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

LianeH12

euronorris said:

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.

No, unfortunately it was not a condition of the mortgage to take out Life Assurance, only Home and Contents Insurance. As if you die before the mortgage is paid off, the house will just be repossessed.

 Thank you for your suggestion about gaining Independent Financial Advice, I think this is a good idea.

LianeH12

onwards&upwards said:

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.

No she hasn’t yet, but as you say she will need to do this 😢.

LianeH12

thepurplepixie said:

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

Thank you very much, that’s a kind thing to say.

LianeH12

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. 

Thank you, this all looks like sound advice. My sister is struggling with the mortgage payments as she is unable to work and her Fiancé is having to take time off to look after her, so this seems the best option, and will free her from the worry of finding the payments.

 Blimey, that example you used was a bit grim. Families can be horrible can’t they! 

I know what you are saying about the caring, it’s easy to think/hope that my husband and I would manage, but it’s another thing doing it everyday, however we will do the best for as long as possible. 

LianeH12

Sea_Shell said:

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?   

I agree, I think it could be a good idea for my sister to marry. In terms of what inheritance there may or may not be left for me and my brother, as long as my mum has been cared for, then so be it. At the end of the day you have to make your own life and luck, and not rely on what someone else may or may not leave you.

MovingForwards

Sister needs will and power of attorney.

Mom needs updated will, power of attorney, legal advice will be given as part of these two. Then mom needs financial planning advice, especially if she has a lot more in banks etc rather than just a bit and the house.

Wills and POA are priority for both mom and sister.