Would you take money from your mum in this situation?

(60 Posts)
RevoltingPeasant Sat 17-Nov-12 17:23:31

I am really genuinely torn on this one.

So: my mum and dad split up 4-5 years ago, DM is in her mid-60s, owns her house outright, has comfortable savings and runs her own (small, 1-person) business. Recently she put her house in trust to me and the DSisses because she says she intends to leave us the property eventually and she doesn't want us to have to pay inheritance tax. I felt pretty uncomfortable about this as it seemed like anticipating her death but I also saw it was a sensible, kind thing for her to do.

DH and I are saving for a house. I trained a long time to do what I do and I will be 34/35 before we can afford one, even on about a 90% mortgage. We also want to start ttc in the new year. But I am worried about having a baby without being close to our savings target as I think we would be unable to save much with DC here.

So my mum said recently, do I want to 'anticipate' my eventual inheritance by having her cash in some money on her house to put towards our deposit? I said no but I know this will come up again when we go for Christmas next month and I don't know what to say.

AIBU to say yes to make my life easier, or should I stand on my own two feet and delay house-buying & baby-making?

expatinscotland Sat 17-Nov-12 17:25:18

I'd take it.

WileyRoadRunner Sat 17-Nov-12 17:25:35

I wouldn't

WileyRoadRunner Sat 17-Nov-12 17:25:58

<helpful grin>

dexter73 Sat 17-Nov-12 17:27:33

The only thing that would worry me is that if she gives you some money, then your sisters may want the same and your mum might not be able to afford it.

Whatnowffs Sat 17-Nov-12 17:28:06

So long as your mum is sure she wont need the money at a later date and it wont leave her short, id say, thank-you very much mum and start feathering my nest :-) What a lovely thing to do, she is lucky to be able to - so long as it doesn't leave her short, it makes total sense.

cozietoesie Sat 17-Nov-12 17:28:08

How is she planning to 'cash in' some equity in the house?

Tommy Sat 17-Nov-12 17:28:12

I would.
You need the money now, she is in the position to offer it to you. At least she will see the benefits of the inheritance!

Whatnowffs Sat 17-Nov-12 17:29:57

dexter does make a good point though, families can be torn assunder over money arguments.

I think a friend of mine did this though, he mother cashed in some money on her house, or even all of it and then split the money throughout the whole family. So no reason why your mum couldn't/wouldn't do the same.

RevoltingPeasant Sat 17-Nov-12 17:30:49

Thanks Wiley for that full explanation wink seriously, why not? 'No' was my first instinct but I can't quite say why either.

cozie not sure, she might have meant actually giving me some money from her savings and then having me inherit less of the house, if that makes sense....? I think she said 'some of the value of the house'.

Gumby Sat 17-Nov-12 17:32:43

And you'd have to pay for your mothers care when she's older if she needs it as you'll have taken her security away ie her house

RevoltingPeasant Sat 17-Nov-12 17:32:43

Yes, whether she could afford to do it for DSisses is a good point. I mentioned it to DSis2 who thinks I should.

But I feel.... icky. I mean, we both have good jobs and will be able to get a house eventually. We are not on the breadline and actually earn above average. It's just that it takes a while to do and meanwhile my eggs are shrivelling up <sob>

cozietoesie Sat 17-Nov-12 17:34:55

Ah - I was just hoping (and I think you need to clarify this with her) that she wasn't planning to use one of these equity release schemes - which send shudders up my spine whenever I look at the small print and the financial pages.

(I thought she might be doing that because some people can be very resistant to using actual savings - they're a comfort blanket.)

If you're unsure, why not take some money - savings - from her and pay her back including the interest she would have been making. (Likely to be peanuts and a much better rate than you could achieve elsewhere.) That would get you started.

MrsCantSayAnything Sat 17-Nov-12 17:35:32

What Gumby said. I wouldn't. I would refuse and get on with things. Having a baby is not dependent upon owning your own house. Yes it makes you FEEL more secure but really, we're all one redundancy away from homelessness anyway! Well most of us are.

