How easy is it for my Mum to pay off my sister's mortgage

LianeH12

My mum would like to help my sister by paying off the remaining £85,000 of her mortgage. My mum can afford it, and she is going to write a Codicil to her Will to ensure that my sister will have that much less entitlement when my mum dies.  Has anyone else done this? Is it easy to transfer that amount of money from one person's account in one bank to another person's account in a different bank.  Also, does anyone have any advice on writing a Codicil please?. Thanks in advance.

onwards&upwards

That's a very generous gift.  Is your mum aware of the rules regarding deprivation of assets should she need to claim benefits or be assessed for social care in the future?

John_

LianeH12 said:

My mum would like to help my sister by paying off the remaining £85,000 of her mortgage. My mum can afford it, and she is going to write a Codicil to her Will to ensure that my sister will have that much less entitlement when my mum dies.  Has anyone else done this? Is it easy to transfer that amount of money from one person's account in one bank to another person's account in a different bank.  Also, does anyone have any advice on writing a Codicil please?. Thanks in advance.

In terms of the transfer itself, yes, it’s dead easy, either through online banking or in branch.

MovingForwards

Assuming your mom has a lot more in the bank and / or a very expensive property, in case she needs to move in the future to a care home or have carers coming in, also no additional state benefits (look up deprivation of assets) then your mom can pay the mortgage off directly, your sister just needs to obtain a mortgage redemption statement.

Be aware of gifts within 7 years of your mom passing away as this payment would go back into the IHT pot. She's allowed to make £3k in gifts per year.

Lastly, your mom should see a solicitor to draw up a new will or prepare the codicil. When it comes to alterations it's best a lawyer does it as they retain notes which can be used if the will is disputed.

sweetsand

Just Google. Are you aware if your mum went into care home and lets say she died several years latter, the care home would want the money and there may be nothing left. You say mum can afford it but if the cash is not in a bank or similar, shares can crash as they recently did and household names can crash at anytime EG Tesco did a couple of years ago.

I don't understand what you mean by 'easy to transfer.'

x

LianeH12

onwards&upwards said:

That's a very generous gift.  Is your mum aware of the rules regarding deprivation of assets should she need to claim benefits or be assessed for social care in the future?

Yes, she is aware of DOA and there is enough money in various other accounts aswell as her estate should care need to be considered. But we have already agreed that she will live with me when she can no longer cope, and I am a Carer.

nicechap

LianeH12 said:

My mum would like to help my sister by paying off the remaining £85,000 of her mortgage. My mum can afford it, and she is going to write a Codicil to her Will to ensure that my sister will have that much less entitlement when my mum dies.  Has anyone else done this? Is it easy to transfer that amount of money from one person's account in one bank to another person's account in a different bank.  Also, does anyone have any advice on writing a Codicil please?. Thanks in advance.

As John says above, its very easy, a phone call to organise a CHAPS or BACS payment, obviously there may be consequences on interest earned on remaining balance depending on rules of the account the money is currently in.  

Writing a codicil should be done by a solicitor - do the other beneficiaries want RPI applied to the £85k?  What if the estate has less than £85k at the end? Because as well as the IHT point above, even if your mother survives beyond 7 years, if she were to need ongoing care, the local authority may see the gift as deprivation of assets.

LianeH12

MovingForwards said:

Assuming your mom has a lot more in the bank and / or a very expensive property, in case she needs to move in the future to a care home or have carers coming in, also no additional state benefits (look up deprivation of assets) then your mom can pay the mortgage off directly, your sister just needs to obtain a mortgage redemption statement.

Be aware of gifts within 7 years of your mom passing away as this payment would go back into the IHT pot. She's allowed to make £3k in gifts per year.

Lastly, your mom should see a solicitor to draw up a new will or prepare the codicil. When it comes to alterations it's best a lawyer does it as they retain notes which can be used if the will is disputed.

Thank you for answering. Yes there is quite a lot more money in various accounts, as well as in her Estate. She won't have to pay for any care, as when she gets to that stage, we have agreed she will live with me and my husband and I am a Carer.

Will have to take into consideration the IHT, but do you know if there would be any difference as my sister would then be having that amount deducted from my mum's estate?

Thank you for your help.

LianeH12

sweetsand said:

Just Google. Are you aware if your mum went into care home and lets say she died several years latter, the care home would want the money and there may be nothing left. You say mum can afford it but if the cash is not in a bank or similar, shares can crash as they recently did and household names can crash at anytime EG Tesco did a couple of years ago.

I don't understand what you mean by 'easy to transfer.'

x

Thank you for your reply.  There is a lot more money in various bank accounts and then money in her Estate. She will not be going into Care, as I have agreed with her that she will come and live with me, when the time is right. So DOA is not an issue.  
The question about the money being easily transferrable was regarding any Money Laundering rules.
Thank you for your reply.

LianeH12

nicechap said:

LianeH12 said:

My mum would like to help my sister by paying off the remaining £85,000 of her mortgage. My mum can afford it, and she is going to write a Codicil to her Will to ensure that my sister will have that much less entitlement when my mum dies.  Has anyone else done this? Is it easy to transfer that amount of money from one person's account in one bank to another person's account in a different bank.  Also, does anyone have any advice on writing a Codicil please?. Thanks in advance.

As John says above, its very easy, a phone call to organise a CHAPS or BACS payment, obviously there may be consequences on interest earned on remaining balance depending on rules of the account the money is currently in.  

Writing a codicil should be done by a solicitor - do the other beneficiaries want RPI applied to the £85k?  What if the estate has less than £85k at the end? Because as well as the IHT point above, even if your mother survives beyond 7 years, if she were to need ongoing care, the local authority may see the gift as deprivation of assets.

Thank you for your reply, sorry what is RPI?' Myself and my brother are in agreement with her having this money basically as an advance on my mum's estate.  There is more money in other bank accounts plus a sizeable estate and my mum will not be going into a home, as she will be living with me when she gets to that stage, so DOA will not be an issue.
Thank you for your reply.

onwards&upwards

LianeH12 said:

onwards&upwards said:

That's a very generous gift.  Is your mum aware of the rules regarding deprivation of assets should she need to claim benefits or be assessed for social care in the future?

Yes, she is aware of DOA and there is enough money in various other accounts aswell as her estate should care need to be considered. But we have already agreed that she will live with me when she can no longer cope, and I am a Carer.

I don't mean to be negative, but please don't count on that being possible, she may well need a backup plan. You never know what the future might hold, when she needs care you may be ill or disabled yourself or your husband may be and you need to care for him, or you could have died before her, or you may not be able to afford to give up work for some reason.  Her care needs might also be beyond what you can manage on your own, no matter how skilled or dedicated you are.