Cash Or Bricks And Mortar

Belitacan

Long story, but my brother and I did very badly out of my mum's will, not that she did it on purpose. One factor was that although my mum left her half of the flat that she lived in with her sister Ada to John (my brother), and I, she put in a clause saying that Ada should stay in the flat till she died. Ada has two daughters, who are due to inherit her half of the flat on her death. Anyway, the result is that we had to pay loads of inheritance tax and have ended up with virtually nothing to date. The only asset we have is a quarter share of the flat each, one day. We had to get the will changed (to avoid a second lot of inheritance tax on it when Ada dies) with Ada's co-operation - we technically own my mum's half of the flat now, but would never force Ada to move out.

Ada is feeling a bit guilty about what's happened with the will (falling property values and credit crunch haven't helped our situation). She is offering John and I £25,000 each in advance of her death. The idea is that that amount will be debited from each of us from our half share of the flat when she dies.

Sorry it's complicated, but my question is this. Is it worth me having £25,000 now financially speaking or better to keep the money in bricks and mortar till Ada passes away.

Would be very grateful for opinions.

Thank you

justruth

Ooh interesting scenario, I note you have posted this elsewhere as well. From what I have seen of your other posts you are in the very fortunate position of being debt free. This does affect my advice as if you were in debt I would suggest that you graciously accept her kind offer and pay off debt with it.

The thing about the scenario is that while property markets have dropped, cash savings aren't exactly doing great either. If things were the other way round and Ada had passed away before your mother how would you feel about your mother giving your cousins £50,000? You already paid out the inheritance tax, so there is nothing more to lose. Do you think that your aunt will die before the property market is recovered? It's all a guessing game.

Would there be legal implications regarding you taking the money now?

The last thing to consider is were will you put the money if you decided to go down that route? Savings are paying really poor rates.

Sorry this has been more questions than advice but this really is something you have to work out for yourself, I don't know enough about your circumstances to offer any more than that.

Belitacan

Thanks very very much for taking the trouble to reply.

Firstly - you're right. Although impecunious and having very little income I am not in debt. Have posted thread in two places as I wasn't sure which was the right one.

Re the cousins - they are very well off with good jobs and due to inherit from a spinster aunt on their father's side as well as eventually from their mother. Ironically their family has already had more money from my mum than my brother and I (guess my mother just wouldn't take on board the inheritance tax situation). You posing the question about how I would feel if my mum had given my cousins £50,000 in advance is an interesting one. I think that if they were in my position I wouldn't begrudge it. I am almost a pensioner and they are quite a bit younger. Thinking about it I wonder if John and I might be in a worse position when Ada passes away, as taking the money now may affect our half ownership and the cousins may presume they have control.

You bring up my original question. Is the money more valuable in bricks and mortar or as cash. As you say, hard to find a viable scheme.

Thanks again

Fire_Fox

A slightly different perspective, but there may be parallels. When I got divorced my ex-husband bought me out of the house. I then looked at buying my parents out of a proportion of a second property they owned which was rented out. It would have suited them to release the cash, and me to have the money in the property market with people I trust implicitly.We were strongly advised not to do it by a financial advisor friend. Basically the second property would have been divided half and half with my brother should my parents die prematurely. If we changed the proportion, it all would have become very complicated legally - I do wonder if this is the same.Would your aunt be giving you money from her half of the flat or from your own half? Do you then get £25k less on her death, or a percentage less than half? If the flat is presently in you and your brother's names along with your aunt, she is trying to give you a share of something that is not hers to give. If the flat is entirely in her name this is possibly a different matter.