Help - Monies given before death for an annex that wasn’t built

Cluffy01

Hi everyone, I’d be grateful for your assistance. 

A reasonably large sum of money was given from my father to a family member to build an annex for my father to live in as he was getting older. 
Unfortunately my father died before plans were finalised or planning permission was even applied for. 

In a “letter of wishes” my father stated that if he hadn’t moved into the annex at the time of his death then the money should be returned to his estate. 

The family member is saying that the letter of wishes is not a legal document and that my father still wanted him to build the annex (although the annex is no longer required) and so they are not returning the money. 

Where do I stand legally? What would you do?

Savvy_Sue

The other person is correct, a letter of wishes is not a legal document. However ... 

Are you the executor? If you are, then I'd follow the letter of wishes, and prepare to fall out with any family member who disagrees with you. And you may be able to deduct the amount advanced from any bequest to that family member, rather than expecting the advance to be returned. Or you could ask them to provide any evidence they may have for your father's wish for them to build the annex regardless of whether or not he was going to be able to live there. 

If not the executor, probably not a lot you can do. 

You could of course take proper legal advice. If the letter of wishes was drawn up by the solicitor who wrote the will, talk to them. They may have a file note confirming the letter of wishes. 

Linton

Surely the payment for the annex which was never built is a debt to the estate. So it is the duty of the executor to recover the money. The Statement of Wishes is only supporting evidence. It does not of itself change the situation.

Flugelhorn

It doesn't sound like it was a GIFT to this person (it was handed over so a specific task could be done for your father's benefit) or at least if it was then it was a gift with strings attached (reservations) ie that it was for the purpose of building your father's annexe. 

if it was a gift given in the last 7 years it would be considered part of the estate for IHT anway.

Emmia

Does this money form a large chunk of the estate? Can the estate cover any IHT bill without its return? Is the recipient of the "gift" a beneficiary? Can the executor deduct this from their share?

If you're the executor I'd consider getting some legal advice, but to be honest it's a pity that your dad didn't wait to hand over the money until after the plans had been drawn up, planning permission obtained and a builder engaged.

What would have happened if planning was denied?

Keep_pedalling

Is this family member also a beneficiary of the will? 

Marcon

Cluffy01 said:

Hi everyone, I’d be grateful for your assistance. 

A reasonably large sum of money was given from my father to a family member to build an annex for my father to live in as he was getting older. 
Unfortunately my father died before plans were finalised or planning permission was even applied for. 

In a “letter of wishes” my father stated that if he hadn’t moved into the annex at the time of his death then the money should be returned to his estate. 

The family member is saying that the letter of wishes is not a legal document and that my father still wanted him to build the annex (although the annex is no longer required) and so they are not returning the money. 

Where do I stand legally? What would you do?

Nobody here is going to be able to answer conclusively on the basis of a couple of lines of background, or have any impact on how the 'family member' behaves.

If you want to know where you stand legally, then getting legal advice would be your answer. That's what I would do.

Cluffy01

Savvy_Sue said:

The other person is correct, a letter of wishes is not a legal document. However ... 

Are you the executor? If you are, then I'd follow the letter of wishes, and prepare to fall out with any family member who disagrees with you. And you may be able to deduct the amount advanced from any bequest to that family member, rather than expecting the advance to be returned. Or you could ask them to provide any evidence they may have for your father's wish for them to build the annex regardless of whether or not he was going to be able to live there. 

If not the executor, probably not a lot you can do. 

You could of course take proper legal advice. If the letter of wishes was drawn up by the solicitor who wrote the will, talk to them. They may have a file note confirming the letter of wishes. 

Thanks for your reply. 

I am an executor along with my two siblings. One of which is the family member who the money was given to so that he could build an annex for our Dad.  

The letter of wishes wasn’t formally drawn up by a solicitor as my dad thought that we would all understand and agree to his wishes. I think I will sadly have to involve solicitors. 

Cluffy01

Linton said:

Surely the payment for the annex which was never built is a debt to the estate. So it is the duty of the executor to recover the money. The Statement of Wishes is only supporting evidence. It does not of itself change the situation.

From what I have read I think it should be. I am an executor and a beneficiary but so is the family member who has the money. Hopefully the letter of wishes will support returning it to the estate. 

Cluffy01

Flugelhorn said:

It doesn't sound like it was a GIFT to this person (it was handed over so a specific task could be done for your father's benefit) or at least if it was then it was a gift with strings attached (reservations) ie that it was for the purpose of building your father's annexe. 

if it was a gift given in the last 7 years it would be considered part of the estate for IHT anway.

It definitely wasn’t a gift. I can’t believe that he wants to keep the funds under the guise that he said my father wanted him to still build it. Even though I have it in writing that it was to go back to the estate. Frustrating. 

Thanks for your reply. 

Cluffy01

Emmia said:

Does this money form a large chunk of the estate? Can the estate cover any IHT bill without its return? Is the recipient of the "gift" a beneficiary? Can the executor deduct this from their share?

If you're the executor I'd consider getting some legal advice, but to be honest it's a pity that your dad didn't wait to hand over the money until after the plans had been drawn up, planning permission obtained and a builder engaged.

What would have happened if planning was denied?

It’s a large amount of money, although there is no IHT issues. The recipient is an executor and a beneficiary as I am too. 

I wish my dad had done things differently but it was his money and his decision back then.