Dear Reader

Welcome to the July edition of the Money Mentor monthly newsletter, brought to you by Vantage Financial Planning, your trusted guide through the ever-evolving world of personal finance.

The Great Global Wealth Transfer

Over the next 25-30 years, the world will witness one of the largest intergenerational wealth shifts in history known as the Great Wealth Transfer. This refers to the handover of assets from Baby Boomers (born 1946–1964) to Millennials (1981–1996) and Gen Z (1997–2012). This transfer has already begun and will only accelerate.

According to ​​UBS's Global Wealth Report 2025 approximately $83 trillion is expected to pass between generations globally over the next 25 years. An additional $9 trillion will shift horizontally primarily between spouses.

Despite these vast sums, the odds of wealth lasting are slim. ​​J.P. Morgan Private Bank's Global Family Office Report 2024 highlights that only 10% of inherited wealth survives past the third generation. The culprits?

• Lack of financial literacy
• Family conflicts
• Poor estate or tax planning
• Absence of stewardship values in heirs

Wealth remains rare:

• 1.1% of the world are millionaires (>$1M)
• 0.3% are multimillionaires (>$10M)
• Just 2,800 are billionaires

Wealth is the exception to the rule and tends to be earned through discipline, curiosity, risk taking, timing, and a good dollop of luck.

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The Great Irish Wealth Transfer

For Irish families, the ability to transfer wealth is a major achievement given the significant tax burden throughout our lives some of which are below:

Direct Taxes: Income Tax, PRSI, USC, CGT, CAT, LPT
Indirect Taxes: VAT, inflation, excise duties, stamp duty, motor tax, customs

According to Revenue and the Department of Finance Budget 2025 Tax Strategy Group Papers (page 11, table 10) the top 20% of income earners pay 79% of all Income and USC tax.

Little wonder that CAT (33% on gifts/inheritances) is often seen as a "double tax" taxing assets already taxed during the earner’s lifetime. However, emotions aside, your first priority in any wealth transfer should be:

Secure your own financial independence first.

Much like putting on your own oxygen mask before assisting others, securing your own long-term financial security first ensures your generosity doesn’t become a future burden on those you care about. Failing to do so will leave you financially dependent on work, family, friends, or the government.

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Financial Longevity

As a financial planner, I often wish I knew two known unknowns, a client’s health and lifespan. In the absence of knowing, we rely on average life expectancy tables.

Average life expectancy in Ireland as of 2023 is 85 for women and 81 for men and it’s rising. Thanks to continuing advancements in medical science, biotechnology, and lifestyle awareness, this upward trend is expected to continue:

Reaching old age in good physical and mental health is a gift, but it also brings a challenge, your money must last as long as you do.

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Planning For A Longer Future

In a world marked by economic uncertainty, climate volatility, rapid technological change, geopolitical unrest, and ageing demographics, it’s easy to feel overwhelmed and fearful about the future. This can manifest into pessimism and helplessness.

Yet as Mark Twain wisely observed, "History doesn’t repeat itself, but it often rhymes." Humanity has faced and overcome extraordinary challenges before, all the while quietly improving our standard of living. The future will be no different.

As individuals, many of us are taking proactive steps to improve our physical and mental wellbeing by eating better, staying active, prioritising sleep, and managing stress with the aim of aligning our health span with our lifespan. But one vital area is often overlooked, our financial health and resilience.

To avoid running out of money before running out of life, your financial plan must be built with longevity in mind:

Women statistically outlive men and are often the first to inherit family wealth making financial literacy and long-term planning essential for both partners. One of the most enduring and often overlooked acts of love is ensuring your loved ones are financially secure when you’re gone.

From an estate planning perspective, there are key benefits to understand:

• Transfers between spouses or civil partners are exempt from both Capital Gains Tax (CGT) and Capital Acquisitions Tax (CAT) in Ireland.
• Furthermore, when an individual dies, any unrealised investment gains on assets held in their name fall away for CGT purposes. Instead of inheriting the original acquisition cost, beneficiaries receive the asset’s market value on the date of death for CAT & future capital gains purposes.

These rules present opportunities for efficient, thoughtful legacy planning.

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The Real Retirement Risk

The greatest retirement threat isn’t market volatility, it’s moving too far into “safe” assets and losing purchasing power over time.

Many retirees are unaware that shifting too heavily into low-return or capital-preserving assets can leave them vulnerable to the real retirement risks:

Key risks:

• Longevity: Living longer
• Inflation: Eroding the value of your money
• Taxes: On pensions, withdrawals, and sales
• Lifestyle & healthcare costs: Often underestimated

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This becomes even more critical if you hope to leave a meaningful financial legacy for your family. Ideally, during your working years, your earned income should:

• Support your current lifestyle
• Fund your lifestyle in retirement.

Once you retire, that responsibility shifts:

Your invested assets must take over generating income that keeps pace with the rising cost of your lifestyle for the rest of your life:

A retirement plan that’s too conservative may leave you short in later life. Maintaining measured investment risk is essential not just for growth but for sustaining independence.

