Money Moral Dilemma: Would it be wrong to borrow from the interest on my sister's inheritance?

Lockettlady2013

As you say your sister is concerned she will be living off the money l sense she may be using you to hide it from someone, otherwise it could be in a bank making interest for her and she could spend that without touching the capital if she wanted to. You haven't mentioned if you have a written agreement with regards to this money. You haven't mentioned either when the likelyhood is she will want it back. I would speak to her and ask. If she says no, give her all the money back and tell her to deal with it herself.

jiffyy1

This is messy. Don't understand why a sole account wasn't opened in her name, - with brother managing it, or there's a joint account. Because if he were to die, then it is part of his estate, not hers. And he is paying tax on an account which is in his name, but then says he's paying the tax on her money. Well, this is enmeshed to say the least. And so he's feeling that he's been the good guy and paid her tax on money he's not been using but now he's wondering if he can and if he needs to ask… This is not a great arrangement at all that he even thinks that this is a question, because it's a reflection of the mighty enmeshment. And he should be asking, what happens if I go bankrupt, what happens to her assets which are in my name, do I tell her then? - No. None of this works. At worst, put the money in a joint account, and she pays the tax on her capital - and he's not doing her a charity. And maybe, just maybe sister needs a push to get her own act together as an adult responsible and independent, separate out of this almighty mess, and learn to manage her own affairs and become confident of that. - or set out formally that she appoints him as her registered legal power of attorney. in which case it all gets much clearer.

Tim11111000111

Speaking to your sister seems like the obvious answer, rather than hoping that strangers on the internet would validate your desire to do it behind her back. Are you scared she'll say no and you'll end up regretting asking?

That said, the whole setup seems a bit convoluted, and harmful for you if you're paying tax on interest earned in your name, but not recouping that from the account. Could you, with your sister's permission, set up an account on her behalf and in her name, but that you have the password to? That way the money is legally hers, the interest earned is hers (and so to is the tax bill) but it's not sitting in her normal bank account tempting her to spend it?

clarmstrong

Surely you sister must realise that you have been paying tax on the interest, this should have been discussed from the start. I suggest that you sit down together and calmly discuss the matter of the tax cost to you and come to an agreement. Maybe she does not realise that you have been taxed on the interest. I would hope that she would be mortified that it has cost you financially to look after her money and would hopefully be more than happy to pay you back.

gothvixen

You have to ask her. She owes you the tax, nothing more. This could be a bone of contention that you should navigate carefully , unless you don't care about your relationship with her. If you borrow without mentioning it you could lose her trust, and maybe any future contact. What sort of home improvements require £10,000 short term? Discuss it with her, it sounds shifty to me.

Cantandrex

Clearly some underhand arrangements going on here! Most people follow the rules about inheritance and investing - it would appear you have actually committed fraud and broken the law. I don't feel that any form of consent/permission can overrule that. That having been said it is by law, however wrapped up, your sister's money so morally if she agrees it would loosely seem to be OK, however immoral)inappropriate the arrangement is!

fabulous_at_any_age

You need to speak with your sister about it and if she agrees then you have your answer.

Bonnypitlad

Ask your Sister for permission to borrow it….simples

What is the dilemma?

keithyno.1

I'm sorry, but this all just sounds…well, DODGY!! Your sister didn't want her share of the inheritance paid into her bank account as she "was concerned she'd end up living off it?" Yeah, right. So you paid it into a savings account in YOUR name and have accrued £20,000 in interest? Are you sure you're not money laundering here??! It all sounds wacky and ridiculously unbelievable to me.

memesweeper

If she has entrusted you with the money you can do as you see fit. Make sure there’s wording in your Will to ensure she gets it back if you die. What follows is my personal moral opinion …

If you are paying tax on her interest make sure that’s deducted from her money. That’s only fair. You should look at tax-free ways to save her money — government bonds (I think these are CGT and income tax free — do check), NS&I, legal tender gold coins, etc. I don’t think ISAs work legally as these are for your money, not money held on trust for someone else.

If you want to dip in to her funds for borrowing, make sure you pay her back more than she would get in bank interest and less than you would pay to borrow from a bank on similar terms. That’s win-win. It’s potty for you to borrow money from a bank and pay interest if you also have savings and then pay income tax on the savings interest.

If your sister really wants to stay in the dark as to how her money is being held and accumulating to avoid temptation, respect her wishes. However, most people would want to know if their money held in trust is being spent or saved, even if temporarily. I have a similar arrangement with my mother, albeit for a much smaller pot, and I check in with her every three to six months, but not for every little decision. She trusts me and doesn’t want to sweat the details, I don’t think she‘s asked about the total sum remaining in many years. Keep good records and make sure they are in a document like a google sheet, shared with family or executors.

One thing you should have absolutely clear with your sister is what happens to the money if she dies. She/her estate may expect all the money back immediately. This may require you to take out a personal loan at short notice. If you think that you couldn’t afford the loan repayments, or a bank simply wouldn’t lend you that sum, you should not borrow it from her either.

Your sister clearly trusts you, and the fact you have asked here for advice means your intentions are good. Trust your gut to do the right thing. Keeping good records for the benefit of others keeps things transparent, and your conscience can remain clear, even without explicit consent.