Help! IHT, PoA, tapering. Bear with. It’s complicated.

Rapscallioniam

I’ll try to make this as simple as I can

MiL is 94, all her faculties but deteriorating and completely housebound. For the past 9 years both OH and her brother (BiL) have had lasting PoA.

As well as both having POA they are both executors of MiL’s will. Having a number of pensions savings and investments from departed FiL the IHT threshold will be easily breached upon her death. 

In the meantime BiL has access to and manages all MiLs investments and savings, pensions etc, apart from one current account OH uses to do MiLs shopping, disperse birthday present cash amongst her other 3 siblings children and their children, pay for gardeners, cleaners, carers and give her cash etc

Problem 1 OH and BiL do not get on. (UOTY!).

In some typically antagonistic exchanges BiL has made it clear that as an Executor he will argue that any funds OH has withdrawn from the current account he will assume are gifts to her (OH), rather than expenses for MiL.

Of course these will breach any allowances, (£3k I believe) by thousands so that my OH will be liable for additional IHT. Of course we haven’t kept the receipts going back years for all the shopping OH for her mother or for the gardeners, cleaners.

We don’t need advice about the vindictive nature of BiL, believe me we’ve tried all sorts of mediation. 

But in terms of liabilities come the dreadful time, what steps can OH take, short of a legal process, to prove the money she has taken from MiLs account for the last 7 years has not gone straight into her pocket?

NB: we are of course now keeping all receipts we can but even if we did have all of them stretching back over any tapering period how would the existence of such receipts prove that the goods receipted were for MiL and not OH? + Do we have to get nephews and nieces to provide receipts for birthday gifts? This seems ridiculous.

On-the-coast

All a bit complicated for me to add much - except to correct this statement
 “ …so that my OH will be liable for additional IHT.”
it’s the estate that is responsible for IHT, not your OH. 

Brie

Well you might threaten legal action if BiL doesn't follow the will exactly.  And that legal bills will need to be paid from the estate.

Back up is to keep a careful record of every spend, all bank statements etc to show a trail of what money goes where.  

Keep_pedalling

Your BIL is an idiot. He may think he is being clever but it needs to be explained to him that if this expenditure is classed as gifts then it will increase the IHT that will come out of the residual estate so he will end up having his inheritance reduced by 50% of any additional IHT that needs to be payed.

If your MIL is aware of the potential trouble that is likely to occur on her passing then she could change her executors. This may be a case that having a solicitor administer the estate is a better option than two siblings at loggerheads. 

Rapscallioniam

Keep_pedalling said:

Your BIL is an idiot. He may think he is being clever but it needs to be explained to him that if this expenditure is classed as gifts then it will increase the IHT that will come out of the residual estate so he will end up having his inheritance reduced by 50% of any additional IHT that needs to be payed.

If your MIL is aware of the potential trouble that is likely to occur on her passing then she could change her executors. This may be a case that having a solicitor administer the estate is a better option than two siblings at loggerheads. 

Lots to agree with there from your first sentence onward but I’ll keep any further value judgements concerning BiL to myself.

I agree getting a solicitor to act as executor might be option. Thank you. 

Rapscallioniam

No we won’t be threatening legal action. And like I said even if we were to keep all the receipts I’m not really sure they could prove anything except the purchase of bread and baked beans on a certain Wednesday from Lidl. It doesn’t prove that OH didn’t have beans on toast for breakfast the next day.

Rapscallioniam

On-the-coast said:

All a bit complicated for me to add much - except to correct this statement
 “ …so that my OH will be liable for additional IHT.”
it’s the estate that is responsible for IHT, not your OH. 

You are of course correct. It’s not a small detail for me to overlook as Keep_Pedalling has pointed out. Thankyou.

Savvy_Sue

Also just checking: if FIL's estate went to MIL, and MIL's estate is going to her children, then you do know you've got up to £1m free of IHT? 

Spendless

There's a couple of phrases that come to mind when you describe your BIL. One is 'When people show you who they are the first time - believe them' the other is 'Listen carefully to the accusations, they're actually confessions' So with the latter in mind, how much access does your OH have to the savings, investments etc your BIL manages on his Mum's behalf - is everything intact?

Agree with what has been put above re what you can do and understand what you're saying with that how can you prove this is Mum's shopping, ultimately you can't 100% but your BIL has showed his hand, as well as keeping receipts I would also go for a bibs and braces approach with a spreadsheet and a journal. 
Sunday 30th July - Bought Mum's shopping at Tesco - 42.87 (and then  keep the receipt plus spreadsheet entry)
Monday 31st July - Paid Mum's Gardner £40
etc with it all including any  birthday/xmas gifts.

Then as and when the day comes if BIL does try anything, you've covered yourself detailing as much as you can.  

Savvy_Sue

Spendless said:

There's a couple of phrases that come to mind when you describe your BIL. One is 'When people show you who they are the first time - believe them' the other is 'Listen carefully to the accusations, they're actually confessions' So with the latter in mind, how much access does your OH have to the savings, investments etc your BIL manages on his Mum's behalf - is everything intact?

Agree with what has been put above re what you can do and understand what you're saying with that how can you prove this is Mum's shopping, ultimately you can't 100% but your BIL has showed his hand, as well as keeping receipts I would also go for a bibs and braces approach with a spreadsheet and a journal. 
Sunday 30th July - Bought Mum's shopping at Tesco - 42.87 (and then  keep the receipt plus spreadsheet entry)
Monday 31st July - Paid Mum's Gardner £40
etc with it all including any  birthday/xmas gifts.

Then as and when the day comes if BIL does try anything, you've covered yourself detailing as much as you can.  

Plus, if you've got, say, 6 months of gardening, cleaning, shopping WITH RECEIPTS then it's going to be harder to argue that all the previous payments were unauthorised / unnecessary. 

Rapscallioniam

Savvy_Sue said:

Also just checking: if FIL's estate went to MIL, and MIL's estate is going to her children, then you do know you've got up to £1m free of IHT? 

Yes it did. It will breach the IHT limits without doubt.