Loan to dying parent

Keep_pedalling

https://forums.moneysavingexpert.com/discussion/comment/82099873#Comment_82099873

Talk to your sister regarding the loan and make her aware that it will need to be repaid from your mother’s estate.

elsien

I think Nhs personal health budget have an option of a managed account where they can sort out the tax insurance and the other employment stuff and your mum gets to choose who she wants as carers.

lisyloo

https://forums.moneysavingexpert.com/discussion/comment/82099588#Comment_82099588

I agree house won’t be sold by April, but if I loaned her £30k and she died the next day, I’d ideally want to be first I the queue from her cash if that was possible to draw up legally. On reflection I agree that gradual drawdown makes better sense for me. I’m sure she would prefer to have a lump sum and manage her own money rather than be reliant on someone else for money each week but there is potential lifetime loss of ISA allowance to me.

silvercar

https://forums.moneysavingexpert.com/discussion/comment/82100076#Comment_82100076

That’s all well and good, but she is reliant on someone else’s money, without your loan she would have a problem. So managing her own money doesn’t come into it. You can always set up a standing order if it makes her feel better.

UKTaxHelper

On being first in the queue, you don't really need a mechanism for that. Debts of the estate get settled before anyone's share is worked out, so as a creditor you are already ahead of the 25%, and being an executor doesn't change that either way. What matters is being able to show it was a loan and not a gift, so something short and signed at the time, dated, and the money going bank to bank rather than as cash. Worth knowing too that the debt only reduces the estate for inheritance tax if it actually gets repaid out of it.

lisyloo

half the bungalow is worth approx £150k so no concerns about IHT threshold but thanks anyway.

Dead_keen

If it was me:

1. I'd talk to the rest of the family / executors to make sure that they understand and are happy with what you want to do. This is really to protect you from someone getting upset later. You'd have thought people would be happy that you are helping out (and I'm sure my family would be) but someone may feel that by you encouraging your mum to spend money then they will lose their inheritance and so might get funny about it.
2. I'd want to think about what would happen in the happy event that she lived longer than estimated and you could not afford to continue funding her.
3. I'd write a really simple loan agreement and get your mum to sign it. It would be really short, look like a letter and set out the boring terms of the loan (e.g. repayable on demand, interest-free). More importantly it would make it clear to everyone that the money you transfer to her is obviously a loan. Whether you want to write it or get a solicitor is up to you. If you were to write it yourself you could easily find free loan templates UK online. But they tend to be overkill (mine would look like a short letter signed by both of you rather than a 12 clause loan agreement for a company). ChatGPT (**) could help with this but read it carefully and ask questions about what it writes (** other ways of not taking professional advice are available).
4. I'd lend the money regularly as needed rather than in a lump sum. That way you only lend what you need to and so aren't having to wait for probate to get the unspent amount back.
5. I'd transfer the money by standing order, with something like "loan from lisyloo" as the reference (again to make clear it is a loan). Cheques (if they still exist) are hassle and cash means you lose evidence.
6. Personally, I would not secure the loan on the property unless the loan got particularly large (or the family were funny about things). Why? Because it is hassle and you would probably want to pay a professional to help with the loan agreement, to put the charge on and how that impacts the step brother who owns the rest. But this is a personal thing, as is what is large and what the rest of the family is like.
7. I'd want to understand how and when I will get my money back. The sale of the bungalow is the obvious way but will the 50% owner cooperate with that? What happens if its not sold for ten years because the 50% owner just doesn't want to sell?
8. A loan is repaid from the estate before the rest is shared with the beneficiaries under the will. So you will get it back before the residual beneficiaries. But of course you will have to wait until the estate has cash and so in reality the timing might be the same as the estate is paid out.
9. A codicil would not be relevant with a loan (unless other changes were needed for the will for some reason you've not mentioned).

Albermarle

https://forums.moneysavingexpert.com/discussion/comment/82099950#Comment_82099950

It is public/taxpayers money, so there has to be some controls/limits on how it is spent.

If the current private arrangements are 'cash in hand' then that would have to change if using CHC funding, as they would need to see that the carers were properly registered as self employed ( maybe they already are though).

lisyloo

https://forums.moneysavingexpert.com/discussion/comment/82100530#Comment_82100530

thanks. Wrt the 50% owner it’s extremely likely he’d want to liquidate ASAP. I guess there could be issues over agreeing if an offer is good enough but it’s a very saleable property (disabled parking space at the front door) so I don’t imagine this aspect being difficult. Of course property isn’t liquid.

lisyloo

I

https://forums.moneysavingexpert.com/discussion/comment/82100588#Comment_82100588

I totally agree (I’m a taxpayer). The whole issue is that my mother doesn’t want any of the taxpayer offers made. Which is free carers not of her choice or gender wiping her private parts or free nursing home. I know loads of people who’d be over the mood to get their care fees paid.

What I was trying to (carefully) say is that PHB does not support cash in hand arrangements (if that were to be the case).