Pascha Sat 17-Nov-12 17:37:50

When she says cash in some money on the house does she mean an equity release plan? She needs to think very carefully about it because they are not suitable for everyone, it could cause some difficulties when it comes to paying the loan back on death. I would get her to check with an IFA what is possible if the house is already in trust to you.

Pascha Sat 17-Nov-12 17:39:22

xposts.

If she wants to use savings then thats entirely her choice but I wouldn't want my mum to be in debt with what is effectively a lifetime mortgage.

ENormaSnob Sat 17-Nov-12 17:39:42

What does it mean the house being in trust?

How will this impact her care in her twilight year?

How will it affect your sisters?

cozietoesie Sat 17-Nov-12 17:39:42

That's true- sorry Pascha, I was having a moment there. If it's in trust, she shouldn't be able to use an equity release plan.

janey68 Sat 17-Nov-12 17:39:53

I wouldn't either. Your situation is tough, but not that unusual nowadays for young couples who go through university and training.
There are a lot of potential pitfalls to this- what if your siblings feel aggrieved that they aren't getting the same? What if your mums situation changes and she needs the cash in the future? what if she needs money for personal care at some point- either a nursing home or buying in care which will probably become the norm in the future.

I'm sure you'll be fine standing on your own two feet. The thing about inheritance is that although you feel it will be 'your' money, there are no guarantees attached to anything. Her business may g

Make sure she's not suggesting an equity release scheme on the house. The small print on those is truly shocking! You pay back an awful lot more than you get paid out.

Would she give you a loan from her savings that you could pay back at a low rate?

Having said that, I don't think your own home is a necessity before DC although I can understand why you feel that way.

janey68 Sat 17-Nov-12 17:41:33

Oops- her business may Hit a bad patch... Her investments may drop in value... I don't think anyone should ever assume they will get anything, and your mum maybe needs rescuing from her own naivety over this

Lavenderhoney Sat 17-Nov-12 17:42:59

I would accept- your mum clearly wants you to be better off and is in a position to do so, you can always ask if how your siblings feel and what if she needs the money? If she is keen to go ahead I would be happy to, and why cut your nose off to spite your face? Many people get a leg up and i don't see why you feel you want to do it all alone, when you could be happier and nearer your dreams.

Parents want to provide and make things better for you, I would for my dc. How different is it to them paying for uni?

HeathRobinson Sat 17-Nov-12 17:44:07

Is it worth banking some eggs?

joanofarchitrave Sat 17-Nov-12 17:45:39

I would take it, and have done so (but yes, not from equity release).

hellhasnofurylikeahungrywoman Sat 17-Nov-12 17:48:43

In your mum's place (and I am almost old enough to be) I would love to help my kids out while I was still young and fit enough to enjoy it. I'd hate for them to have to wait til I was dead to benefit.

cozietoesie Sat 17-Nov-12 17:50:04

Me also, actually, so I'm biased I guess. I borrowed some money from my Mum when we were in difficulty and paid it all back including interest. (Which, sadly for her, was indeed peanuts.)

Numberlock Sat 17-Nov-12 17:54:17

First thing to consider is how much savings would she be left with in the event that she needs nursing care at some stage in the future.

Tabliope Sat 17-Nov-12 18:03:27

I'm in the situation where my brother has had a leg up for quite a substantial sum from my mother. He didn't need it - tiny mortgage about a quarter of mine. I'm completely pissed off about it and am thinking of not having anything to do with either of them as it highlights inequalities that I feel have been ongoing since we were small. I don't want the same sum of money even though I could do with it much more than my brother but what I do want is him to pay my mother back so we are on an even footing as that is what I perceive to be fair. I don't think it fair for you to take it. You might need it now but in the future your sisters might need it (redundancy, if one of them needed IVF etc) but can your mother afford to keep freeing up her money for them? How would they feel if they found out? Like me I expect. Pissed off.

