Proof of funds/money laundering rules when purchasing property.

Ant555

If someone were to inherit money and then gift to adult children with a view to them using it within the next 10 years for a house deposit then will they need to prove where that money came from at some point?

Obviously there is nothing untoward but someone mentioned to me that money laundering rules will mean that the kids will need to ultimately prove where it came from.

If this is the case then how much of a paper trail is required? - If its required then I may as well put the detail in one place now.  Can I for instance screen shot the transfer on a statement from one account to another or will someone need a full list of the probate grant etc

for info - value will be around 20k if it makes a difference

Thanks in advance.

FlorayG

Yes, they will need paperwork to prove it is a gift from parents. Proof of where parents got it would also be useful just in case

ACG

A lot depends on how much we are talking about. 
If you are saying £20k, then chances are the solicitors would maybe want a bank statement going back a year or 2. 
If you are saying £200k then the checks would probably be more. 

Also in 10 years time I imagine money laundering checks will have changed. 

Keep_pedalling

If the death was within 2 years it may be worth drafting a deed of variation which as well as providing a paper trail of where the money came from would also prevent the nifty ever forming part of your estate for IHT purposes.

born_again

Just keep the paperwork around the inheritance. So if a solicitor was dealing it it, then the letter giving details of the payments.

400ixl

I was thinking a deed of variation if applicable to make the money go direct to them.

silvercar

Solicitors differ in their requirements to satisfy money laundering checks. Some may consider that savings having been in the adult children's accounts for a few years are just savings. Others may want to know how the savings arose. I would have thought that £20k in the adult child's saving account for 2+ years would be sufficient, but I am not a solicitor.

Twice we recently had to prove a 6 figure sum for a deposit and we provided recent bank statements for a few months, showing excess income over expenditure and said the savings had been building up over decades, we also showed a statement for a savings account that showed excess of the money involved. The solicitor was happy with that. The actual money that was paid over came from a different savings account, but the solicitor just required it to come from an account in our name. This was all repeated for our other child, with similar requirements and again no eyebrows were raised by the second solicitor. 

Ant555

Thanks for the replies - yes assuming I am (hopefully) still alive and the kids have not inherited my house by the time this happens then its simply a one off transfer of 20k each to prove.
   
They may not be in a position to purchase for a good few years so I will get screenshots and/or pdf copies of anything relevant now whilst it is fresh in mind and easily accessible.