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

LianeH12

onwards&upwards said:

LianeH12 said:

onwards&upwards said:

LianeH12 said:

onwards&upwards said:

Ok, that is actually a very compelling reason.  I’m sorry to hear about your sister’s diagnosis and I hope she has longer, but it is definitely sensible to be planning ahead in that situation, and very kind of you and your mum to be thinking about the fiancé too. 

Thank you. It's very sad and horrible to see her suffering, but her fiancé has been with her through thick and thin and has brought her a lot of joy, so we want to do right by him too. It's very worrying for my sister not knowing what will happen to him when she dies, so by doing this we can help ease her worries a little 😢.

Has she written a will?  As you are a carer I assume you aware of her options regarding end of life planning for her own care? 

No, she hasn't yet, we wanted to get this money sorted so she actually owns her property. Next step is to get her Will sorted! To be honest I don't think she has really even considered planning her own end of life care, I think it's too awful for her to think about, but she knows she is getting worse and is on 24 HR Oxygen, so needs to get it sorted ASAP 😢.

It is very hard to think about but there is a lot she can do now to make things easier as her illness progresses.  A will, appointing power of attorney, thinking about any advance decisions she wants to make to refuse certain treatments (a solicitor can help with all three of those) and hopefully she has a specialist nurse who can help her to make decisions about things like hospital/hospice/home etc, or the GP should support if not.

That said, I've known people with COPD live for many years on 24 hour oxygen, so while its definitely good to plan for the worst it is also still possible that she will have longer with her family than she expects. 

I do hope she will have longer but her Biological mum and Auntie (we are all adopted), both died at 59 of the same thing, so genetics are not on her side unfortunately, but obviously medicine has moved on since then 🤞.

 We will definitely seek advice for her Will, she has asked me to be Executor and is planning on getting everything down on paper ASAP.

 Thank you for all of your advice. 

Savvy_Sue

Normally, I'd say that one thing which would make life (and death) much simpler for your sister would be if she is able to marry: small quiet ceremony, this can even be arranged in hospital in an emergency. However, she'd need to make a will AS WELL because without one, her house would pass to her fiance, and if he decided not to leave it to the children then ... Any will would need to be 'in contemplation of marriage' because otherwise the will is made void by the marriage. 

Would another possibility be for sister to leave the house to Mum in her will, then Mum can simply pay off the mortgage? Can sister afford the mortgage payments now? 

I'm trying to find the thread where Mum and Dad gave Child A £17000 some years ago with a clause in their will that Child B should get that much more as part of their inheritance. It's all starting to blow up now because a) there may not be that much left by the time parents die; b) Child B needs money now and Child A is willing and able to give £8500, but Child B wants inflation / interest etc added on. 

So, your mum needs to word her will carefully and think about many 'what ifs'. However good it seems to be 'fair', sometimes you just have to be pragmatic. And there's an argument that if you've spent years caring for your mother, your 'share' should perhaps be larger than the 'share' going to your sister's children. Plus I'd echo what others have said about the reality of caring: you know how hard it can be, just imagine doing the worst bits 24/7/365.

Also you could do a deed of variation at the time if you felt your 'share' was larger than it should have been. 

Sea_Shell

Savvy_Sue said:

Normally, I'd say that one thing which would make life (and death) much simpler for your sister would be if she is able to marry: small quiet ceremony, this can even be arranged in hospital in an emergency. However, she'd need to make a will AS WELL because without one, her house would pass to her fiance, and if he decided not to leave it to the children then ... Any will would need to be 'in contemplation of marriage' because otherwise the will is made void by the marriage. 

Would another possibility be for sister to leave the house to Mum in her will, then Mum can simply pay off the mortgage? Can sister afford the mortgage payments now? 

I'm trying to find the thread where Mum and Dad gave Child A £17000 some years ago with a clause in their will that Child B should get that much more as part of their inheritance. It's all starting to blow up now because a) there may not be that much left by the time parents die; b) Child B needs money now and Child A is willing and able to give £8500, but Child B wants inflation / interest etc added on. 

So, your mum needs to word her will carefully and think about many 'what ifs'. However good it seems to be 'fair', sometimes you just have to be pragmatic. And there's an argument that if you've spent years caring for your mother, your 'share' should perhaps be larger than the 'share' going to your sister's children. Plus I'd echo what others have said about the reality of caring: you know how hard it can be, just imagine doing the worst bits 24/7/365.

