advance on future inheritance as a gift?

bionic_dad

Hi everyone

I will try and keep this brief, concise and succinct

My sister is in the postion to offer me a large sum of money in order to clear a long standing debt my ex wife left me with ten years ago.

The basis of this gifting is that i will let her take that amount from our parents estate in the event that we both survive them. I should also state my sister is willing to take the risk that all the estate funds could be consumed with care home fees etc. We obviously dont know what the future holds but currently both parents are healthy in their 80's. My parents own their property outright and it is valued below the current inheritance tax thresholds.

My sister trusts me implicitly however for ourselves and our respective partners peace of mind we'd like to set this agreement down on paper so there can be no disputes upon division of my parents estate, my sister is also the executor for the estate.

Can anyone advise what format this should ideally take (letter of intent...?) or envisage anything inherently wrong with the arrangment that we havent taken into account?

Would you all agree that this document need be drawn up by a legal professional..?

many many thanks in advance for your views and advice

BD

maman

Sorry I don't know what you'd have to do legally but why do you have to link it to inheritance? Couldn't your sister let you have an interest free loan and you pay it back in instalments?

gettingtheresometime

maman wrote: »

Sorry I don't know what you'd have to do legally but why do you have to link it to inheritance? Couldn't your sister let you have an interest free loan and you pay it back in instalments?

This is what my aunt did for my mum.

Basically a sum of money was lent and my aunt gave my mum a building society pass book (opened in the name of my aunt). Mum paid money into the account until the agreed sum had been paid into it.

Personally I think you're modding the waters by linking it to your inheritance especially as your sister is executor

maman

Yes, that way OP gets help directly from his sister (and the benefit of not paying interest on the debt) but the inheritance stays intact.
I suppose another way would be to borrow the money directly from parents and pay them back. But that might be considered deprivation of assets and a gift of a large sum of money from people in their 80s is risky.

krlyr

I suppose that at least by linking to the inheritance, the sister has a way of recouping her money should OP not pay back (not saying they won't, but it happens).

Perhap a loan agreement with a clause for any outstanding amount to be taken via the inheritance route, which gives OP the option to pay back at any time prior should they be able to?

I would just tread very carefully. Loans to and from friends & family can really sour a relationship. You both need clear expectations of any T&Cs, expected repayments, etc. , and the legal backup is a wise idea. Bear in mind that the sister is in a position to lend money right now - but if something was to happen in her life, and she then had money worries, that could change the dynamics of the agreemnet completely.

System

The idea behind the sister paying it off would be that the OP no longer has the debt hanging over him.

But it's not really a gift if it's expected to be repaid when the parents pass on.

Tricky.

maman

krlyr wrote: »

I suppose that at least by linking to the inheritance, the sister has a way of recouping her money should OP not pay back (not saying they won't, but it happens).

Perhap a loan agreement with a clause for any outstanding amount to be taken via the inheritance route, which gives OP the option to pay back at any time prior should they be able to?

I thought that too. Without being morbid and not knowing the size of the loan or how much OP can afford to repay regularly that seems like a good fallback position.

bionic_dad

Thank you everyone for taking time and replying and for the excellent advice unf for time being this situation is on hold pending some legal advice now...