Gifting from future inheritance

[mike9009]

Slightly selfish question.

What happens if my parents would like to split their estate three ways equally, but one sibling has been given £100k (8 years ago) to help them out from a nasty divorce (house purchase). The idea is the gift is an early inheritance. Neither parent has passed, thankfully.

I can see a number of complications with this scenario. Are there any standard protocols for this? I have obviously googled it, but it showed nothing beyond the usual gifting.

Questions that immediately arise.

What happens if the estate diminishes to not cover the gift (not likely but potential care home costs are an unknown)

Is the gift index linked over time (ie. does the £100k become £120k over time, for example)

Is this a problem waiting to happen?

Or perhaps it is all covered by my parents and I just need to ask (I suspect it is not covered though.....).

I will be the sole executor.

Thanks for any guidance.......

[Countdown]

if it's 8 years ago there are no IHT implications.

I assume when your parents do pass away your sibling will receive £100k less than the other two siblings. This needs to be made clear in the Will(s).

[stuthemongoose]

Depends depends depends.

IMO the truly “fair” way is to index link and subtract from the other dispersements….. but unless that was discussed at the time I think it more likely a simple 100k deduction would avoid arguments.

But in reality I think it depends on who needs the money most as to what is the correct thing for the family to do, even writing off that 100k and just simply dividing by 3!

It sucks a little, but it’s your sister!!

The main thing is that family don’t fall out over money. So I’d err on generous than “correct”.

[Countdown]

What happens if the estate diminishes to not cover the gift (not likely but potential care home costs are an unknown)
Not sure what this means to be honest. It's impossible for the LA to argue that this was a deliberate deprivation of assets given the time lapsed

Is the gift index linked over time (ie. does the £100k become £120k over time, for example)
No

Is this a problem waiting to happen?
Can't think of one. maybe the sibling arguing that they should STILL get an equal share of the estate and the 3100k should be ignored?

[dibblecorse]

Your sibling has been gifted 100k, only your parents can tell you if that was an advace from their inheritance pot.

Whether it is in any way index linked would be as per their Will as that is where all the answers will be.

Unless your parents have decreed it repayable or to be taken into account then future value of the estate is irrelevant as the gift is already out of IHT scope and no longer part of the estate unless documented otherwise.

If your parents pass without a will then the estate as its valued today would be split as per the law and tge gift has no relevance.

[popegregory]

The “idea” is irrelevant. Your parents gave your sister £100k and it’s nothing to do with inheritance. What they are now free to do is arrange their will in order to reflect this. If the amount doesn’t cover it then you get less than your sister did, you’re not guaranteed a set amount that care fees can’t touch because otherwise “unfair”.

[alscar]

mike9009 said:

Answering your questions as posed -

What happens if the estate diminishes to not cover the gift (not likely but potential care home costs are an unknown)

Assuming no additional “ early inheritances “ handed over now then perfectly possible the gift of £100k may not be available.

Is the gift index linked over time (ie. does the £100k become £120k over time, for example)

Makes it complicated so whilst perfectly possibly seems a little mercenary.
My wife’s brother has been given money for various things and her fathers will stipulates the same sum be allocated to her before the estate is further split between them.

Is this a problem waiting to happen?

Money and family can be a poor mix.
The more complicated you make this the more likely this is.

Or perhaps it is all covered by my parents and I just need to ask (I suspect it is not covered though.....).

Nothing to stop you asking the question but ask elegantly !

I will be the sole executor.

Thanks for any guidance.......

[Sheepshanks]

mike9009 said:

Slightly selfish question.

What happens if my parents would like to split their estate three ways equally, but one sibling has been given £100k (8 years ago) to help them out from a nasty divorce (house purchase). The idea is the gift is an early inheritance.

Is that well known and openly discussed in the family?

My brother had sponged money off our mother over her last few years which she told me and my other brother about but her Will just divided her estate in three and he wouldn't admit he'd been given money or how much he'd had.

[ATG]

If it is your parents' wish that the gift of 100k be taken into account when their estate is eventually divided amongst their children, then they need to state that in their will or in a codicil to their will, and it can also state how the gift should be valued. As an executor you shouldn't be "doing what they really wanted", you should be following what it says in the will.