My partners brother has taken a loan out using their mother's home as security.

Moby

My partner is one of two siblings. About twelve years ago her elder brother split with his wife and returned to live with their mother for a few months. In order to assist him my partner and their mother then allowed him to take out a loan of about 50k secured against the mother's property. There is no other mortgage or charge on the property. About 6 years ago my partner was becoming increasingly worried because her brother had not started paying any of the loan back, not even any of the interest and the loan was increasing.He therefore reluctantly agreed to sign a "promissory note' confirming he would protect her half share of any inheritance. Recently in a conversation with her now 87 year old mother my partner became aware that a lady was "coming round' to see the house and for her to sign a new document. My partner then spoke to her brother and he said the loan had now increased to 180k. He said the woman was coming around so that he could replace the original loan with a new one at a lower interest rate. He said this would enable him to "freeze" the loan at the current interest rate because he would now be able to pay the interest. My partner was aghast that he had allowed the loan to increase so much and raised concern about her share of the inheritance. The property is currently worth about 400k and their mother's will divides it equally between them. The brother became defensive and angry, stating she should trust him and he would guarantee to do whatever it takes to pay his sister her half of any future inheritance and he commented that he couldn't pay anything back from the loan because he didn't earn enough. My sister pointed out that he has been going on frequent holidays, staying in 5 star hotels for the last ten years and was clearly living a lifestyle beyond his means. The brother became angry and said it wasn't for his sister to comment on his lifestyle and hung the phone up on her.  My partner later spoke to her mother (co signatory》to the loan, but she takes the side of her son and wants to help him. She had no idea what the terms were of the loan she signed and had no idea of the amount of the loan. She is 87, partially blind and semi literate. My partner raised the issue of her possible future care needs. We are aware the local council would do a means assessment on equity in the property. The mother said she didn't know and basically doesn't care. My partner is now in a dilemma of having to try and protect her mothers possible future care needs and any due inheritance against two parties who are clearly in alliance against her. I think I'm stating the obvious when I say that this issue is creating a major divide within family relationships. My partner is reluctant to resort to litigation but  there are possible concerns regarding her mother's capacity regarding this decision and does she really have a choice when the alternative is to to trust her brother who in our view has acted so recklessly.

74jax

I think as the mother wants to help her son, and has basically said she doesn't care what the loan is, your partner can't do anymore. 

You can't protect inheritance as such, once the mam passes, debts are paid and what is left is halved (if that is what her will says). 

Social services will look at finances for care, and it will all be investigated then - did she know, was she happy etc - whatever comes of this will be between the social services finance officer, the mam and the son. 

I do also understand the sons comment regarding his finances, although your partner doesn't agree what he does, if mam is coherent and he's the golden child, she can give him what she wants. If she isn't all there, that's another matter and we can help you take further steps if she has been forced out entered into things unknowingly. 

Pollycat

There is no inheritance until someone dies.
The money (and property) is your M-I-L's to do with as she wishes.

If your partner feels her Mum is being taken advantage of, you could raise a safe-guarding concern.
But if your M-I-L is likely to support her son, it may not get very far.

Moby

74jax said:

I think as the mother wants to help her son, and has basically said she doesn't care what the loan is, your partner can't do anymore. 

You can't protect inheritance as such, once the mam passes, debts are paid and what is left is halved (if that is what her will says). 

Social services will look at finances for care, and it will all be investigated then - did she know, was she happy etc - whatever comes of this will be between the social services finance officer, the mam and the son. 

I do also understand the sons comment regarding his finances, although your partner doesn't agree what he does, if mam is coherent and he's the golden child, she can give him what she wants. If she isn't all there, that's another matter and we can help you take further steps if she has been forced out entered into things unknowingly. 

Thanks for looking at this. Should the mother have received independent legal advice before acting as a co-signatory to the loan? 

onylon

I would be very worried if your brother in law has already thrown away so much of his mothers money servicing this loan. I'm guessing he feels that he deserves the same lifestyle he had pre-divorce? Given that your mother in law is elderly and has poor literacy, does she understand how much risk she is taking on? Would she have anywhere to live if your brother in law defaults on his loan and the house is repossessed to pay his debts? Does your brother in law have a plan to get back to financial health or is he dragging his mother into bankruptcy with him?

I strongly believe that we should make our own way in the world and inheritance is a windfall for those lucky enough to receive it. Entitlement just clouds these situations and makes them more fraught than they need to be. If you stop trying to protect the money and put your efforts into protecting your mother in law then things are less likely to go sour.

Moby

onylon said:

I would be very worried if your brother in law has already thrown away so much of his mothers money servicing this loan. I'm guessing he feels that he deserves the same lifestyle he had pre-divorce? Given that your mother in law is elderly and has poor literacy, does she understand how much risk she is taking on? Would she have anywhere to live if your brother in law defaults on his loan and the house is repossessed to pay his debts? Does your brother in law have a plan to get back to financial health or is he dragging his mother into bankruptcy with him?

