Gifts Inheritance & payment to beneficiaries

Tuftywufty

Brie said:

Word of caution for you to pass along....if brother is using dad's debit card, even with his permission, a bank will consider this fraud.  It's a completely understandable situation of course but a bank has to consider the account holder's best interests and they have no way of knowing if brother is helping his parents or scamming them.  

As for the £500 a month cheque - that's cheap help and I can't imagine anyone seriously considering that as a gift for IHT purposes.  If it's a steady amount then it is easy to explain.  And if you 2 other siblings are aware of it and don't object then it appears to be something organised for the benefit of your parents.  

So maybe the way around the first problem is for Bro to get his regular cheque for £500 and then to use his own debit card to make specific purchases that Dad then reimburses with another cheque on presentation of an invoice each month.  

Yes we have told him it's potentially fraudulent to do this but it's the only way of getting cash out without POA so it's understandable for brother to do it. Parents & brother both happy to continue. Neither of us would do it though & have said so.

We have discussed with brother to do exactly as you have said but he doesn't do it unfortunately. Me & my sister as executors are only really concerned about how we are going to account for it all given there are no records & that HMRC will likely be taking an interest in so much money going out & reducing their savings.

Tuftywufty

Keep_pedalling said:

Tuftywufty said:

poppystar said:

IHT is on the estate not individual beneficiaries so it will be equal shares after IHT is paid. Think carefully if you want these payments to be considered gifts. Do you even have accurate details of them? If they are expenses then you will not need to account for them. With no POA in place then no one is required to keep records and that seems to be your parents wish but if they lose mental as well as physical capacity then this could become more complicated. 

Thank you. No accurate details at the moment it's only what Mum has told us about the cheque written each month for brother & it's more than £500pcm. . It will no doubt be clearer when we have to get the statements after death (fairly close for them both). We have advised brother to keep records but he doesn't.

The other potencial issue is deprivation of assets if they are giving away their savings at a rapid rate. 

Yes we realise that also may be questioned. Assume it would be covered if we consider the monthly cheque as my brothers income in exchange for the help he gives. I doubt he would want that though as assume he would be liable to then pay income tax on it. It bring us back to accounting for it as a gift each month which has all the other problems described above. We just want to make sure we don't put ourselves in the position of liability by not doing a proper job as executors.

Tuftywufty

Keep_pedalling said:

Your brother and parents are going to cause you major headaches if they are not going to keep records of these gifts (the amounts involved are way above a bit of recompense for doing a bit of shopping).

You need to have a serious conversation with them regards this and their pig headedness about not making financial LPAs. 

You are spot on there & this is a big concern for us. Both brother and father are very difficult to deal with when it comes to financial conversations and will not accept advice from us or anyone. POA is out of the question. Parents don't want any of the 3 of us dealing with their finances until after they are dead. Other than this problem relationships with them are good....so long as we all do things the way they want which me & my sister are not always happy to oblige when it involves potential fraud & bending the truth. We are trying to prepare for what will be a very difficult time ahead but I don't think we can do anymore at the moment without their cooperation. We are hoping to deal with the estate ourselves & I already have experience as an Executor but it was much simpler than this is going to be. We may need a solicitor if brother becomes unhelpful with providing information.

Flugelhorn

If they won't listen then best to step back at the moment, you have done what you can. 

When the time comes and you are the exec you should have access to the bank statements and the cheque book and then can see what payments were made to your brother. 

Tuftywufty

Out of interest when the time comes & we see the statements; if the cheque to brother is £1500pcm every month & there are no receipts or record what do we do as Executors? Does brother have to maybe provide a statement on what the money was for (e.g. payment for helping or expenses for 'running around' or a gift to aid his finaces etc) I see that as a way of at least absolving ourselves of making assumptions & potentially providing wrong information.

Keep_pedalling

Tuftywufty said:

Out of interest when the time comes & we see the statements; if the cheque to brother is £1500pcm every month & there are no receipts or record what do we do as Executors? Does brother have to maybe provide a statement on what the money was for (e.g. payment for helping or expenses for 'running around' or a gift to aid his finaces etc) I see that as a way of at least absolving ourselves of making assumptions & potentially providing wrong information.

