Intergenerational living and inheritance
Discussion
I have a situation which I assume must pretty common surrounding inheritances/and family living situations, but I can’t really think of what the best solution is. My mother is selling her property at the same time as my brother (family 2 kids 2 adults) - they’re pooling their money together to buy one larger property that they can all live in, them taking up the main part of the house and her having an annexed portion. The idea is that this future proofs my mother’s needs as she is nearly 70 and her existing house has very steep stairs etc. On my brother’s side it gets them out of their small 3 bed and into a larger 4 bed detached house with a nice sized garden still in good proximity to the children’s schools and where they know. Before this they all lived pretty close anyway.
Financially, neither party could afford to do this without the other and it will take my brother to the limit of his borrowing capacity/nearly all of my mums money apart from a pot she’ll use to fund her retirement alongside state pension - I understand the property is to be paid for 50/50. The development recently is that the only way to proceed with this is that she gifts my brother the money and he goes down as the sole owner (with his wife) of this property, so my mothers name I don’t think is on the deed at all. I’m told the original plan was to own it 2 ways but that for some reason isn’t a goer according to the mortgage company. So I assume she’ll send him a few hundred grand as a gift and he’ll buy the property as if he was always a solo buyer and moves her in.
The issue here that my mum has sent my brother to talk to me about inheritance and how this situation changes all of that. To my mind, if this plan goes ahead as is, basically I see zero £ from my mothers estate when she passes and my brother gets to live in a house that is well beyond what he could have bought solo, the only downside for my brother is that he has to live with her for potentially 20-30 years, though babysitting on tap is not without its upside - this struck me as a little unfair.
The elephant in the room is that my wife and I are quite comfortable financially, we aren’t showy with money, but I suspect they probably are thinking along the lines of ‘well, he doesn’t need it does he’ - and part of me thinks they’re right, and that me writing any potential inheritance off is a nice thing to do that changes the lives of my brother and his children, but then on the flip side I think about my own son and how he is essentially completely frozen out if this goes ahead.
The house is around £700k, so my mothers ‘share’ is around £350k, so using simple maths I suspect our inheritance each would be around £175k - though even if she did own a 3rd of the house I don’t see how I could have got my money out of it without asking them to sell/remortgage which I doubt they can ever afford to do.
What would you do in this position?
Financially, neither party could afford to do this without the other and it will take my brother to the limit of his borrowing capacity/nearly all of my mums money apart from a pot she’ll use to fund her retirement alongside state pension - I understand the property is to be paid for 50/50. The development recently is that the only way to proceed with this is that she gifts my brother the money and he goes down as the sole owner (with his wife) of this property, so my mothers name I don’t think is on the deed at all. I’m told the original plan was to own it 2 ways but that for some reason isn’t a goer according to the mortgage company. So I assume she’ll send him a few hundred grand as a gift and he’ll buy the property as if he was always a solo buyer and moves her in.
The issue here that my mum has sent my brother to talk to me about inheritance and how this situation changes all of that. To my mind, if this plan goes ahead as is, basically I see zero £ from my mothers estate when she passes and my brother gets to live in a house that is well beyond what he could have bought solo, the only downside for my brother is that he has to live with her for potentially 20-30 years, though babysitting on tap is not without its upside - this struck me as a little unfair.
The elephant in the room is that my wife and I are quite comfortable financially, we aren’t showy with money, but I suspect they probably are thinking along the lines of ‘well, he doesn’t need it does he’ - and part of me thinks they’re right, and that me writing any potential inheritance off is a nice thing to do that changes the lives of my brother and his children, but then on the flip side I think about my own son and how he is essentially completely frozen out if this goes ahead.
The house is around £700k, so my mothers ‘share’ is around £350k, so using simple maths I suspect our inheritance each would be around £175k - though even if she did own a 3rd of the house I don’t see how I could have got my money out of it without asking them to sell/remortgage which I doubt they can ever afford to do.
What would you do in this position?
Tricky one.
My BIL recently asked my FIL for an advance on his inheritance equivalent to about 25% of what he may end up all things being equal.This is roughly 20% of my FIL’s current wealth ex his house.
He refused and one of the reasons was simply that it was too much and he didn’t know how much he may or may not need for care or whatever.
The reason for the request wasn’t straightforward either and has to do with buying out his girlfriends ex husband from a house.
During the debate my BIL used the line you have in that my sister doesn’t need the money.
My wife pointed out too that whilst it was unfair per se ( her Father has always been of the 50/50 split ) if she was given any money now she would invest it and if Dad needed it back it was immediately available.
