help fund gift tax arising on lifetime gifts. It is a savings or life assurance policy approved under Section 73 of the Capital Acquisitions Tax Consolidation Act.

Key advantages include:

• If the policy is held for at least eight years, the proceeds can be used to pay gift tax.
• It enables significant lifetime gifting to children or grandchildren.
• The recipient does not need to fund the tax from their own resources.

Section 73 is often used by families aiming to pass on wealth earlier while reducing the size of their taxable estate.

In short: A Section 73 policy is like saving into a dedicated pot to cover the tax on gifts you want to give during your lifetime. When the time comes to make the gift, the pot pays the tax so your children or grandchildren can receive the full amount without worry.

How These Tools Work Together in Irish Estate Planning

Using Bare Trusts, Section 72 policies and Section 73 policies together can support a structured and tax-efficient family wealth strategy.

• Bare Trusts allow early gifting with parental oversight.
  • Section 73 policies offer a tax efficient way to cover gift tax on those lifetime gifts.
  • Section 72 policies help fund inheritance tax on the remaining estate, protecting key assets like property.

Together, they support structured gifting, protect beneficiaries from unexpected tax liabilities and help preserve family wealth across generations.

If you have any questions, or need help planning your wealth, contact the team on: or visit our web page at https://cantorfitzgerald.ie/wealth-management/wealth-planning/

Written by Aaron Cunningham, Wealth Advisor