I strongly believe that we should make our own way in the world and inheritance is a windfall for those lucky enough to receive it. Entitlement just clouds these situations and makes them more fraught than they need to be. If you stop trying to protect the money and put your efforts into protecting your mother in law then things are less likely to go sour.

My partner's 'entitlement' as you put it stems from the fact that she originally purchased the property with her mother and then it was placed in her mothers name and subsequently we have had the scenario I described above. We live within our means! I understand nevertheless her mother has chosen to help her son in relation to his debts because he doesn't live within his means. This help now amounts to 180K being taken from the equity and as I stated the mother has no idea of the risk she has taken on. Basically she doesn't want to deal with such issues. She had no idea about the amount of the loan, or its terms or implications. My question is in these circumstances how do we help her because my brother in law has no plan to get back to financial health?  

Pollycat

Moby said:

onylon said:

I would be very worried if your brother in law has already thrown away so much of his mothers money servicing this loan. I'm guessing he feels that he deserves the same lifestyle he had pre-divorce? Given that your mother in law is elderly and has poor literacy, does she understand how much risk she is taking on? Would she have anywhere to live if your brother in law defaults on his loan and the house is repossessed to pay his debts? Does your brother in law have a plan to get back to financial health or is he dragging his mother into bankruptcy with him?

I strongly believe that we should make our own way in the world and inheritance is a windfall for those lucky enough to receive it. Entitlement just clouds these situations and makes them more fraught than they need to be. If you stop trying to protect the money and put your efforts into protecting your mother in law then things are less likely to go sour.

My partner's 'entitlement' as you put it stems from the fact that she originally purchased the property with her mother and then it was placed in her mothers name and subsequently we have had the scenario I described above. We live within our means! I understand nevertheless her mother has chosen to help her son in relation to his debts because he doesn't live within his means. This help now amounts to 180K being taken from the equity and as I stated the mother has no idea of the risk she has taken on. Basically she doesn't want to deal with such issues. She had no idea about the amount of the loan, or its terms or implications. My question is in these circumstances how do we help her because my brother in law has no plan to get back to financial health?  

You can only help someone who wants to be helped.
It sounds like your M-I-L doesn't want to be helped.

Mojisola

Moby said:

My partner's 'entitlement' as you put it stems from the fact that she originally purchased the property with her mother and then it was placed in her mothers name

Is it possible to get paperwork signed by her mother to evidence the money used to buy the property?

Your wife could then put a charge on the house for that amount.

pinkshoes

Moby said:

My partner's 'entitlement' as you put it stems from the fact that she originally purchased the property with her mother and then it was placed in her mothers name 

Well this changes things!

So the property is "worth" and the other sibling is taking out a loan against the equity for £180k?

How much did your partner put into the property to help her mother buy it?

I would suggest taking the mother out for the day for tea and cake, along with a trip to the solicitors, and possibly even social services because she is clearly being manipulated. 

She might need that £400k for care in the future. I believe it's about £50k+ a year for residential care, providing you don't have an additional needs. Much more if further care is required. 

gettingtheresometime

Moby said:

onylon said:

I would be very worried if your brother in law has already thrown away so much of his mothers money servicing this loan. I'm guessing he feels that he deserves the same lifestyle he had pre-divorce? Given that your mother in law is elderly and has poor literacy, does she understand how much risk she is taking on? Would she have anywhere to live if your brother in law defaults on his loan and the house is repossessed to pay his debts? Does your brother in law have a plan to get back to financial health or is he dragging his mother into bankruptcy with him?

I strongly believe that we should make our own way in the world and inheritance is a windfall for those lucky enough to receive it. Entitlement just clouds these situations and makes them more fraught than they need to be. If you stop trying to protect the money and put your efforts into protecting your mother in law then things are less likely to go sour.

My partner's 'entitlement' as you put it stems from the fact that she originally purchased the property with her mother and then it was placed in her mothers name and subsequently we have had the scenario I described above.  

Was it a council house bought under right to buy?

74jax

Moby said:

74jax said:

I think as the mother wants to help her son, and has basically said she doesn't care what the loan is, your partner can't do anymore. 

You can't protect inheritance as such, once the mam passes, debts are paid and what is left is halved (if that is what her will says). 

Social services will look at finances for care, and it will all be investigated then - did she know, was she happy etc - whatever comes of this will be between the social services finance officer, the mam and the son. 

I do also understand the sons comment regarding his finances, although your partner doesn't agree what he does, if mam is coherent and he's the golden child, she can give him what she wants. If she isn't all there, that's another matter and we can help you take further steps if she has been forced out entered into things unknowingly. 

Thanks for looking at this. Should the mother have received independent legal advice before acting as a co-signatory to the loan? 

I wouldn't have thought so if she was happy doing it, if she had questions etc she could have but certainly no 'should'. 

For what reason did the daughter buy the property but put in on her mother's name? It seems a really strange thing to do 1)with the mothers age and 2) the daughter had no means of getting her money out. Was this advised by the financial person involved? What reason was given?