Appreciate your issue is a tad different.
I’ve just asked my wife who immediately said it is unfair and whilst there is “ mitigation “ if it were her she would want it writing in Mums will that upon his death some form of transaction needs to happen to “ balance “ things with you.
The babysitting part carries a small value and if things get really tough for your Mum then your Brother isn’t going to be able to provide that care himself so ultimately there will be potential costs being met how ?
Obviously I hope that is never the case but who knows.
My BIL recently asked my FIL for an advance on his inheritance equivalent to about 25% of what he may end up all things being equal.This is roughly 20% of my FIL’s current wealth ex his house.
He refused and one of the reasons was simply that it was too much and he didn’t know how much he may or may not need for care or whatever.
The reason for the request wasn’t straightforward either and has to do with buying out his girlfriends ex husband from a house.
During the debate my BIL used the line you have in that my sister doesn’t need the money.
My wife pointed out too that whilst it was unfair per se ( her Father has always been of the 50/50 split ) if she was given any money now she would invest it and if Dad needed it back it was immediately available.
Appreciate your issue is a tad different.
I’ve just asked my wife who immediately said it is unfair and whilst there is “ mitigation “ if it were her she would want it writing in Mums will that upon his death some form of transaction needs to happen to “ balance “ things with you.
The babysitting part carries a small value and if things get really tough for your Mum then your Brother isn’t going to be able to provide that care himself so ultimately there will be potential costs being met how ?
Obviously I hope that is never the case but who knows.
That’s a whole heap of issues right there and you are rightly concerned that you won’t ever see your inheritance. Simple solution is she gifts you your half at the time she gifts your brother and they just have to borrow more.
Bigger issue could be she has to live for 7 years after this gift for it to stand as a gift. I hope she lasts a lot longer than that.
Bigger issue could be she has to live for 7 years after this gift for it to stand as a gift. I hope she lasts a lot longer than that.
I have a friend who is a lawyer. In the past three years he has specialised in family law and I asked him what that actually meant.
He said what it means today is that he is inundated with work where offspring are contesting and arguing their late parents Wills.
This often where Wills are clearly written but challenged because one party believes the other influenced and took advantage of an elderly parent .
It's basically seeking proof that an elderly parent was vulnerable and then influenced or forced to make arrangements that effected one child disproportionately.
It's very common place now where estates are not evenly shared.
The Red flag for me was when you said she asked your brother to talk to you about inheritance. Did she , surely it would be for her to speak to you both about inheritance.
He said what it means today is that he is inundated with work where offspring are contesting and arguing their late parents Wills.
This often where Wills are clearly written but challenged because one party believes the other influenced and took advantage of an elderly parent .
It's basically seeking proof that an elderly parent was vulnerable and then influenced or forced to make arrangements that effected one child disproportionately.
It's very common place now where estates are not evenly shared.
The Red flag for me was when you said she asked your brother to talk to you about inheritance. Did she , surely it would be for her to speak to you both about inheritance.
butchstewie said:
Sometimes it feels like the questions here are less financial ones and more a "how much do I want to risk falling out with the family over sum of money" question.
And this time the sum is £175k.
Or to put it another way , potentially 2 to 3 years of either care home costs or at home carers. And this time the sum is £175k.
Depending on what is decided presumably any house purchase agreement needs to be done by a professional to ensure money is either available or conversely not obtainable.
markiii said:
doesn't matter what you write in a will or agree
If she gifts him the cash and he goes down as sole owner, your totally at their mercy when she dies
I know a family who were in this position and it caused a big family rift where the brother/ sister siblings fell out and didn't speak at all for quite a long time, i'm led to believe they are on speaking terms again now but in this case the brother who felt pushed out cut all contact with his sister and mother who bought the house together, whilst all the parties are still alive I don't think it has ever been properly resolved. If she gifts him the cash and he goes down as sole owner, your totally at their mercy when she dies
AFAIK once the money is gifted from the mother to brother ignoring the 7 year rule about gifts and funding future care requirements it will be gone and there will be no real chance of the OP's family making a claim to any inheritance which was previously gifted away.
Stripping this down:
Elderly woman has a house and two children. She sells the house and gives all of the proceeds to one child on an unwritten understanding she will be allowed to live in said child s newly acquired house for the rest of her life. Other child (OP) is looking at nil return from mother s estate.
The obvious stuff:
- on the numbers presented it looks like there d be no IHT on the mother s estate so concerns about her outliving the gift by 7 years should fall away
- having an elderly parent live with you for 20-30 years is likely to be a very bum deal in the long run. I d guess brother has his eyes set firmly on the short term.
