Paying off equity release and inheritance

waccamole

Waccamole x

holly_hobby

If this is a lifetime equity release mortgage (with typically rolled up interest), the early redemption pens will probably be hefty - have they checked this out ?

How I would divide this would be the first £30k from their estate (ie sum equal to the same gift your sibling benefited from yrs earlier), be bequeated to you, now this could be with the addition of a sum equal to inflation on the sum, from the date of sisters gift to their death, and your subsequent inheritance, to even out the inflationary (real value) aspect you have raised.

Fairness re the fees incurred by Mum/Dad, would be your Sister paying the early redemption pens plus the interest already paid by Mum/Dad - or if that isn't possible, and Dad is inc the above costs as a benefit sister has had, that a sum equal to that paid in relation to the mge, could also be taken from the estate and added to your initial 30k being apportioned, before subsequent division of the residual estate between you or whomever else is a beneficiary.

How does that sound ?

Holly

waccamole

Thanks again

W

waccamole

Thanks again.

getmore4less

Doing current value, inflation calcs etc will be a nightmare

Remember the cuurent value to date has been based on roll over of interest nothing to do with inflation.

Do you have a mortgage?

It seems they have plenty of income if they can throw it at the current debt and pay it off. prhaps that could be £30k(+interest on that) off your debt or if they think £48k is more appropriate that much towards your debts(+interest maybe).

if no debt just start paying you from income. they seem to have had no problem with the equity mortgage.

How big is there estate(>£650k) it may also be that trying to get things level before they die may also benifit tax planning.

holly_hobby

Right, if there are no ERPs (save any applicable MEAF fee), it sounds as though this was an income based equity release exercise (and not a true lifetime equity release mortgage - which do have hefty redemption pens) - so thats all to the good.

As I say, if they wanted to be super duper fair (and you agree that you don't wish your sibling to have have recd any extra monetary benefits via their early bequest), then application of an inflation based foruma to your 30k upon parents death (setting aside any interest payments etc for the moment), to essentially give you an equal monetary equivilent to that recd by your Sibling, would I feel be the answer here.

How the interest/payments incurred in connection with the 30k they released to gift to your sibling, (and subsequently repaid by M&D from their own funds), is tackled between they and her, could be as I suggested, be via deduction of the total interest/fees paid in relation to the exercise, from the estate following deduction of your 30k (plus inflationary uplift) but before division of the remaining residue between you.

The exercise will no doubt be time consuming, and ultimately whether you/your parents feel taking equality between you & your sibling, to this kind of detail is really reqd, is ultimately your decision (obv if you don't have a great relationship with your sibling, feel they don't help Mum/Dad or have their best interests, etc ... then I can appreciate that you may agree to the underlying principle of fairness being raised by Dad).

Futhermore, and as raised above, if their net estate on death (inc any unexpired PETs), is likely to exceed unused and qualifying nil rate thresholds applicable at the time (inc any spousal transfer), then proficient estate planning needs to be established asap - a HNW adviser will be the most experienced within this field (should it be reqd).

Hopefully it will be a long, long, long time before division of the estate has to be actually administered - but getting things administered, agreed and in place now, may well save some heartache later down the line at what will already be a very distressing time for all concerned x

Hope this helps

Holly

waccamole

Thanks again for comments received.

holly_hobby

Thats great ... !

Nice to see that the Sol I and were on the same page re deduction and indexing up of the relevant sums pre estate division ... don't forget to ensure that M&Ds wills are updated and reflect the chosen route !

Best of luck

Holly