Advance of inheritance

mysterymum

I have 3 children, one is buying a house.  My father is 90 years old and my children will inherit 1/3 of his estate divided equally between them.  I have some savings which I will need one day but not for some time, although I know the future is never certain. My estate will also be divided between them. Could I give my daughter £10000 to help with the house purchase on the understanding she gives it back to me when she inherits from my dad or her inheritance from me is reduced by £10000 if I die first? If I can do this should I add interest to the amount?

The_Unready

Of course you can give your child money - why do you think you can't? Whether or not you charge interest is entirely down to you.

eskbanker

mysterymum said:

Could I give my daughter £10000 to help with the house purchase on the understanding she gives it back to me when she inherits from my dad or her inheritance from me is reduced by £10000 if I die first?

So this is really a loan rather than a gift, to be deducted from her inheritance (from you) if you die before she repays it?  The answer to 'can you do this' will be 'yes', but care should be taken to document it properly.

EthicsGradient

mysterymum said:

I have 3 children, one is buying a house.  My father is 90 years old and my children will inherit 1/3 of his estate divided equally between them.  I have some savings which I will need one day but not for some time, although I know the future is never certain. My estate will also be divided between them. Could I give my daughter £10000 to help with the house purchase on the understanding she gives it back to me when she inherits from my dad or her inheritance from me is reduced by £10000 if I die first? If I can do this should I add interest to the amount?

I think that without interest, it would be counted as a gift from you to her for inheritance tax purposes, but that is presumably OK (if you survive 3 years after the gift, the IHT value of it starts to decrease anyway, disappearing after 7 years). You might say it would be fairer to your other 2 children to charge a modest amount of interest.

If there's an understanding it would be paid back at some time, it might be something your daughter's lender (I assume there will be one) would expect to know about. Maybe someone who has done something similar (or works/worked in the industry) can advise.

BooJewels

I've given a cash gift to my son for a house deposit and one of the questions that appears on mortgage forms and they ask you to outline in any letters you supply, is whether there is any expectation for the amount to be repaid and they also ask if you will have any stake over ownership in the resulting property.  Can't remember the exact wordings, but they certainly ask you to make any distinction between a loan or gift.

Bigwheels1111

Non refundable gift is the term.

My Dad did it for me.

jimjames

. Could I give my daughter £10000 to help with the house purchase on the understanding she gives it back to me when she inherits from my dad or her inheritance from me is reduced by £10000 if I die first? If I can do this should I add interest to the amount?

What happens if your dad's estate is spent on care? Or they don't inherit in the way you expect? Are you able to wait and have the money deducted when you eventually die?

Aretnap

EthicsGradient said:

mysterymum said:

I have 3 children, one is buying a house.  My father is 90 years old and my children will inherit 1/3 of his estate divided equally between them.  I have some savings which I will need one day but not for some time, although I know the future is never certain. My estate will also be divided between them. Could I give my daughter £10000 to help with the house purchase on the understanding she gives it back to me when she inherits from my dad or her inheritance from me is reduced by £10000 if I die first? If I can do this should I add interest to the amount?

I think that without interest, it would be counted as a gift from you to her for inheritance tax purposes, but that is presumably OK (if you survive 3 years after the gift, the IHT value of it starts to decrease anyway, disappearing after 7 years).

And if course this is only an issue if your estate is likely to be large enough to qualify for inheritance tax in the first place - 96% of estates do not.

Keep_pedalling

Her mortgage provider is going to require you to sign a declaration that this is a gift or she will not be able to use this as part of her deposit. To declare a loan as a gift would be mortgage fraud.