- if mother when much older needs nursing care, how will that be paid for? I don’t know what approach local authorities have to gifts of everything which took place in the distant past, but I bet they have one and I’d be surprised if it is charitable.
- the brother is going to be tied to the mother for the duration of the latter s lifetime. If the brother wants to move house in say ten years, they will have to take mother with them. Query whether they have thought that through.
As the OP I d be pissed off (but concerned not to show that). I recognise that no one has a right to expect to be left something in a will, and that a parent is entitled to do what they want with their estate. Nevertheless barring family feuds/fallings out, one would normally expect a parent to treat two children equally, or more or less equally, in a will. The fact of the OP doing ostensibly well is not the same thing as being able to pass up a six figure gift without blinking.
What to do? I d lay out my concerns first to the brother then to the mother. Those concerns would be - whilst recognising her freedom to do what she wants - that I consider the arrangement unfair, amounting to a complete preference of the brother over me.
What should I do instead? then has to have a ready answer. Tricky. One option would be for her to gift to the brother half of the proceeds of her house sale and to lend (with interest?) the brother the other half. On mother s death the loan element would become repayable to her estate, and she sets up a will leaving her entire estate to the OP. Of course that means that on her death the OP has to ask his brother to stump up £175k plus X years interest. Which may not be possible without the brother selling or remortgaging his house. Could create rancour.
Another is to suggest mother splits the proceeds now and brother and mother proceed with their plan but somewhere more affordable. Pragmatic but given there seems to have been a bit of time and energy invested in the plan to use all the proceeds, this could put noses out of joint. Possibly the least messy and simplest solution though.
ETA: since composing this I see that there is a living father. Depending on his worth, his outgoings over the rest of his life, remarriage and predeceasing his new wife etc there is a possible avenue for an equalising gift on his death. But that seems precarious on a number of fronts.
Elderly woman has a house and two children. She sells the house and gives all of the proceeds to one child on an unwritten understanding she will be allowed to live in said child s newly acquired house for the rest of her life. Other child (OP) is looking at nil return from mother s estate.
The obvious stuff:
- on the numbers presented it looks like there d be no IHT on the mother s estate so concerns about her outliving the gift by 7 years should fall away
- having an elderly parent live with you for 20-30 years is likely to be a very bum deal in the long run. I d guess brother has his eyes set firmly on the short term.
- if mother when much older needs nursing care, how will that be paid for? I don’t know what approach local authorities have to gifts of everything which took place in the distant past, but I bet they have one and I’d be surprised if it is charitable.
- the brother is going to be tied to the mother for the duration of the latter s lifetime. If the brother wants to move house in say ten years, they will have to take mother with them. Query whether they have thought that through.
As the OP I d be pissed off (but concerned not to show that). I recognise that no one has a right to expect to be left something in a will, and that a parent is entitled to do what they want with their estate. Nevertheless barring family feuds/fallings out, one would normally expect a parent to treat two children equally, or more or less equally, in a will. The fact of the OP doing ostensibly well is not the same thing as being able to pass up a six figure gift without blinking.
What to do? I d lay out my concerns first to the brother then to the mother. Those concerns would be - whilst recognising her freedom to do what she wants - that I consider the arrangement unfair, amounting to a complete preference of the brother over me.
What should I do instead? then has to have a ready answer. Tricky. One option would be for her to gift to the brother half of the proceeds of her house sale and to lend (with interest?) the brother the other half. On mother s death the loan element would become repayable to her estate, and she sets up a will leaving her entire estate to the OP. Of course that means that on her death the OP has to ask his brother to stump up £175k plus X years interest. Which may not be possible without the brother selling or remortgaging his house. Could create rancour.
Another is to suggest mother splits the proceeds now and brother and mother proceed with their plan but somewhere more affordable. Pragmatic but given there seems to have been a bit of time and energy invested in the plan to use all the proceeds, this could put noses out of joint. Possibly the least messy and simplest solution though.
ETA: since composing this I see that there is a living father. Depending on his worth, his outgoings over the rest of his life, remarriage and predeceasing his new wife etc there is a possible avenue for an equalising gift on his death. But that seems precarious on a number of fronts.
Edited by BlackTails on Tuesday 7th October 18:56
okgo said:
The elephant in the room is that my wife and I are quite comfortable financially, we aren't showy with money, but I suspect they probably are thinking along the lines of well, he doesn't need it does he - and part of me thinks they are right, and that me writing any potential inheritance off is a nice thing to do that changes the lives of my brother and his children, but then on the flip side I think about my own son and how he is essentially completely frozen out if this goes ahead.
