Advice on inheritance offer

Gavin83

My biggest concern would be what would happen if neither of you inherit anything from your mothers estate, this should have been your first question really.

I agree with the majority here, mixing family/friends and money is a bad idea. A true gift is one thing, a loan (which is what this is) is another. Return it with a thanks but you've decided you don't really need the money.

Mallotum_X

Id not get into this one, too many things to go wrong and spoil the relationship.

What if mum gives her house to the cats home instead?

rpc

As a loan, it is a good deal.

As an arrangement between friends/family, it sucks and has the potential to cause a rift you probably don't want.

If you do want to carry on, you do need to ensure you aren't on the hook for £25k regardless. A term that makes it repayable on your mums death (rather than from any inheritance) might pass casual inspection but see you in trouble later.

If mum's estate gets drained by care home fees and the inheritance doesn't cover the loan, what then? What if mum changes her will to leave it all to the cats home? What if mum says she will change her will, but doesn't because she wants her money to be split 50:50? Neither you nor your sister can control what is in that will.

Either make it a friendly arrangement (with a small risk of your relationship going pear shaped if they get nothing back) or make it far more businesslike and have a solicitor draw up an agreement to cover all the bases.

Personally, I would want it to be a gift or not at all. At worst, a friendly arrangement such as you had with your sister.

I would return the money on the basis that the terms now being offered are not the ones that were originally discussed.

Jagraf

Noooooooooooooooo don't do it!!!!! :eek:

Don't mix business and pleasure.

KiKi

rollerball wrote: »

Do I have a right to feel agrieved?

You have a right to feel anything, it doesn't matter what anyone else thinks!

How much could this inflation add to the amount loaned?

Unfortunately, no-one can tell you. Inflation could be 2% this year, 5% next year, 3% the year after etc. And it depends how long your mum lives for. Essentially, you owe them £25k now, but when your mum dies it could be £26k, £30k, £35k, who knows?

Isn't it in effect like paying interest on the amount?

Yes, it is. Except you have no idea how much the interest will be.

Should I stand firm or swallow some pride and accept?

You can't stand firm - those are the terms they are offering. But I don't think you should accept, either!

Walk away. The biggest issue you have here is that they want the money back - and you have absolutely no guarantee that your mum's estate will be worth that when she dies. Her house may have to be sold to pay for care home fees. Where does that leave you, then? Your sister and BIL will argue that the 25k is still to be paid back. You could argue that it was to be paid from the estate, and as there's no estate anymore, you owe nothing. What happens if there's negative inflation? Will you owe them less?

A non-straightforward loan like this - with inflation applied and assumptions about how it's to be paid back - should be done only with every detail considered and done properly on paper, or it should be a gift. It sounds like he is far more financially savvy than you, so you should definitely walk away or it's you who'll end up losing.

Good on you for asking the questions and checking before committing to it.

duchy

My big concern is what would happen if for whatever reason you didn't inherit .

Either Mum needing to go into a care home

Mum remarrying

A family fall out and Mum giving her money to the cats home in her will instead

You predeceasing your Mum

Whilst if it is genuinely inflation only it is a good deal - this needs to be drawn up legally and you both need separate solicitors to make sure the agreement covers all eventualities and there are no "surprises" later on. Just like if you were taking out any other loan you'd want to protect yourself.

Ivrytwr3

Does the sister know about the emails from the husband?

I would reply to the sister including the husbands emails - saying something along the lines of thanks for the very kind offer, but this kind offer has gone a bit serious and business like - enjoy your holiday, but would appreciate if we can talk face to face when you're back.

Or something along those lines.

Pollycat

rollerball wrote: »

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 gifting 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 I've a spouse who's now furious and reluctant to accept any money at all from them. I'm however keen to resolve this without a bust up.

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.

I appreciate that it may have been his money (not your sister's) but it doesn't really sound like you have been treated in the same way.

One's been gifted a deposit - you don't say how much - but you have been offered only a loan (albeit a generous one) and are not only expected to pay back the amount of the loan but inflation too.

Like the poster above, I too wonder if your sister is party to the emails from her husband.

rpc

Pollycat wrote: »

I appreciate that it may have been his money (not your sister's)

They are married, no such division of assets.

I suspect he sees it as his money and while he is prepared to share it with his family and wife he is rather more reluctant to share it with his wife's family who mean rather less to him.

I think that sort of position is understandable, but whether the gifts/loans are under the same terms is largely irrelevant to OP's position.

getmore4less

The deal has changed, that's the main problem.

the first deal was they get £25k more than you from you mums left over assets.

Which actually ends up at you get £12.5k less that you could have got.

This is itself is an open ended mess, as there are unconsidered scenario, like what happens if you or sis dies what happens to the loan currently the only terminating condition is mum dies and that does not cover the what if there is not enough left or that your estate would not benefit on her death.

A right mess and I bet sis had not thought of any of those and hubby is fuming.

Now we move onto the new terms that hubby has introduced making far less desirable.

He is obviously trying to evade some tax here by rolling up the interest and trying to get it linked in with mums will.

The next thing you know he will be linking to your property with a charge.

At this point hubby getting involvrd I would bow out it has not been thought through properly.

Future value is well understood and documented so that in itself is not unusual in loan situations but personally I think it is something you want to avoid on this deal as it could go very wrong.

https://en.wikipedia.org/wiki/Future_value