Also you could do a deed of variation at the time if you felt your 'share' was larger than it should have been. 

Savvy Sue beat me to it.   

I was going to make similar points, about getting married, and also that you and your brother need to take on board that there may not be any inheritance left for you.   Would you be OK with that?   

nicechap

LianeH12 said:

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.

RPI is Retail Price Index, most people know it as inflation but property may or may not grow at the same rate.  You mention your mum is 85 so could easily live for 10 or even 20 years.  £85k today would be worth a fair bit less in 10 or 20 years time.

Just to reinforce what others have said about a plan B, there's no guarantee your own health will remain good enough to look after your mum, 24hours a day, 7 days a week for years on end.  Your mum might want to consider things like power of attorney and advance directives before such a time.

Finally, sorry to be blunt but presumably your sister has life assurance as a condition of her mortgage to pay back the lender in event of her death? So her mortgage would be paid on her passing, she would just need to make a will giving her property to her fiancé, or a life time right to reside if there are children who might expect to inherit.

macman

To state the obvious, you need to consult a solicitor with specialist experience of estate planning, given that IHT and DoA are factors here. You are not seriously taking advice on an internet forum about how to write a codicil, when the amount in question is £85K?
As others have said, you cannot assume that you will always be in a position to provide care for your mum.

thepurplepixie

OP you sound like a lovely caring family.  I hope all goes as well as possible in what sounds like a difficult situation.

LianeH12

nicechap said:

LianeH12 said:

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.

RPI is Retail Price Index, most people know it as inflation but property may or may not grow at the same rate.  You mention your mum is 85 so could easily live for 10 or even 20 years.  £85k today would be worth a fair bit less in 10 or 20 years time.

Just to reinforce what others have said about a plan B, there's no guarantee your own health will remain good enough to look after your mum, 24hours a day, 7 days a week for years on end.  Your mum might want to consider things like power of attorney and advance directives before such a time.

Finally, sorry to be blunt but presumably your sister has life assurance as a condition of her mortgage to pay back the lender in event of her death? So her mortgage would be paid on her passing, she would just need to make a will giving her property to her fiancé, or a life time right to reside if there are children who might expect to inherit.

Unfortunately, Life assurance inicechap said:

LianeH12 said:

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.

RPI is Retail Price Index, most people know it as inflation but property may or may not grow at the same rate.  You mention your mum is 85 so could easily live for 10 or even 20 years.  £85k today would be worth a fair bit less in 10 or 20 years time.

Just to reinforce what others have said about a plan B, there's no guarantee your own health will remain good enough to look after your mum, 24hours a day, 7 days a week for years on end.  Your mum might want to consider things like power of attorney and advance directives before such a time.

Finally, sorry to be blunt but presumably your sister has life assurance as a condition of her mortgage to pay back the lender in event of her death? So her mortgage would be paid on her passing, she would just need to make a will giving her property to her fiancé, or a life time right to reside if there are children who might expect to inherit.

nicechap said:

LianeH12 said:

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.

RPI is Retail Price Index, most people know it as inflation but property may or may not grow at the same rate.  You mention your mum is 85 so could easily live for 10 or even 20 years.  £85k today would be worth a fair bit less in 10 or 20 years time.

Just to reinforce what others have said about a plan B, there's no guarantee your own health will remain good enough to look after your mum, 24hours a day, 7 days a week for years on end.  Your mum might want to consider things like power of attorney and advance directives before such a time.

Finally, sorry to be blunt but presumably your sister has life assurance as a condition of her mortgage to pay back the lender in event of her death? So her mortgage would be paid on her passing, she would just need to make a will giving her property to her fiancé, or a life time right to reside if there are children who might expect to inherit.

Unfortunately it is not a condition of the mortgage to have Life Assurance at all, as they don’t care if the owner does because they will just repossess the property if it is not paid if.  You do however have to have Contents and Property Insurance. My sister was a single parent who could not afford to take out the insurance. She obviously has no other Life Insurance either.  

My mum has already appointed me as Power of Attorney.

euronorris

Nicechap has made the point I was going to raise - does your sister not have life insurance in place as a condition of the mortgage?