You will have to declare the lot as gifts (less annual allowance). If this was payment for work done your brother would be your parent’s employee and the payments would be subject to income tax and national insurance. As his employer they should also be contributing to a pension scheme for him. 

Sea_Shell

Flugelhorn said:

If they won't listen then best to step back at the moment, you have done what you can. 

When the time comes and you are the exec you should have access to the bank statements and the cheque book and then can see what payments were made to your brother. 

I agree.   Cross these bridges when you get to them.

All you can do is start to keep your own records with whatever information you can glean from them.  Play detective 😉

At least it won't come as a total shock!!  
Forewarned is forearmed.

My feeling is that these are gifts, unless Brother has kept records of what he was being reimbursed for.

badmemory

Do they know that just having a POA does not mean that it can be used until they are ready.  I've had one for years, ready in case it is ever needed.  But no-one can use it until I hand the paperwork over.  Everyone should have one ready just in case.  Having to go to court is expensive (thousands) a POA last time I looked was £82.  Mine is in a box file with other documents incl a copy of my will, which says on it what to do if I am unable to.

Just wondering if they are trying to compensate your brother for reducing his working hours to help them.  The 3 of them would not consider that as employing him even if it does to others, they would just see it as doing the right thing.  It is possible that your parents may be thinking that say your brother has had £10k that you may be expecting to take that money off the top of your inheritance & they don't want that.  People do get these ideas in their heads.

Tuftywufty

badmemory said:

Do they know that just having a POA does not mean that it can be used until they are ready.  I've had one for years, ready in case it is ever needed.  But no-one can use it until I hand the paperwork over.  Everyone should have one ready just in case.  Having to go to court is expensive (thousands) a POA last time I looked was £82.  Mine is in a box file with other documents incl a copy of my will, which says on it what to do if I am unable to.

Just wondering if they are trying to compensate your brother for reducing his working hours to help them.  The 3 of them would not consider that as employing him even if it does to others, they would just see it as doing the right thing.  It is possible that your parents may be thinking that say your brother has had £10k that you may be expecting to take that money off the top of your inheritance & they don't want that.  People do get these ideas in their heads.

Thanks for your reply. Yes they know all about POA. All us siblings have one for ourselves & use our spouses & children. I am also POA for another 2 people & one is currently in operation. It's been explained to parents by us all many many times & even got to the point of filling out forms twice then they pull back.
Brother is retired from main job with v little pension & runs a small 'sole trader' business with not much wage or profit I don't think. He doesn't  need to reduce his hours of work to help parents. I think parents to realise he isn't very successful & not good with money so they keep him topped up financially and have given tens of thousands in lump sums in the past. Their choice as it also benefits them too & both of us sisters live too far away to be there now on a day to day basis though we keep up alot of contact & do what we can. Incidently re shopping my sister actually orders all the main meals for them to be delivered weekly & pays for it herself online & parents reimburse a couple.of times a year so there is only minimal shopping for household stuff & a little extra food for brother to do. She has documented it all to the penny.
Father thinks we can deduct the lumps sums previously given to brother from the estate to be fair but I don't think that can happen as there is nothing documented on his part & the Will splits everything 3 ways. My brother has told us about 2 of the lump sums in an e mail previously though. I doubt we will be going there as Executors & it was more than 7 years ago so no IHT liability.

Tuftywufty

Keep_pedalling said:

Tuftywufty said:

Out of interest when the time comes & we see the statements; if the cheque to brother is £1500pcm every month & there are no receipts or record what do we do as Executors? Does brother have to maybe provide a statement on what the money was for (e.g. payment for helping or expenses for 'running around' or a gift to aid his finaces etc) I see that as a way of at least absolving ourselves of making assumptions & potentially providing wrong information.

You will have to declare the lot as gifts (less annual allowance). If this was payment for work done your brother would be your parent’s employee and the payments would be subject to income tax and national insurance. As his employer they should also be contributing to a pension scheme for him. 

Yes I'm sure this will likely be what we have to do. We don't mind the payments to our brother but it sticks in the claw a bit that we will all cop for the IHT. I was hoping at least that the IHT owed would come out of brothers share of the estate but it seems not. Better for us to know that now though.