With the right succession plan, family businesses can minimise tax exposure

Even modest estates can trigger significant inheritance tax liabilities – but the earlier you plan, the more options you have

For many Irish families, wealth was once a straightforward matter: a farm, a business, a family home passed from one generation to the next. Today, soaring property values mean that even modest estates can trigger significant inheritance tax liabilities. The decisions families make, or fail to make, around succession and planning have never carried higher stakes.

Yet many leave it too late or avoid the conversation altogether. With the right structures in place, however, families can protect assets, minimise tax exposure and ensure that wealth serves not just the current generation but those that follow.

For Irish families with significant assets, the risks to long-term wealth frequently stem from inaction rather than bad decisions.

Family wealth in Ireland is most exposed where long-term planning has not been implemented, says Mairead Harbron, partner, PwC Private. “Significant tax costs can arise every time assets pass between generations or if assets are allowed to grow substantially in the hands of one generation. Valuable tax reliefs may be lost if transfers are not structured correctly.

“Families with illiquid assets such as property or private equity also face liquidity risk, potentially forcing sales to meet tax liabilities. Equally, the absence of clear governance and a long-term wealth strategy can undermine the preservation and smooth transition of family capital.”

Mairead Harbron, partner, PwC Private

Succession planning should begin as early as possible to ensure both the protection and controlled transfer of family wealth, says David Moran, tax partner, PwC Private. “This starts with foundational steps such as putting appropriate wills and enduring powers of attorney in place and may extend to more structured planning where significant assets are involved – for example, the use of trusts, family partnerships or investment companies with next-generation share classes or governance rights.

“Early planning allows families to address issues of control, protection and tax efficiency long before decisions become time pressured or complex family dynamics intervene.” Governance structures such as family constitutions or independent boards are essential, not optional, in preserving both capital and family relationships, says Nick Charalambous, managing director, Alpha Wealth. “They serve as the ‘rule book’ to prevent emotional decision making whilst growing generational wealth.

“An independent board brings with them professional oversight, allowing for clear decision-making processes which prevent impulsive or emotionally driven decisions which could erode wealth. They allow for clear and comprehensive succession plans, and defined investment procedures, which aid in maintaining both relationships and wealth.” Where family wealth is tied up in a trading business, the planning challenges are distinct. The starting point is to assess the future of that business and the family’s succession intentions, says Moran.

David Moran, tax partner, PwC Private

“If next-generation members are to take over, this transition needs careful, early planning to ensure an efficient transfer and to maximise available tax reliefs. If the business is to move to external management or ownership, families must plan that transition thoughtfully to safeguard their interests as shareholders.

“Either way, diversification decisions should align with the long-term strategy for the business and the family’s broader wealth and succession objectives.”

Balancing the current generation’s income needs with long-term capital preservation depends on the family’s overarching philosophy – whether current members are viewed as beneficiaries or as custodians for future generations, says Harbron.

“Long-term family structures often adopt defined distribution policies or annual income frameworks that meet present needs while protecting and growing the underlying capital. Education around family values, purpose and long-term wealth goals is essential to ensure alignment across generations and to avoid short term decisions that erode future capital.” The tools available to families who plan ahead are considerable but require time to deploy.

The families who sustain wealth across generations tend to be those who plan well in advance, gradually transferring assets over time, making use of the small gift exemption, using trusts and taking full advantage of the reliefs available to minimise capital acquisitions tax (CAT) exposure, says Charalambous.

“This has never been more important in Ireland, given soaring property values, which mean that even modest estates can now breach CAT thresholds, leaving heirs with an unexpected and often significant tax bill,” he says.

“Waiting until a transfer is forced, whether by death or circumstance, is where families come unstuck; the earlier provisions are put in place, the more options you have.”