When does money given to someone just become their money?

user1977

Billie1007 said:

AdrianC said:

Billie1007 said:

Thrugelmir said:

Billie1007 said:

Scotbot said:

Billie1007 said:

AdrianC said:

Billie1007 said:

She's simply trying to avoid unnecessary paperwork and avoid the whole family knowing her financial position.

How is "Uncle David from Chichester? It's X's solicitor. Did you give £45k to X? Can you satisfy us as to the legitimacy of its source?" having the whole family know her finances?

I presume Uncle David from Chichester is already aware that he gave £45k to her...

He is. You are probably right. I think that she would just rather keep it as a private matter. So, is the conclusion that this money is not savings? 

Conveyancer will ask for proof of funds. If your relative provides 3, 6 or even 12 months of bank statements the conveyancer  may accept that or they may ask her to show where the money in her account came from.  If Uncle David has literally transferred 45k to her account that could get tricky. If Uncle David has died and it is an inheritance with documentation from the executor no problem 

If it is a gift from Uncle David then he needs to write a letter declaring that. Google gifted deposit declaration and you will find a number of standard formats.  Tax could be an issue if it has not been declared to HMRC

It's just accumulated earnings from a salary that has been gifted so tax already paid and yes, it was just a straight transfer as he is very much alive. 

So what's the issue if the solicitor simply requires confirmation of the source of the funds if this information is already known. Many people would have no idea as to the actual source of a gift. 

Simply that she didn't want family to know about her purchase and so we wanted to know if this money can be legitimately referred to as her savings. 

She is overthinking it.

Why doesn't she want "family" to know? Isn't she going to tell them she's moved?
Does this "family" include the donor? Because they're the only person that's going to be contacted by the solicitor.

It'd be a second property. It's not ridiculous that someone wouldn't want anyone to know their financial position surely? 

It's a bit odd for somebody to be close enough to their uncle to get a very generous gift, but now so distant that they don't want the uncle to know that they've bought a property? Anyway, the uncle doesn't need to know any more about the buyer's "financial position" than the fact that her solicitors need evidence of the source of the gift - what she's doing with the money isn't something which needs to be revealed, if she really wants to be cagey about it.

chasingfreedom

Generally the lenders ask for 3-6 months of bank statements to prove source of funds (I was asked to provide 3 months) but there is always a possibility for whatever reason they could request the last 1-2 years (or more) if they wanted to or were suspicious of an issue. If she was given the money last year she's already got proof of it sitting in her account for 12 months I guess? If she's not added anything to the amount since she was given it I don't think she can say its savings as there is no accumulation showing on the account. If she's been adding money on top then personally I would declare it as savings but that's just me.

user1977

chasingfreedom said:

Generally the lenders ask for 3-6 months of bank statements

There are no lenders, we're talking about a cash purchase.

doodling

Several different things are being confused in this thread:

1. Anti-money laundering - the solicitors involved in the transaction are required to be sure that there isn't any dodgy money involved.  How they do that is up largely to them and their precise approach will depend on a whole range of factors.  Each solicitor will do whatever they consider to be a "standard" check which at the minimum will involve getting IDs and having a discussion around where the money has come from.  If they aren't comfortable with the answers, either because their client is evasive or the answers themselves are concerning, they will ask for more information.  They may choose to ask for evidence to support your answers or they may not, depending on a whole load of factors (e.g. how well they know you and your affairs, their estimation of how likely you are to be laundering money, etc.).  It is impossible to predict the extent to which they will want evidence of this gift and its giver.  Don't lie to your solicitor - that way lies a whole world of pain.
2. A lender will want to be certain that any gifted money is truly a gift and that the giver isn't going to come back and claim that they own part of the property.  That would make it difficult for them to repossess the property and get their money back if they needed to.
3. A lender may want to know if gifts are involved to assess the level of financial commitment being made by the buyer.  There is a potentially a difference in commitment between someone who has been given £45k as a deposit and someone what has scrimped and saved for 5 years for their £45k deposit.  Lenders will generally prefer the latter as they are more likely to keep paying the mortgage.  (Not that lenders exclude the former, they may just be more careful).
4. Gifts.  There is no tax on gifts in the UK.  You can give anyone any sum of money (billions if you've got it!) and the taxman doesn't want to know.  Inheritance tax laws are designed to prevent people giving all their money just before they die away to avoid inheritance tax.  To be specific, "just before they die" is taken to be the 7 years preceding death.  If someone dies then any gifts given in those 7 years are considered to be part of the estate and inheritance tax will be calculated on that basis.  In the (relatively rare) event that there are insufficient assets in the estate to pay the tax due then the money can be recovered from those who received those gifts.  Those who should be most concerned about this are those who receive gifts from older people who are giving away most of their money ("My mum wants to give me her house...").

getmore4less

Take this case £45k it looks like it has already gone through 2 UK accounts wherever it came from without any AML questions and sat there for a year.


OP relative could have lived off part of that £45k covering some of their expenses(OK not a good year to choose when nothing to spend on) recycled other income into savings

6 months of bank statements look pretty normal and the bit sitting in savings much of it  looks like it has been coming from other income.

or as another example

Put the full £45k into premium bonds when they got it and then the source of funds is cashing them in.
how diligent will the solicitor be at looking at the full history of PB holdings.



The easy one as has been suggested. 

if that £45k is a <60% of the property set up a mortgage really cheap for the £45k.
Overpay and by the time it comes to fully redeem the mortgage no one will care how that got paid off over the previous years.

Marvel1

Simple process is to simply gift the £45K back and save her own money.

Billie1007

Marvel1 said:

Simple process is to simply gift the £45K back and save her own money.

Not very helpful. 

Thrugelmir

getmore4less said:

if that £45k is a <60% of the property set up a mortgage really cheap for the £45k.
Overpay and by the time it comes to fully redeem the mortgage no one will care how that got paid off over the previous years.

The Uncle may still assume that the money was used to buy a second property even if a mortgage is involved. 

SallyDucati

Maybe it's other relatives the OPs friend doesn't want knowing Uncle David has gifted such a large sum, for whatever reason.  Family dynamics can be difficult!

It is only Uncle David who would know, so I can't see it being a problem.