With regards to your Mum, as well as independent legal advice, I would recommend independent financial advice. One with experience of long term care, and who can do some cashflow simulations to ensure that your Mother is not gifting to the detriment of her own future financial security. Care can be very, very expensive. The average that I usually see clients paying is circa £60k pa, but I've seen others paying over £100k pa. Costs vary greatly by area, need and whether it is being provided in their own home or in a care home setting. So, what you might consider a large sum of money now, might not go very far once care fees are being incurred. In addition, the cost of care has typically risen at a higher rate than RPI in recent years. With 3.31% pa increase being the average for nursing care and 3.51% pa increase being the average for residential care. This is based on a 10 year period.

I hope you are all able to find the solution that best meets everyone needs.

LianeH12

MovingForwards said:

LianeH12 said:

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.

It makes no odds to the IHT liability as it's calculated on the assets in an estate on their death, plus the gifts over and above £3k each year.

A solicitor will go through it all with your mom when preparing a new will / codicil.

Do also take onboard the comments others have made about having a back up plan. If dementia / Alzheimer's is involved it will get too much for you day in day out. I know you mean well, but it is a real possibility as times goes on. Also, if your own health changes and you need care, you cannot then care for your mom.

Thank you, I know that it is easy to think we could cope, but not always the case; however my sister and I both worked/work in Care, and neither of us want what we have seen for our mum. (obviously there are some good places, but it’s very sad). So my husband and I will do the very best that we can to keep her with us as long as possible, however she does have a lot more money and a house.

onwards&upwards

LianeH12 said:

nicechap said:

LianeH12 said:

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.

RPI is Retail Price Index, most people know it as inflation but property may or may not grow at the same rate.  You mention your mum is 85 so could easily live for 10 or even 20 years.  £85k today would be worth a fair bit less in 10 or 20 years time.

Just to reinforce what others have said about a plan B, there's no guarantee your own health will remain good enough to look after your mum, 24hours a day, 7 days a week for years on end.  Your mum might want to consider things like power of attorney and advance directives before such a time.

Finally, sorry to be blunt but presumably your sister has life assurance as a condition of her mortgage to pay back the lender in event of her death? So her mortgage would be paid on her passing, she would just need to make a will giving her property to her fiancé, or a life time right to reside if there are children who might expect to inherit.

Unfortunately, Life assurance inicechap said:

LianeH12 said:

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.

RPI is Retail Price Index, most people know it as inflation but property may or may not grow at the same rate.  You mention your mum is 85 so could easily live for 10 or even 20 years.  £85k today would be worth a fair bit less in 10 or 20 years time.

Just to reinforce what others have said about a plan B, there's no guarantee your own health will remain good enough to look after your mum, 24hours a day, 7 days a week for years on end.  Your mum might want to consider things like power of attorney and advance directives before such a time.

Finally, sorry to be blunt but presumably your sister has life assurance as a condition of her mortgage to pay back the lender in event of her death? So her mortgage would be paid on her passing, she would just need to make a will giving her property to her fiancé, or a life time right to reside if there are children who might expect to inherit.

nicechap said:

LianeH12 said:

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.

RPI is Retail Price Index, most people know it as inflation but property may or may not grow at the same rate.  You mention your mum is 85 so could easily live for 10 or even 20 years.  £85k today would be worth a fair bit less in 10 or 20 years time.

Just to reinforce what others have said about a plan B, there's no guarantee your own health will remain good enough to look after your mum, 24hours a day, 7 days a week for years on end.  Your mum might want to consider things like power of attorney and advance directives before such a time.

Finally, sorry to be blunt but presumably your sister has life assurance as a condition of her mortgage to pay back the lender in event of her death? So her mortgage would be paid on her passing, she would just need to make a will giving her property to her fiancé, or a life time right to reside if there are children who might expect to inherit.

Unfortunately it is not a condition of the mortgage to have Life Assurance at all, as they don’t care if the owner does because they will just repossess the property if it is not paid if.  You do however have to have Contents and Property Insurance. My sister was a single parent who could not afford to take out the insurance. She obviously has no other Life Insurance either.  

My mum has already appointed me as Power of Attorney.

Has your sister appointed an attorney?  If not she can do this at the same time as the will.