2023 Updated CAT Advice & Planning for Co-habiting couples

by | General

Most practitioners are aware that the threshold for Co-habiting couples is Group C, currently €16,250

This can lead to a substantial tax bill on the death of a partner, where the surviving partner is the main beneficiary.

There are a few strategies to minimise/eliminate tax liabilities for the surviving partner.


If one party takes a “Life of Another” policy out on their partner, the benefits go directly to the surviving partner who paid the premiums and owns the policy.

In this case there will be no inheritance tax.

The benefit goes directly to the policy holder, who paid the premiums, and does not form part of the estate of the deceased.


Another approach is to take out a “Dual/Joint Life” policy. This is where both parties pay 50% of the premiums and are both beneficiaries.

If one partner cannot afford to pay the premiums then the other partner could use the Small Gift Exemption of €3k to enable the premiums to be paid.



Jack has a €100k single life policy on his own life, his will states that his partner Jill is the sole beneficiary.

Jack dies and Jill inherits.

CAT – benefit is €100k – less group threshold €16,250 = €83,750 – tax @33% = €27,638

Net benefit – €100k less tax of €27,638 = €72,362


Jack and Jill have a €100k Dual Life Policy, where they are joint owners.

Jack cannot afford to pay his share of the premium.

Jill gifts him €3k each year so he can pay the premiums from his own bank account.

Jill dies, the policy pays €100k to Jack as the surviving policy holder.

Jack owns half of the policy and inherits Jill’s 50%.

CAT – benefit is €50k less threshold €16,250 = €33,750 @33% = 11,138

Net benefit €100k less €11,138 = €88,862


Jill takes out a Life of Another Policy with cover for €100k on Jack’s life.

Jill pays the premiums from her own bank account.

Jack dies and the proceeds go to Jill as legal owner of the policy.

There is no CAT liability as Jill is both the beneficiary and the owner of the policy.

Net benefit €100k.


When it comes to minimising a CAT liability, forward planning is the key, sometimes the steps are simple but they must be taken at the appropriate time.

We specialise in estate planning

Please reach out if you have any queries regarding these scenarios, or indeed, if you require any tax advice.

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