Advice on inheritance offer

rollerball

Looking at the kind of posts on here, my issues may sound a little paltry but I'm seeking some impartial advice none-the-less.

My older sister has been with her partner now for the best part of 20 years, the last 4 of them as a married couple. He's a very intelligent business man who recently sold off a company he founded and nurtured in a multi-million pound deal. Having received a pay out they were flush with cash and offered to help his brother buy a house by giving him cash for a deposit. My sister clearly felt that this favour should go both ways so called me a few months ago with a proposition: They could give me a lump sum of cash now (£25k) on the proviso that when my mother dies and we inherit her estate 50/50, she gets £25k more than me. The vast majority of my mothers estate is the house she lives in, which she has paid off the mortgage as is worth currently somewhere in the region of £200k.

I'm extremely careful around any issue with lending money, and by my own admission a bit financially naive, so asked a volley of questions to my sister.

• Will this benefit you in the long run?
No, its simply a gesture to help me out.

• Will this make you lose out at all in the long run/leave you out of pocket?
No - its money we dont need, its just "sitting there".

• Will any paperwork be needed or any solicitors involvement?
No, happy to leave this as trust

• Is there a timescale to this offer?
No, the money could be transferred to you tomorrow if you wanted.

With this in mind, I went off and got several quotes for work that my house desperately needs and that I'd resigned myself to not being able to do for years. All during this, I kept my sister in the loop with the type of work I was planning to get done and the prices i was getting - really more to reassure her that this sum of money is going to good use. We texted or spoke at least once every week.

With work due to start in less that 4 weeks time and my sister about to travel abroad on a long family holiday, I gave her the shout to move the money over. "No problems" she said, then a few hours later an email arrived from her husband. This is the first communication he'd had with me during the process.

"We'll draw up a brief agreement when we're back off hols just so everyone is clear (and your mum probably needs to amend her will), but in simple terms we are effectively providing you guys a loan secured on your mum's inheritance. Think of it like equity release for your mum, which she then gives straight to you (via us).

We won't change you interest on the loan, but it will be subject to inflation. Your Mum's house is the lion's share of her estate and that is likely grow in value at a rate well above inflation."

I didn't understand this - now a mention of inflation from out the blue. The money had already been transferred into my account by this point, but this new information is only coming to light now. I felt blindsided and confused, so replied back to please explain more, ideally with some figures so I can fully understand what the inflation means.

"Money gets less valuable over time and so it just accounts for that. Basically, your mum's estate pays back in real terms the same amount as was loaned. Inflation is currently running at 2%, well below property prices (which is the rump of your mum's estate)."

An hour after that email was sent they boarded a plane to their holiday. I've not contacted them since, opening a dialogue over email/phone whilst they are on a family holiday wasn't conducive to me understanding this. I do feel very much lied to - the terms of this money switched at the 11th hour and I don't know why. It feels less like a family gesture and more like a business deal to secure a return for them. I've resolved to speak with my sister when they return from holiday this coming weekend and explain my concerns. In the meantime I'm worrying constantly and now feel reluctant to accept any money at all from them.

Do I have a right to feel agrieved?
How much could this inflation add to the amount loaned?
Isn't it in effect like paying interest on the amount?
Should I stand firm or swallow some pride and accept?

Any help and advice welcome.

Ganga

Your sister is loaning you £25,000.

Are you definately receiving 50% of your mothers estate?
What happens if your mother changes her will ?
You might get nothing or you might get it all!
What happens ( and i hope not ) that you pass away before your mother,will your sister want her money straight away.
What happens if something happens to your sister and her husband,will the person/people who inherit their estate want the money payed back asap.
I would speak to your sister on her return from holiday and disscuss it with her.

PS I noticed that his brother was GIFTED cash,pity your sister could not do the same for you even if you said you will pay it back when you inherit.

Hope it works out for you.

Primrose

I see three major issues here.

Firstly if your mum ends up having to go nto care for a lengthy period her house may have to be sold for care home fees so neither you nor your sister might end up inheriting anything

Secondly, if you accept the loan, your mum,s house rapidly i creases in value over the years and care home fees are not involved, i would bet my last dollar that the value of your forfeited inheritance will have risen a lot more then than the £25K you have received from them now. I' msure how the "inflation" part of this deal is going to work.

Thirdly, family arrangements regarding money almost always end in tears and resentments. I'm not surprised your husband is feeling angry. My advice would be to return the money graciously, thank them for their kind offer but say on balance you think it'a better for the long term future if your two familities don't get involved in financial arrangements in case something unforeseen crops up at a future point which could cause trouble between you.