I guess there are all manner of future possible hurdles to consider.
If your mother dies soon after she has gifted the large sum of money. - Need to find money from somewhere, to pay tax on the gift.
Your brother has an unforseen divorce. - House sold and your mother (without any portion of ownership) would be moving in with you.
Those are just two points, but maybe many other aspects might be involved.
The points you describe above reminded me of my situation.
Two children and regarding finances, I have always treated them exactly equally. A while back one received home extension help. The same sum is now being paid to the other child by regular payments, under the HMRC 'gifts from surplus income scheme', which overcomes the normal 7 year rule.
Best of luck. Think you just need to try to think of everything in advance.
Edited by Jon39 on Tuesday 7th October 19:15
To be clear - the house they’re buying is probably the lower end of the market for what they need and my brothers children are enrolled in the local school. So buying elsewhere at a lower rate doesn’t work unless they uproot everything. I do not see brother or his wife earning significant more in their lives and they’re maxed in borrowing to buy half this place so there’s no option there either - they like living rurally, my brother has had a job in the same small firm since leaving school (34 now) - this is basically the only way they get into this kind of house and he’s already said he wouldn’t want to move to release funds etc and sees this as the forever home.
I’ve floated the father idea, my dad is a fair bit older and unmarried and relatively wealthy so that may be some form of option.
I posed it that if this was the other way around, my brother would feel hugely hard done by and it wouldn’t even be a question as to whether it was viable or not. The only thing making it work on paper is that we are not hard up.
I’ve floated the father idea, my dad is a fair bit older and unmarried and relatively wealthy so that may be some form of option.
I posed it that if this was the other way around, my brother would feel hugely hard done by and it wouldn’t even be a question as to whether it was viable or not. The only thing making it work on paper is that we are not hard up.
This isn't really the answer to the OPs question but it's real and shouldn't be ignored
They go ahead and Mum, Son, Daughter in Law and kids all live together and everything is fine and dandy
Just suppose (hopefully it won't) Son gets ill and passes away. Do Mum and Daughter in Law get on well enough? Do Mum and Daughter in Law get on well enough if DiL meets someone new after a couple of years. Will Mum want to live with a new blended family?
This could have been me if we had gone ahead with a discussion I had with my Mum about how she might choose to live as she gets older. We discussed loads of options, the one we didn't discuss was what if me or my wife passed away first. Sadly that was what happened.
They go ahead and Mum, Son, Daughter in Law and kids all live together and everything is fine and dandy
Just suppose (hopefully it won't) Son gets ill and passes away. Do Mum and Daughter in Law get on well enough? Do Mum and Daughter in Law get on well enough if DiL meets someone new after a couple of years. Will Mum want to live with a new blended family?
This could have been me if we had gone ahead with a discussion I had with my Mum about how she might choose to live as she gets older. We discussed loads of options, the one we didn't discuss was what if me or my wife passed away first. Sadly that was what happened.
Inheritance tax issues aside, another issue (if it hasn't already been mentioned) is regarding the OP's brothers wife...
If his brother and wife divorce then the wife could get at least half the house, or all of it.
If the brother dies, his wife gets the house and could choose to sell, kicking mum out and making her homeless.
If the wife remarries the house could pass down the bloodline of her new husband.
All three scenarios leave the OP without a share of the house.
Plus, if the OP divorced then his comfortable financial situation could change.
This video covers the possible negative impact of a parent gifting their house to their child.
https://www.youtube.com/watch?v=PxgMqHZWbAs
If his brother and wife divorce then the wife could get at least half the house, or all of it.
If the brother dies, his wife gets the house and could choose to sell, kicking mum out and making her homeless.
If the wife remarries the house could pass down the bloodline of her new husband.
All three scenarios leave the OP without a share of the house.
Plus, if the OP divorced then his comfortable financial situation could change.
This video covers the possible negative impact of a parent gifting their house to their child.
https://www.youtube.com/watch?v=PxgMqHZWbAs
Edited by The Gauge on Tuesday 7th October 19:51
okgo said:
Yes this is kind of as I expected.
My only wonder was could I request that my brother make me whole from anything my dad may leave him (parents are separated)?
How good is your relationship with your brother? If it’s good you need a chat over a pint and out this to him. You get all of mums estate I get dads to balance it out and no arguing. My only wonder was could I request that my brother make me whole from anything my dad may leave him (parents are separated)?
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