Inheritance, loans to children and other confusion

Juleszoemay

I can prove when mine was received in 2012. I have the paperwork dad had to sign for ML with the solicitor when we bought the house. I don’t know if my brother has the same evidence. 

Juleszoemay

I assume he has the same evidence as dad paid for a BTL in 2010, his first house in 2013 and another £100k in 2017 when he moved.  All property related so there must be evidence. 

Sea_Shell

Juleszoemay said:

I can prove when mine was received in 2012. I have the paperwork dad had to sign for ML with the solicitor when we bought the house. I don’t know if my brother has the same evidence. 

Do you mean he had to sign to confirm it was a GIFT for the mortgage lender!!

But you then made "repayments" anyway?

Silvertabby

Definition of 'fair" seems to lie with the one who is (or thinks they should be) the better off.

When my sister started her florist business, she borrowed £10K from our great aunt.  It was supposed to be repaid once the business got going, but there were always excuses.

Then our great aunt died, and her Will clearly stated that the £10K loan was written off instead of being a debt to the estate, and that this was my sister's inheritance.  I got £10K.

Cue hysterical screams of 'not fair! Even my mum and dad, who tended to give in to her just to keep the peace, reckoned the 'fair' thing to do would be for me to give £5K to my sister.  

I didn't.  It went straight into my house deposit savings pot.

Keep_pedalling

Sea_Shell said:

Keep_pedalling said:

Juleszoemay said:

Sea shell, 

I don’t think they pay income tax? They are in their mid 70’s and draw pensions, they don’t have any other income other than pensions. 

I think the lending needs to be re categorised as gifts and remove the interest calculator, my brothers will never be repaid, whether it has interest or not, mine could be. But either way what’s the point? 

I assume if it was gifted back in 2012 then it’s irrelevant now in terms of IHT? And could I still provide a monthly payment to my parents by way of assisting with their income needs for example without it being assumed to be any form of repayment. Just an allowance? 

Pensioners still pay tax if their total income is high enough. I’d does sound like your brother is treating his loans as gifts but you are treating them as they were attended. Bank of mum and dad loans often end up not being paid back especially when the parents are happy to let things drift.

Your assumption is wrong, if the loans are written off now the 7 year clock starts now. Your parents really should see a solicitor regarding their wills.

I didn't realise that!!   Even if they could prove when the funds were received?

With nothing in writing either way, what's to stop them verbally confirming they were gifts.   I'm sure many people don't keep all the records they should of these things.

It does not matter when the money was transferred, the fact that interest has been paid makes it a loan. This already sounds a financial mess of your parents creation, I would advise against compounding it with committing tax fraud. 

Juleszoemay

Sea_Shell said:

Juleszoemay said:

I can prove when mine was received in 2012. I have the paperwork dad had to sign for ML with the solicitor when we bought the house. I don’t know if my brother has the same evidence. 

Do you mean he had to sign to confirm it was a GIFT for the mortgage lender!!

But you then made "repayments" anyway?

We didn’t have a mortgage lender. But it was confirmed he had no interest in the property through the solicitors

Juleszoemay

Keep_pedalling said:

Sea_Shell said:

Keep_pedalling said:

Juleszoemay said:

Sea shell, 

I don’t think they pay income tax? They are in their mid 70’s and draw pensions, they don’t have any other income other than pensions. 

I think the lending needs to be re categorised as gifts and remove the interest calculator, my brothers will never be repaid, whether it has interest or not, mine could be. But either way what’s the point? 

I assume if it was gifted back in 2012 then it’s irrelevant now in terms of IHT? And could I still provide a monthly payment to my parents by way of assisting with their income needs for example without it being assumed to be any form of repayment. Just an allowance? 

Pensioners still pay tax if their total income is high enough. I’d does sound like your brother is treating his loans as gifts but you are treating them as they were attended. Bank of mum and dad loans often end up not being paid back especially when the parents are happy to let things drift.

Your assumption is wrong, if the loans are written off now the 7 year clock starts now. Your parents really should see a solicitor regarding their wills.

I didn't realise that!!   Even if they could prove when the funds were received?

With nothing in writing either way, what's to stop them verbally confirming they were gifts.   I'm sure many people don't keep all the records they should of these things.

It does not matter when the money was transferred, the fact that interest has been paid makes it a loan. This already sounds a financial mess of your parents creation, I would advise against compounding it with committing tax fraud. 

Do you mean the fact I’ve been making payments? Rather than interest, as there is nothing documented to suggest I’m paying interest. But I am making payments to them. I will cease doing so. 

oh my god this is a nightmare. 

RAS

You could end up with a situation where your loan is a debt to the estate, and the distribution means that your brother gets half the money you repay. And his "loans" are classed as gifts, or not depending on whether the executor realises he's been re-paying at intervals.

Do your parents have wills? Even if they have, they need to talk to someone about inheritance planning as this needs sorting.

Do explain before you stop paying why you are doing so.

Juleszoemay

RAS said:

You could end up with a situation where your loan is a debt to the estate, and the distribution means that your brother gets half the money you repay. And his "loans" are classed as gifts, or not depending on whether the executor realises he's been re-paying at intervals.

Do your parents have wills? Even if they have, they need to talk to someone about inheritance planning as this needs sorting.

Do explain before you stop paying why you are doing so.

Hi RAS, 
The fact he is repaying it adhoc not through banking has risen alarm bells to me. And why hasn’t anyone suggested I should be doing the same? It makes no sense. Particularly as I live 5 miles from my parents and he’s 100 miles away. 

It all smells very fishy to me, and I think my brother will shaft me. He clearly has limited morals given what he’s manufactured with regard to the BTL property. On that, I have seen on land registry that he has recently added his wife to the title, and raised the value to £200k any idea why he would do that? Surely it’s not that simple to change the value of a house by adding a spouse and increasing it? Wouldn’t you have to pay SD or something? Sorry if you don’t know, I just thought someone might? 

Thanks 

Sea_Shell

Juleszoemay said:

Sea_Shell said:

Juleszoemay said:

I can prove when mine was received in 2012. I have the paperwork dad had to sign for ML with the solicitor when we bought the house. I don’t know if my brother has the same evidence. 

Do you mean he had to sign to confirm it was a GIFT for the mortgage lender!!

But you then made "repayments" anyway?

We didn’t have a mortgage lender. But it was confirmed he had no interest in the property through the solicitors

How much did you "borrow" in total?

Is £100,000 the "balance" and you've already paid back £80,000?  Or do you only still "owe" £20,000.

I trust your husband is aware of your financial assistance from your parents (is your house in your joint names?), but just not (yet) party to your brother's position?