If you want money for home improvements , can you not negotiate an extension to your own mortgage?. Family turf wars over money are not worth getting involved in.

And in any case, this isn't an equal deal in both aides of the familly. Your brother in law has gifted a deposit for a house to his own brother. You are effectively just getting a £25k loan which effectively will have to be repaid on your mother's death by forfeiting a share of your inheritance. So already there are in balances in the way family members are being treated. Ask yourselves honestly if this is going to fester later, especially if something goes wrong with your mother's affairs at some point.

Steer very clear. Avoid future arguments and only improve your own home if you can afford to do it under your own financial steam.

tea_lover

You don't actually need this money (as in, you're not going to be out on the streets/unable to eat without it). It's already causing friction. It's highly likely to cause further issues down the line.

Transfer it back and say thank you for the offer but you'd rather keep things simple.

DigForVictory

Families. Money. Inheritance.

Frankly, dynamite.
Plus she's on a long holiday moments after her husband communicates?

Someone's playing someone & for your own peace of mind, I suggest you reassure your sister that you love her more than money & that the house will stay upright without her kind gesture.

You can avoid a bust-up by walking away gracefully. It'll sting, but transfer the money back as soon as you can.

Ozzuk

Give the money back. The biggest red flag for me (as already mentioned) is that you'll have to pay this back out of your inheritance. However you've no guarantee you'll get anywhere near that level if your mother requires care for instance.

Now if it is worded that you pay for out of your inheritance alone, ie, if there isn't enough to cover that then you don't have to pay then maybe its worth it, depends how much you need the money.

AylesburyDuck

Cancel the builder and return the funds. As it wasnt what was agreed with your Sister and the deal has now changed and is not to your likeing.
Their is no need to take the offer up OR fall out about it.

troubleinparadise

Unfortunately, I don't think your sister had actually discussed this in full with her husband when she made you the offer.

The two of them seem to have very different views on how this "gift/loan" was to work - and from what you have written, this is very much a loan and not a gift.

I suspect that as the funds are coming from the proceeds of the sale of a company that the husband founded, he sees that money as his, not "theirs", and that whilst he feels happy to gift the money to his brother, he doesn't feel as generous towards you as his sister-in-law.

Echoing what all the other posters have said so far, my advice would be to walk away from this offer given the situation that has unfolded so far.

Try not to feel aggrieved, as I would also suspect that your sister either feels uncomfortable about her husband's stance, but is probably not in a position to change it without a lot of persuasion and potential conflict, or actually has no real idea about finance and her husband's views on it. It sounds as though she came up with a brilliant idea, but that isn't quite how it has worked out some weeks down the line.

You haven't mentioned your mother's views on all this, but its either with her full agreement and blessing, or somewhat presumptive on your BIL's part that a pile of cash will be coming your way in the fullness of time care of your mother's estate, relying on her financial status quo remaining as per today.

As this already has hints of conflict and discomfort, it would probably only get worse with time. Better to work out how you and your OH can raise the funds for yourselves, and keep your finances separate. And hope for family harmony!

rollerball

Thanks for all the replies so far - I should clarify that it was my mistake to put "gifted" against his brothers cash amount. i am not in fact privy to their arrangements, nor do i expect to be. it doesnt change the unease i feel and the common response by all so far would back up my feelings

troubleinparadise

I think gut instinct is always a strong indicator of whether a situation is good or bad - and especially if its one of unease!

Just transfer the money back straight away and explain once your sister gets back.

spadoosh

Dont think its that bad an offer really.

Inflation is how much stuff increase in price year on year. So a loaf of bread cost £1 now and in a year with inflation (2%) will cost £1.02.

Basically hes saying they want to lend you £25k and recieve the equivalent amount back as and when inheritance becomes available.

As an example.

Based on you borrowing the £25,000. With that you could buy a new vauxhall zafira. Essentially they want to be able to buy a new vauxhall zafira as and when your mother inheritance becomes available. The issue being that the zafira might have increased in cost to £30,000, still buying the same amount of things but essentially money becomes less valuable over time.

I suppose it is interest but its unfair to say they're making any money out of you more theyre preventing their money losing value (fwiw they could earn more having it sat in a standard saving account compared to lending it to you.)

If you wanted to be a bit crafty. Borrow the money @ 2% inflation and stick it in a savings account paying more than 2%. Then you could earn money off their money.


Ignoring the issues of lending between relations, youll be hard pushed to borrow money cheaper.