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Personal loan when lender dies

DivineSaver
DivineSaver Posts: 60 Forumite
Loaned between family members. A is the lender. B is the borrower. Loan is secured against B's property.

A is in their 80s and with current repayment plan, loan will never be paid off in full during their life time.

B is A's next of kin and is beneficiary in the event of A's death.

What will happen to this loan when A passes away?

Comments

  • StopIt
    StopIt Posts: 1,470 Forumite
    Well, surely unless if A is regulated by the FCA and/or is a bank, they can't legally perform any secured loan.


    As for the 2nd bit? Sounds like a way around inheritance tax? Well, HMRC will see it that way.


    If this "loan" is a way to get around Gift Tax/Inheritance tax, it'll be caught out.

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  • Gaz83
    Gaz83 Posts: 4,047 Forumite
    1,000 Posts Combo Breaker
    You need to speak to a solicitor.
    "Facism arrives as your friend. It will restore your honour, make you feel proud, protect your house, give you a job, clean up the neighbourhood, remind you of how great you once were, clear out the venal and the corrupt, remove anything you feel is unlike you... [it] doesn't walk in saying, "our programme means militias, mass imprisonments, transportations, war and persecution."
  • foxy-stoat
    foxy-stoat Posts: 6,879 Forumite
    Eighth Anniversary 1,000 Posts Name Dropper
    B is A's next of kin and is beneficiary in the event of A's death.


    In this case B should not of put a charge on A's property - total waste of money there !
  • TrickyDicky101
    TrickyDicky101 Posts: 3,535 Forumite
    Part of the Furniture 1,000 Posts
    StopIt wrote: »
    Well, surely unless if A is regulated by the FCA and/or is a bank, they can't legally perform any secured loan.


    As for the 2nd bit? Sounds like a way around inheritance tax? Well, HMRC will see it that way.


    If this "loan" is a way to get around Gift Tax/Inheritance tax, it'll be caught out.

    That isn't correct - why do you think it is?

    As for HMRC seeing this as a way around IHT I'm not sure why you think that either - the loan forms part of the estate of A in the event of his/her death and thus will be considered for any IHT due (above any nil rate band or allowances).
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