Gifted deposit question - advice please

Irishsmurfy

Hi all

My husband sadly died in June this year and I've just received his life insurance and pension payouts (he was 55 yrs old).

I've paid off our outstanding mortgage on our home and have been left with circa £200k. I'd like to give my sons (25 & 23 year olds) £50k each from this money so that they can put it into their personal savings accounts (I'm sure my husband would have wanted my sons to have this money).

Both of my sons are currently saving towards a house deposit - my eldest has saved £40k and my youngest has saved £25k. (they both currently live at home with me).

If I gift them £50k each how would that affect any mortgage application they make? (they're thinking of buying a place together so as to get on the housing ladder). Do they have to "prove" the money is theirs?

I'm assuming it's not classed as inheritance as my husband didn't have any savings - this money is purely from his life insurance and pensions.

Mojisola

We just had to sign a letter to say the money was an outright gift and that we didn't have any legal interest in the property.

davidmcn

If it's in their accounts for long enough before they buy (often just a few months) it may well simply be treated as "their" money anyway. At worst, you'd be asked to confirm it's a gift, the lender would need to be happy with that, and the solicitors may want evidence of your ID and where you got the money, so don't chuck out the paperwork in the meantime.

amnblog

It a gift from you if you are the beneficiary of the life insurance and have received funds.

That is how it would be presented to the Lender.

If the policy was written in Trust, and the Trust listed your sons as potential beneficiaries (it should do), they could receive funds direct from the policy which would make it inheritance.

That is how it would then be presented to the Lender.

Doesn’t sound like a great time for you to be left alone.

CarbonImage

As above, most likely this would be considered a 'gift'.

You will need to sign a letter stating that you have no interest in the property and expect no repayment of the money, as well as providing a copy of your bank statement showing the money being paid into your account. Possibly you will also be asked for other proof e.g. an original letter from the life insurance/pension companies stating that they are paying the money to you. You will also have to send a copy of your ID which someone 'authoritative' will have to countersign as being yours. We used my mortgage broker.

Source: This is exactly what happened when my parents gifted me a chunk of their pension payout two years ago for a deposit.