Inheritace and gifts or loans

Potternerd

My MIL recently passed away. OH and BIL are the main beneficiaries ( with small amounts to grandchildren.)BIL has admitted to solicitors that he has borrowed about £20,000 from her in the last 5 years. Can OH have this added to his share of the inheritance? In other words should he get £10 k more when the money is divided between them? Does he have legal grounds for a claim?

Keep_pedalling

The £20,000 should be treated as a debt owed to the estate so your OH should receive £20,00 more from the estate provide the estate is big enough to do that.

If IHT is payable it becomes a little more complicated.

Keep_pedalling

Very honest of you BIL to admit this was a loan, lots would have claimed it was a gift, and that would be hard to disprove.

Potternerd

Not sure he will admit all of it was a loan but he has said it was for a car loan and for rent etc. I don't think he was doing it out of honesty so much as OH warning him solicitors would be accessing last 7 years bank statement, but hopefully OH will be able to get some of his share.

getmore4less

Keep_pedalling wrote: »

The £20,000 should be treated as a debt owed to the estate so your OH should receive £20,00 more from the estate provide the estate is big enough to do that.

If IHT is payable it becomes a little more complicated.

No extra complications if the £20k is not paid back into the estate the first £20k of the brother share is assumed to have already been paid out to the brother.

IHT makes no difference.

getmore4less

Potternerd wrote: »

Not sure he will admit all of it was a loan but he has said it was for a car loan and for rent etc. I don't think he was doing it out of honesty so much as OH warning him solicitors would be accessing last 7 years bank statement, but hopefully OH will be able to get some of his share.

Executors should look back for relevant IHT info and can look at statements but usually just ask the relative if there are any gifts they need to consider for IHT purposes.

Undocumented loans are a problem if there are no payment terms they can be difficult to enforce and recall back into the estate.
(mortgages have specific extra terms to become payable from the estate)

To analyse 7 years of statements would cost a fortune with professional executors so most do not scrutinize unless the asset base change lot or there is IHT issues or suspect transactions.

Keep_pedalling

getmore4less wrote: »

IHT makes no difference.

Yes, I was not thinking straight there.