MIL has a lot of money. Advice?

Darlyd

Hi guys, sorry not sure where to post this, have picked a few boards. (Duh me). Anyway

My husband told me everything today about MIL. I knew she always had some money put aside, (good on her) She never spends it on rubbish, never went out for meals, always brought packed lunches etc, very old school..

Anyway FIL passed away last year (god rest his sole), and only now probate has finished (I think). Well she has over 200k in total (I think, there about's) She owns her own home (mortgage free). She has opened a few ISA's in her name and my husbands name, I think even in my DD2 name. She has been told that she can only gift just over 3k a year to any one person by a financial adviser (hubby was there).

Hubby is worried about her having to pay tax on her money in the future, money they worked buddy god darn hard for. (She was a district nurse, FIL was a factory worker, Plus inheritance from relatives).

The reason for this post is to ask any professional/person with experience as to what she can do with this money? I know hubby is dying to ask her for some money for our own home improvements but she always wants us to pay back, I loaned some money off of her for a car last year and I been paying her back £200 a mnth (don't blame her). I am dying to ask her to buy a care home so I can run and have an amazing always wanted career, she will think about it don't get me wrong, BUT how can she go about this? Can she buy one and gift it to us? I don't understand, nor does she (I don't think). Just want her to do right with her money.

She also has a daughter (both adopted) But she is an acloholic/drug addict and only bothers with her when she has no money, MIL helped hubby out with vets bills last week (He has to pay back, added onto his monthly debt) And she feels bad and is offering to give her DD money to the same value, Hubby has told her she will just p it up the wall, so MIL is indecisive. hmmm tough decision.

Just want what's best for her, And I know she wants what is best for her kids, (even if she don't get on with DD), Think the main question is about TAX ... It's her bloody money, tax already paid as and when they earned it.. Makes my blood boil

MIL will read these posts.. (Hubby told her I would find out)

lulu650

Tell her to enjoy the money while she can and have a great time spending it. She can't take it with her and no doubt any spare money will be swallowed up in care home fees when she can't look after herself anymore.

Not sure what you mean about paying tax on her own money though??

Darlyd

lulu650 wrote: »

Tell her to enjoy the money while she can and have a great time spending it. She can't take it with her and no doubt any spare money will be swallowed up in care home fees when she can't look after herself anymore.

Not sure what you mean about paying tax on her own money though??

That is exactly what she is doing, going abroad and holidays etc. Sadly I hate flying so we don't join her. (I feel terrible for it, and tells hubby to go, but he won't without me urgh). She could spend it on home improvements herself but she does not want to change a thing in her home (it's very 60's-70's) .

She helped hubby buy this house many years ago, she paid cash he has a mortgage, so she does have some say in this home. We could do with some home improvements due to the room we need to extend, and other bits and bobs, but she always insists on hubby to pay her back, he pays her £50 a mnth towards his debt (owed her thousands) .

Just don't know what to advice her, Like I said I am dying to ask her to buy a care home and let me run it, but how would this work? Everything will be passed down to hubby when that time comes. The only home she would go into would be the one I work in. OR she can live with us in a granny flat.

What can she do? She says she needs to get rid of most of it for fear of being taxed on it..

Lokolo

Honestly - it's her money, you shouldn't be asking her for anything.

Given you can't even bothered to go on holiday with her, because you don't like flying, I don't see how you can even ask her for something like this. Totally greedy imo.

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Tax wise is inheritance tax, add up the total assets, anything over £325k is taxed at 40%, so she might not get taxed on anything. And even if she does give it away, it can still be taxed for up to a further 7 years, as gifts up to this 7 year period count towards the assets upon death.

Darlyd

Lokolo wrote: »

Honestly - it's her money, you shouldn't be asking her for anything.

Given you can't even bothered to go on holiday with her, because you don't like flying, I don't see how you can even ask her for something like this. Totally greedy imo.

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Tax wise is inheritance tax, add up the total assets, anything over £325k is taxed at 40%, so she might not get taxed on anything. And even if she does give it away, it can still be taxed for up to a further 7 years, as gifts up to this 7 year period count towards the assets upon death.

I am not greedy by far, I work and am starting another job (so would be 2 jobs). She wants to get rid of her money, She does not want to have to pay stupid amounts of tax on HER money. She would love to buy a care home, I know her so well. She wants what is best for her kids, And hubby would be by my side working it too. (at the moment it's just a suggestion to help her spend her money, which she wants to do, as it's no good to her when she has gone is it?)

Lokolo

How much is her house worth?

As I said above, shes only going to pay tax over £325k of total assets, and getting rid of any money beforehand may not do anything, as she could die within 7 years. The only way to stop this is for her to spend it herself, not gift anything.

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As a side note, as the care home owner she could employ anyone to run it and be owner, she would set herself up as a company, and you could run it as her employee. However I suspect any sort of care home will cost more than £200k and require extensive knowledge of running a business, as well as being a care home owner....

hcb42

she won't have to pay stupid amounts of tax on her money.

whitewing

If FIL died relatively recently I really think you should give MIL time and space to grieve. Decisions about the money can surely be saved for a year or so until she is not so emotionally vulnerable. To be honest, I feel quite sick at the thought of you railroading MIL into handing over large quantities of cash. I apologise if that is not how you mean me to read your post. It sounds so horrible though.

Darlyd

MIL told hubby she is concerned about what to do with her money, as she does not want to pay tax on any big gifts she wants to give, (she was told she could only gift just over 3k per person per year without having to pay tax on). And hubby told her I would find out about it, She will read all the posts.

Please no more judgemental posts, fed up of it, I am only asking on her behalf, perhaps I should of made that clear in OP. (I will edit)

gizmo111

In post 1 you sk how can you aproach her re the care home and in post 6 you say she would love one? Which is it I#m a litte confused.
Also you talk about your house and her owning some of it - how does that work, is it yours and your husbands house or hers and your husbands? Id the latter can she pay the mortgage off and have no tax implications.
Is she concerned about tax - or is it your husband that is?

scottishblondie

Sorry if you feel the posters are being harsh but the repeated references about "dying to ask her" to give you money and buy you a care home do make it sound like you want your OH's inheritance now!

If she has a stable income by way of pensions etc and doesn't need any more, then she can stick the capital into decent savings accounts and spend it as and when she wants. On the other hand if she might need it to provide an income over the longer term then she should seek professional advice on how to generate this.

The only tax to worry about is inheritance tax, which currently applies to estates valued at over £325k - assets over that are taxed at 40%. However, if her husband did not use any of his nil rate allowance when he died (i.e. everything went to her), then she can leave an estate of £650k before any IHT kicks in. The allowance may also have increased by the time she passes. Read the MSE guide on IHT to see a more detailed explanation. The 3k allowance just means that those gifts will be excluded from her estate when it's value it calculated upon her death. Also to be clear, this allowance is not per person, it is per year in total.

If she wants everything to go to your OH on her death (to the exclusion of her daughter?) then she must have a will, or the assets will be divided among the legal beneficiaries.