Lost in the world of 'home ownership and inheritance issues'

DavLet2004

hey everyone,

thanks for reading my post, I can't find anything similar here, so I started a new thread.

Here the background information:

• A couple of years ago, my father passed away, leaving my mother all alone in Lancashire, far away from my brother in London. 
• So we decided to sell my mom's house, and settle her closer to family down South. 
• There was a huge difference in house prices, the North / South divide was substantial 
• Mom sold her 4 bedroom house up North for £180K
• And we found a tiny flat in London for £300K
• Mom wasn't able to finance the difference because she's retired.
• I lent mom the difference of £120K (with a loan agreement) to buy the flat

Now my question..

My brother has unfortunately lost his job through Corona, and is struggling to pay his mortgage.
Therefore I would like to help-out and propose the following:

Basically I would like to pay-off my brother for his future inheritance.
Is that contractually possible?
My maths are as follows

£300K - £120K = £180K / 2 = £90K

So my idea was to give my brother £90K to repay his mortgage - and ultimately take some kinda ownership of my mom's house.

Surely there would need to be a three-way agreement made between all parties, as I would like to guarantee the ownership of the flat.
If a contract is needed, who sets-up that kind of agreement?

Alternatively, do I buy a further portion of my mom's house, which she in-turn gives to my brother?
Or, is it just a contract between my brother and myself - where he forfeits his inheritance?

As you can see; I am kinda lost, can anyone give me some advice if this is feasible, or am I completely out of touch with reality  

Just trying to help out in hard times
Thanks for hanging-on to the end.

Daniel

user1977

DavLet2004 said:

Surely there would need to be a three-way agreement made between all parties, as I would like to guarantee the ownership of the flat.

How can you "guarantee the ownership of the flat"? It's your mum's flat. She owes you the £120k loan. What you and your brother agree between yourselves isn't anything to do with her - or has she been involved in these discussions so far?

TBagpuss

Wouldn't it be simpler just to lend your brother the money and have a charge over his property to secure it? Why bring your mum into it at all? 

It also means that if your brother is in a position to pay you back once he gets a new job he can do so.

Wouldn't a much simpler thing to do just be to  lend him a lower amount to cover the mortgage payments for the next few months until he is able to get back on his feet? 

If your mum wants to, then she could sell you a further % of the flat in which case you and she would need to get an updated declaration of trust drawn up.

This would of course have CGT implications for you when the flat is eventually sold, and your mum would of course have to decide whether she wished to give your brother the money, and to be confident she was retaining enough to cover any needs she may have now or in the future.  

AdrianC

I presume your father's will left everything to your mother?

I presume your mother owns her flat, but you've got a charge registered at the Land Registry for the loaned amount, and she isn't repaying anything?

So your mother currently has ~£180k equity (assuming the flat's value is still £300k).
That doesn't mean she will have £180k at her death, of course. So you can't simply say "My brother's share of the inheritance is £90k".

One way you could do what you want would be to extend the loan to your mother, and the charge on her flat, and she can gift £90k to your brother. BUT... if/when she needs residential care, that £90k gift will still be seen as being part of her assets.

Alternatively, can you just loan your brother the £90k? Would your mother be willing to change her will to reflect that?

[Deleted User]

Would it not just be easier to lend your brother some money to help him on a short term basis with the view that he pays you back when he gets a new job? Providing you are on good terms. 

Your mothers flat may increase in value and by buying him out of his inheritance now, you are essentially denying him any right to the value increase in the future which he may not be happy about. 

On the other hand it may decrease in value, or have to be used to pay for any future care, in which case you will end up taking the hit whereas your brother sits comfortably on his 90k he's already received.