My wife and I are in our early 80s. At present we have a six-figure sum in a deposit account with one of our local Irish banks which attracts only minimal interest.
We have been looking at alternative institutions which would pay more attractive interest, such as Raisin and Bankinter. Bearing in mind our age and therefore our short life expectancy, it is most likely that the money will eventually be inherited by our children in accordance with our wills.
What concerns me is, if we transfer the money to one of these banks which are effectively based outside of Ireland, the ease of access to the money by executors and whether the money would be subject to the inheritance rules in the bank’s home states or Irish rules. Any help or advice you can give us would be really appreciated.
JG
If nothing else, your query should be a warning to Ireland’s traditional banks that they can no longer take for granted the savings that have funded the bulk of their profits in recent years.
The margin between what the banks here are offering savers (even before the State adds to the pain by taking a third of that in Dirt) and what they make by lending out that same money in mortgages and consumer loans has helped them become among the most profitable in the European Union.
And, thus far, they have made only modest concessions to the growing competition from fintechs offering services online, or accounts available to Irish residents abroad.
They are confident in the innate conservatism of the Irish bank customer. Most people still choose to save where they conduct their other banking business and have not been deterred by the derisory rates of interest being offered on the overnight or demand deposit accounts where the bulk of those savings are held.
While fintechs were mostly attracting younger customers with less in the way of savings, that was fine. But when a couple in their 80s with a six-figure sum is thinking of shifting away from the traditional Big Three, it should certainly ring alarm bells in the head offices of AIB, Bank of Ireland and PTSB.
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It makes perfect sense for you, and others, to look at options elsewhere, either through challenger banks such as Bankinter – the home of Avant Money – which are setting up business in Ireland, or through the likes of Raisin which gives Irish residents easy access to accounts in other EU states.
The two things I would say in choosing a destination for your savings are: first, to take a close look at how much of your funds are protected by a guarantee in any bank you consider setting up a savings account with; and second, where you are saving in fixed term accounts, keep track of the rates available.
The amount you are talking about will certainly not be covered in full by any guarantee with any one bank – here or abroad.
And once you time out of your fixed rate, the rate subsequently on offer might not be competitive. You need to keep tabs on your funds and be prepared to move them to secure the best return.
It is certainly understandable that people might have concerns about what would happen if they are no longer around – especially with banks that they are only dealing with remotely.
But there is no reason for you to avoid either Raisin or Bankinter. The latter has established an Irish banking operation so anything you save with them will be readily available to any executors if you do die and will be dealt with under Irish inheritance tax rules.
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The same is true for Raisin. Eoghan O’Hara, the bank’s country head in Ireland, assures me that saving through Raisin “does not complicate estate administration or alter their legal standing”.
“Because your readers are resident and tax domiciled in Ireland, their worldwide assets (including any savings held with EU partner banks) are governed entirely by Irish succession law and subject to standard Irish capital acquisitions tax rules, meaning our partner banks will not impose their own domestic inheritance laws or estate taxes on their children,” he said.
In practical terms, he says Raisin Ireland would act as the point of contact for any executors, who would not need to deal with the individual banks holding your money or work their way through foreign legal systems.
As with traditional Irish banks, your executors will need a death certificate, a copy of the will identifying them as executor where there is one, ID for that executor and a grant of probate before releasing funds.
As an aside, if you have not yet done it, I would suggest you and your wife consider drawing up an enduring power of attorney so that if you do lose capacity to manage your affairs, you can ensure someone you trust and who knows what you want, such as a family member, can help you out – including managing these savings if necessary.
Please send your queries to Dominic Coyle, Q&A, The Irish Times, 24-28 Tara Street Dublin 2, or by email to dominic.coyle@irishtimes.com with a contact phone number. This column is a reader service and is not intended to replace professional advice.
