Can i bank this large sum of money without a catch ?

SR1

My parents lent my sister some money (350,000) to buy a new house as she had not sold her own in time (house for sale for £350000),
They then decided that they did not want the money back (they've got loads of money and are approaching 70)and it was to be split between us when the old house eventually sold. Well today was the day her old house sold and the sale money reached Her account. Can she simply write me a cheque or do a chaps transfer to give me the 175000? I know about the
7 year rule , will we have to declare where the money is from ?

jonesMUFCforever

Almost certainly yes unless you are in the habit of paying sums like this on a regular basis.
Won't be a problem though will it?

agrinnall

I'm not convinced that you will have to say anything, I've transferred sums in the same order between accounts at different banks and never once had to explain the source. But as jones says, it's not a problem if you do have to explain anyway.

xylophone

Your parents made your sister a loan - presumably this was documented.


Your sister used the loan to buy a house,

She has now sold her former home and received the proceeds.

Your parents should write her a signed and dated letter stating that they do not require repayment but do require that she pays £X to her brother Full Name as an absolute gift from them, the balance to be kept by the sister and regarded as an absolute gift.

A copy of this should be kept with the Will of each parent - the original can be shown (if required) to the bank(s) through whom payment will be made.

SR1

xylophone wrote: »

Your parents made your sister a loan - presumably this was documented.


Your sister used the loan to buy a house,

She has now sold her former home and received the proceeds.

Your parents should write her a signed and dated letter stating that they do not require repayment but do require that she pays £X to her brother Full Name as an absolute gift from them, the balance to be kept by the sister and regarded as an absolute gift.

A copy of this should be kept with the Will of each parent - the original can be shown (if required) to the bank(s) through whom payment will be made.

They did have to write such letter to my sisters solicitor when they transferred the money , saying it was a gift. I'm just wondering, when it comes to inheritance tax if neither survived 7 years, how do they actually trace any money they've given? Surely they can't account for every penny

alternate

They may well contact your sister with it being a large amount. I have banked 100k before with no issue but the cheque was issued by a solicitor so that might have made a difference, whereas Barclays have contacted me with cheques as low as 20k.

jonesMUFCforever

alternate wrote: »

They may well contact your sister with it being a large amount. I have banked 100k before with no issue but the cheque was issued by a solicitor so that might have made a difference, whereas Barclays have contacted me with cheques as low as 20k.

They have no right to contact the sister - data protection and all that - it will be up to the OP to satisfy the bank the funds are kosher.

xylophone

They did have to write such letter to my sisters solicitor when they transferred the money , saying it was a gift.

But you said in your original post that it was a loan?

If your parents have stated in writing that they made their daughter an absolute gift, then this is the gift and amount that should be recorded with their wills.

It seems to me that legally they can have no further say over anything that your sister does with the proceeds of her house sale?

That is to say, if your sister chose to keep all the proceeds then there would be nothing your parents could do about it?

If your sister now chooses to make you a gift, then this gift needs to be recorded and kept with her will as it becomes a PET to you from her?

On death, the executor has to fill in a detailed form - there is a question concerning gifts.

alternate

jonesMUFCforever wrote: »

They have no right to contact the sister - data protection and all that - it will be up to the OP to satisfy the bank the funds are kosher.

The sister writes the cheque so her bank has the right to contact the sister and ask if she did write it. Not ask where it came from or what it is for.

I don't see how this breaches data protection at all.

jonesMUFCforever

alternate wrote: »

The sister writes the cheque so her bank has the right to contact the sister and ask if she did write it. Not ask where it came from or what it is for.

I don't see how this breaches data protection at all.

The questions will be asked by the receiving bank not the bank who the cheque is written on.

Keep_pedalling

The issue of the cheque is the minor one here, the thing that needs sorting out is getting the gifting sorted out correctly. What was said to the bank was a lie, in reality it was a loan. As an executor all I would want in the real world is a record of the gift, and to be able to cross reference that to a bank statement.

All our substantial gifts (and loans) over the past seven years are kept on a spreadsheet with a paper copy kept with our wills, and that is all the OPs parents need to do. I don't recommend the OP gets his sister to gift him the money as that would put his £175k onto both his parents and sisters estates for 7 years.

They should convert half the loan into a gift, and call in the other half and gift it to you separately. After that they should take some professional advice on estate planning. With all those assets between you, you should all have wills and LPAs in place.