We are a retired couple whose main residence is in Ireland. We have two houses here, one of which is rented. We also have a house in Spain worth approximately 200,000. All the properties are owned jointly.

Property and inheritance

In the event of our death, we would like to divide all our assets evenly between our four children. What would be the best way to do this, especially as regards the property in Spain? Death duties seem to be very high. If one of us dies first, will there be death duties? What then is the situation when the second one of us dies?

Mr C.C., e-mail

There is no blanket "best way" to divide assets such as property between children. Either the children can work together with property they own in common or they cannot, in which case it is better sold and the money such a sale yields divided between them.

This assumes that all children are living independently. If there are children still at home - either due to age or disability - you might well want to put specific arrangements in place to ensure they are catered for either until they are independent or for life in the case of certain disabilities.

That aside, and assuming there is no particular desire to hold on to any of the properties for family reasons, the simplest and cleanest way to split these assets evenly is to sell them and divide the proceeds.

Depending on what other assets you leave behind, it is possible that your four children could, between them, inherit your full estate without liability to death duties in Ireland. The relevant limit here is €422,148 per child - a figure that would avoid capital acquisitions tax (better known as inheritance tax) on an estate of close to 1.7 million.

In addition, I note that you have six grandchildren. You could further dissipate any liability by your family for inheritance tax by leaving each of them assets worth up to 42,215. Under current Irish tax provisions, this is the inheritance tax exemption limit for close relatives - grandchildren, great-grandchildren, siblings, nephews and nieces.

Of course, each of the beneficiaries of your will would need to take account of other inheritances previously received - in this case with you both alive it does not arise for your children, but it might in the case of the grandchildren if they have inherited already from another linear relative, such as an uncle.

It is unlikely, of course, that you will die at the same time and that raises its own issues. In Ireland, as you probably know, all assets can pass between spouses with no tax liability. This is not the case in Spain. First there is no automatic transfer of assets to the spouse and, even where willed, these assets are subject to the same death duties as inheritances passed on to children.

It would help, therefore, to ensure the property in Spain is bequeathed to as large a number as practical, certainly your four children, on first death - that of either you or your wife - to limit exposure to death duties.

As you suspect, death duties will be levied in Spain on the beneficiaries of the property there, notwithstanding the fact that the Irish authorities can also have a claim on the passing of the property.

As the property is jointly owned and is worth in your view about €200,000, European law specialist Mr John Howell tells me its taxable value on death with be about 150,000. Given that it is jointly owned, the half that is passing on in the first instance would have a taxable value of about 75,000.

If that were to be spread among the four children, it would amount to individual bequests worth about 18,750. However, each child would have an exemption to death duties in Spain on the first €15,000 of any inheritance. As a result, they would only be looking at tax on the balance - less than 4,000 each.

Inheritance tax in Spain is progressive - it rises as inheritances get larger, much the same as the situation used to be in Ireland. At this low level, you would be talking about a tax rate of around 7 per cent.

Of course, as you already know, there are other taxes attached to property ownership in Spain and, in addition, any decision to sell the property by you or those inheriting it would trigger a capital gains charge in addition to any inheritance tax charge.

It is very important, when you are looking at assets in different jurisdictions that you formulate a will that is clear and valid in each of those jurisdictions. It would be a shame to have your wishes overruled by local intestacy laws, for the sake of a session with a solicitor familiar with the law in the relevant states.

There is no provision under our double taxation treaty with Spain to cover death duties. As such, you could end up being taxed both here and in Spain on the same asset. The Irish Revenue tells me it will decide on such instances on a case by case basis. However, because there is no provision in Irish law for taxing of assets passed to a spouse, there would be no means of recovering any inheritance taxes paid by someone on Spanish-based assets passed from a spouse.

In relation to the child living in England, Mr Hugh Campbell of PricewaterhouseCoopers tells me that they will be liable to tax in Ireland, provided any bequest exceeds the exemption limit, but not in England.

Warranties

I was recently looking to buy a computer and having decided to opt for Dell agreed to avail of the finance the company offered, which would see the computer paid off over three years, despite what I considered the high APR of 16 per cent. However, I was then told I would also have to purchase a warranty offered through Irish Life to cover the computer during the term of the loan. Is this so?

Mr I.N., e-mail

Put simply, no. There is no reason why you should be strong-armed into signing up to a warranty to cover any breakage or other problem during the term of your finance agreement. This is a form of insurance and one that is extremely lucrative for those who provide it.

I am glad to note that you decided to walk away from this funding option on being told that signing up to the warranty was an obligatory part of the deal. Whoever was providing the finance was already getting a very good deal on the transaction. As you point out, charging 16 per cent at a time when the lenders are borrowing money at around 4 per cent builds in a whacking margin for the lender.

Dell can probably count itself lucky that you were (a) enamoured enough of their product and (b) had other funds available to pay for it. Otherwise, for the sake of a needless warranty, which is generally only padding profits for the finance house, it could have lost your business.

The sale of certain insurance products, like warranties, can sometimes raise concerns. People can be made to feel, as you were, that they are practically obligatory. It is important to remember that the only insurance policy that is obligatory is motor insurance.

You might be foolish if you decided to hold no other policies but that is your choice.

Please send your queries to Dominic Coyle, Q&A, The Irish Times, D'Olier Street, Dublin 2 or e-mail to dcoyle@irish-times.ie. This column is a reader service and is not intended to replace professional advice. Due to the volume of mail, there may be a delay in answering queries. All suitable queries will be answered through the columns of the newspaper. No personal correspondence will be entered into.