RevoltingPeasant Sat 17-Nov-12 18:06:11

So cheery MrsCant. Yeah I know, that is kind of what I feel. I am skittish about having a baby whilst in rented as last year our landlord specifically offered us a 'gentleman's agreement' that we could stay in the house for at least 12 more months - I arranged elective kidney surgery on the back of that - 10 days after my op he gave us a chucking-out notice. I had 8 weeks (when I couldn't drive, on painkillers) to find us a new house.

I am worried about that happening if I have a rough birth/ Csection and also just think saving might grind to a halt post-DC.

pascha sorry, how would mum be in debt? She owns her house outright and has quite a lot in savings.

RevoltingPeasant Sat 17-Nov-12 18:09:29

Sorry MrsCant that should've had a smile in there, was not meant to be narky!!!

Numberlock I do not know her situation with savings but I think she has about £200k. She is currently living off pension + her business + some interest from that and not touching the capital. I think.

But Tabliope you make a good point. Even if I asked DSisses they might feel obliged to say it was okay out of politeness.

Lavenderhoney Sat 17-Nov-12 18:10:40

Hellhas- that's exactly what I mean! And what my dm said.

Op, maybe your siblings have accepted theirs! What does your mum say? If she has her own business she must be quite switched on, no real debt etc However, look at the amount you can be gifted - you don't want to be liable for tax. It's about 3k ( or it was)

BadgerFace Sat 17-Nov-12 18:12:30

Has your mum taken professional advice? If her Estate is above the IHT Nil Rate Band and she intends to give you and your sister her house in Trust but continues to live there then this is a Gift With Reservation of Benefit and the house will be counted as part of her Estate anyway unless she pays you a market rent. I.e. the gift is not effective for IHT planning purposes.

If she's going to give you cash out of her savings instead of gifting her house then the problem won't occur.

cozietoesie Sat 17-Nov-12 18:14:04

I think Pascha was referring to an equity release plan, OP - if indeed that's not only possible (given the trust) but what your Mum has in mind.

I think you'll find that your DSisses would likely have no problem with a formal loan which you paid back including the going rate of interest. That would keep you all on an even footing now - and would be a charge against your share of any estate in the event of her death.

noddyholder Sat 17-Nov-12 18:15:24

I would say no if she is considering equity release

cozietoesie Sat 17-Nov-12 18:15:49

That's an annual figure, Lavenderhoney and its effect would depend on the date of death.

Maybe you all should seek professional advice, OP.

DontmindifIdo Sat 17-Nov-12 18:21:44

I think there's a few problems here, what if your mum wants to sell in the future? Is she planning on living in the house forever? What if she needs residential care? There are 2 questions that throws up, 1) how will she pay for it and 2) if she can pay another way (or make the house your asset rather than hers and get free care) what will happen to the house - will it sit empty for possibly 10+ years? My grandmother innitally moved in with my parents then went into a home, it was over a decade in total, that's a lot of maintenance costs on a house that noone is using.

If she can give you the money from her savings now, she can change her will to reflect what's already gone ot you, your sister would probably be happy with that. BTW - my brother borrowed £10k of my dad to buy his first home, when he moved 5 years later he paid my dad back - i didn't begrudge it to him, I know if I'd needed similar sums, they'd have done the same for me. It's only a problem when the other sibling doesn't get the same help.

ClippedPhoenix Sat 17-Nov-12 18:22:02

I'd accept OP but seek legal advice on the best way to do this.

My late dad was like your mum in a way he gave me soo much whilst alive because he said what was the point when he was dead and wouldn't be around to see me benefit from it.

Whoknowswhocares Sat 17-Nov-12 18:26:32

No I couldn't. There is no telling what her future holds and whether she may have money to pass on when she dies. Or whether she needs it to provide her some care in the future or well, any number of things.
Just suppose you said yes, took your share then there was none left in the pot for her needs. Or your sisters got less because times changed?
You don't NEED the money. You just want it. Which IMO is not enough of a reason

Tabliope Sat 17-Nov-12 18:29:02

RevoltingPeasant a loan would be better - even at zero percentage interest. Your sisters might say they're ok with it now and indeed they might truly feel that but that might not always be the case, depending on what life throws at them and also you - both positive and negative. Say, for example, they can't have kids or husband made redundant or they have long term health problems and one can't work. They might then think well what about us? On the other hand your fortunes might change - say you win five plus the bonus, just enough to make life comfortable - they then might be thinking hang on, she got that hand out from mum and now the lotto she's well ahead because of all this. It's not fair. It was done to me in a sneaky way also which I can't forgive so if you do it I'd do it above board and make sure everyone knows. Also do it under the advice of a solicitor. It might not be done with the intention of favouring one child but believe me it can end up being perceived as that and if you want a future relationship with your sisters I'd be careful.

