Giving our son money from his inheritance

Bob-cat

We have just given our son £15k to help him buy his house. So that we are fair to his sister, we intend this money to form part of his inheritance when we pop our clogs (i.e. he gets £15k less than his sister) and want to write a letter to this effect to go with our wills. Can anyone advise me how we should word this, please?

G6JNS

Bob-cat wrote: »

We have just given our son £15k to help him buy his house. So that we are fair to his sister, we intend this money to form part of his inheritance when we pop our clogs (i.e. he gets £15k less than his sister) and want to write a letter to this effect to go with our wills. Can anyone advise me how we should word this, please?

You need to make a new will or a codicil to the existing one. These days it is easier, and more reliable, to do a new will. A letter will not usually be sufficeint and could be subject to challenge.

pattycake

We gifted some money to our son when he added an extension to his house.

To make things fair, we gifted the same amount to our daughter at the same time.

You may well have reasons you don't wish to take that route though.

Keep_pedalling

The trouble with this is that they come to inherit in 15-30 years time your daughter will still lose out, because your son has had the chance to invest the gift in property and the value will almost certainly have risen considerably, and inflation would have reduced the real value of of his reduction.

If you can easily afford it, the simple solution would be to gift your daughter the same sum now. If you can't do this then it might be fairer to split their inheritance on a percentage basis. E.g. If your estate is now worth £150,000 then because you are gifting 10% of that to your son now, then the split would be 45/55 %

getmore4less

If you can't do this then it might be fairer to split their inheritance on a percentage basis. E.g. If your estate is now worth £150,000 then because you are gifting 10% of that to your son now, then the split would be 45/55 %

Then if the money get blown on holidays or care fees the sister get nothing.

Just about anything tried will have flaws when it comes to "fair" except the equal gifts now.

define what you mean by "fair" first.

........................

The easiest way to achieve what you said you wanted without a change of will is to do it as a interest free loan with terms that make it repayable at the time needed.
(and some other things like sons death)

This has two knock on effects

IHT: no longer a PET exempt after 7 years so included in the estate(s)

IF they need a mortgage the lender won't like it as a loan if it a big part of their deposit lenders prefer gifts.

Keep_pedalling

getmore4less wrote: »

If you can't do this then it might be fairer to split their inheritance on a percentage basis. E.g. If your estate is now worth £150,000 then because you are gifting 10% of that to your son now, then the split would be 45/55 %

Then if the money get blown on holidays or care fees the sister get nothing.

Just about anything tried will have flaws when it comes to "fair" except the equal gifts now.

define what you mean by "fair" first.

I suppose even matching the gift might not be fair under certain circumstances.

We have always tried to even it up except where it came to paying off my daughters student loan, something my son was fortunate to avoid.

theoretica

Another option would have been to buy £15k work of his house - so if it is worth £150k you own 10%. Then leave things 50/50 in the will so he inherits the rest of his house and his sister gets more cash, or a greater share of your house/other assets.

joerugby

The number of different answers above simply confirms the fact that you need to consult a solicitor

G6JNS

joerugby wrote: »

The number of different answers above simply confirms the fact that you need to consult a solicitor

A solicitor is unlikely to have the expertise. It is really a matter for an actuary or an IFA.

getmore4less

theoretica wrote: »

Another option would have been to buy £15k work of his house - so if it is worth £150k you own 10%. Then leave things 50/50 in the will so he inherits the rest of his house and his sister gets more cash, or a greater share of your house/other assets.

With a potential for CGT every time he want to move.

nom_de_plume

One more for debate...

'Borrowed' from the British Red Cross here

I give free of Inheritance Tax, to my daughter (name) such sum (the “Legacy”) as shall be produced by multiplying fifteen thousand pounds (£15,000) by the index figure in the Retail Prices Index as published by the Office for National Statistics or its successor body for the month immediately preceding my death and dividing the product by the index figure for the month in which my Will is executed