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Gifting & Inheritance

If you have surplus wealth beyond your own lifelong needs, you can:

1. Spend more
2. Save/invest further
3. Gift strategically

Child Benefit

Gifting can begin as soon as the arrival of a child. The monthly child benefit payment of €140 can be invested in a child savings and investment policy.

Small Gift Exemption

The child benefit payment can be topped with the small gift exemption of up to €3,000 per parent, grandparent or great grandparent per child, grandchild or great grandchild per year. This does not impact your lifetime limit Capital Acquisitions Tax threshold outlined below.

Capital Acquisitions Tax Thresholds

Individual Capital Acquisition Tax lifetime limit thresholds are currently:

• €400,000 for children
• €40,000 for siblings/nieces/nephews
• €20,000 for others

If you receive 80% or more of the lifetime limit Revenue must be informed. Any gift or inheritance above these lifetime limits is taxed at 33%.

Family loans

When making a family loan, it’s important to decide whether the loan will carry interest or be interest-free, as this has tax implications. Interest free loans are deemed a gift.

Alternatively, you may charge a modest fixed interest rate with the interest rolled up meaning it accrues but is not paid until the loan is repaid or forgiven. While this avoids gift tax issues, the interest becomes taxable income for the lender when it becomes due or is waived.

Clear documentation (loan agreements) and repayment schedules are essential to avoid CAT exposure.

Dwelling House Relief

Dwelling House Relief is a specific exemption from CAT that applies to the inheritance (and in limited cases, a gift) of a residential property. If certain conditions are met, the recipient of the property does not have to pay CAT on its value, a significant financial benefit given Ireland’s high property prices.

Life's Milestone Moments

Gifts or loans can be powerful tools to support key life milestones from funding primary, secondary, or third-level education, to contributing toward a first car, wedding, mortgage deposit, future grandchildren’s needs, or even launching a business.

I encourage families to view gifting as a form of investment, one that helps children transition from financial dependence to financial independence. It’s about equipping them with the confidence, values, and decision-making skills needed to navigate their personal, professional, and financial lives, both while you're here and after you're gone.

While we naturally hope children appreciate such generosity, it's important to acknowledge a psychological truth, gifts are often valued differently than money earned through personal effort and hard work. That’s why it’s best when a gift is experienced as a meaningful bonus not an expectation.

At some point, being kind may mean stepping back. Financial support, if not carefully managed, can create a false sense of security. Striking the right balance between support and self-reliance is key, and ultimately, you know your children best.

Business Owners

If you are a business owner, consider:

• Employing children (from age 14) for part-time work
• Setting up pensions (from age 18)
• Availing of key reliefs

Tax Reliefs for business owners

• SURE: Tax refund for new business founders
• Entrepreneur Relief: 10% CGT on up to €1M in gains
• Retirement Relief: CGT exemption over age 55
• Agricultural Relief: 90% CAT reduction on farm assets

Financial Products for Legacy Planning

Section 72 Life Policy: Covers inheritance (CAT) taxes. Typically used for the family home (illiquid assets)

Section 73 Savings Plan: Funds future gift tax liabilities

A valid up-to-date Will & enduring power of attorney are essential.

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Philanthropy

Ireland has a proud tradition of generosity. Chuck Feeney, the Irish American billionaire co-founder of Duty Free Shoppers, quietly amassed a fortune through savvy global business operations all while living modestly and giving nearly all of it away.

Through his foundation, Atlantic Philanthropies, he donated over $8 billion, with more than €1 billion directed to Ireland, funding education, health, peacebuilding, and social justice. Feeney’s deeply held belief was that wealth should be used to make a difference in one’s lifetime and his transformative impact on Irish universities, hospitals, and communities will be felt for generations.

Feeney’s foundation, The Atlantic Philanthropies, formally announced its final major round of grants in late 2016. The foundation then completed its shutdown and officially closed on September 14, 2020

Chuck (Charles) Feeney passed away on October 9, 2023, in San Francisco, at the age of 92

Whether supporting your family or causes you believe in, giving can be one of the most fulfilling uses of wealth.

Wealth brings opportunity but also responsibility. A long-term mindset, guided by sound financial planning, allows you to protect your independence and pass on your values, not just your assets.

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📚 Recommended resources 💡

JP Morgan Guide To The Markets (EMEA Monthly):

​​​JP Morgan Guide to the Markets EMEA 30th June 2025.pdf​​​​​​​​​

Book recommendations:

How To Manage Your Money When You Don't Have Any by Eric Wecks

Amazon

Overcoming Underearning: A Five Step Plan to a Richer Life by Barbara Stanny

Amazon

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If you are interested in personal finance education, coaching, advice or technology, please reach out to me on my contact details below.

If you found this month's newsletter useful, feel free to share it with family, friends and colleagues. Constructive feedback is always welcome! If there's any personal finance topic you'd like covered please let me know.

Until next month.

Kind regards,

Ken Mason CFP®

Tel: (01) 539 2670

Mobile: 083 803 2008

Email: ken.mason@vantagefp.ie

www.linkedin.com

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