AThingInYourLife Sat 17-Nov-12 18:30:50

No, I would not take an "early inheritance" from anyone.

An inheritance is the money left over.

While a person is still alive there is every chance they will need it.

Pascha Sat 17-Nov-12 18:36:39

Yes sorry I was referring to equity release which is a loan in effect. If it's her savings she can do what she likes without penalty but she does need to get the terms of the trust set up correctly to take into account any advance you have on your share.

RevoltingPeasant Sat 17-Nov-12 18:51:53

Oh right, thanks Pascha

Tab I would definitely discuss it with my sisters - no way would I do anything behind anybody's back. Actually my dad's family got all snitty with each other about money and we have all agreed already we will not fall out over money.

DM has taken legal advice: I don't know all the terms of it but her solicitor specialises in wills and reckons that presuming DM doesn't die within 7 years (God, I hate even writing that sad) that IHT will not apply. I don't know all the ins and outs but the solicitor reckons it's sewn up.

With a loan from DM, I sort of feel like, what's the point? - as we are already getting a loan with the mortgage at interest. And I would feel terrible if our circs changed and then we couldn't pay DM back. If that happens with the bank, it's tough shit, an impersonal thing, they foreclose or we sell up or whatever - but if it happened with DM I'd feel terrible.

Yes I take the point about not knowing her future financial needs. Think I will probably not. But thanks all smile

Corygal Sat 17-Nov-12 18:55:20

Agree with everyone who says avoid eq. rel. plans like the plague. They're worse than wonga.com, and that's saying something.

I'd say YES - most people don't go into care, and the quarter of OAPs that do usually live a year at most. If your mum transfers the cash tax-efficiently you will pay a lot less tax on it than if you get it later, trust or no trust, plus the money will grow in value.

Inheritance tax is nasty. One of the things about inheritance that older people feel much more than the young is the awful realisation that unless they give their money away while alive, they are signing a massive cheque to George Osborne. The old don't like it, partic not when they have worked for said money.

Finally, about 75 per cent of new homebuyers get financial help from family. I think MN is rather at odds with RL about this, actually, and traditionally has been. Your DM is offering to do something standard and usual.

WileyRoadRunner Sat 17-Nov-12 19:35:15

Will your DM be able to even get equity out of the house if it is in trust?
I think it is quite complicated, no?

I initially said no as it just sits uncomfortably with me - you are not really in dire financial need. But i get why you and your DM would want to do this.

<squirms on the fence>

However, i am a bit of a hypocrite as my lovely dad pays my daughters school fees blush but only with my deceased mothers pension as he does not want to have the money himself and my brother (who will not be having children) agreed it should be used for the girls.

RuleBritannia Sat 17-Nov-12 19:43:38

I would also disagree with an equity release on the OP's mother's house. In effect, she would be borrowing money on her house based on its value and not paying any back until her death. Not quite sure how it works but I read somewhere that interest is charged on the loan and when the mother dies, the amount to be paid back could, by that time, be more than the house is worth. That would mean that the OP and her sisters might have to stump up the extra.

Chelvis Sat 17-Nov-12 19:54:47

I would go for it, we've found it incredibly hard to save since we had a baby -everything from unexpectedly needing formula/steriliser etc to the cost of restoring the damage our now toddler is causing around the house (the DVD player and some ripped wallpaper this week alone!). If it means Grandchildren sooner and a longer time with them, I'm sure it will make her happy too.

Chelvis Sat 17-Nov-12 19:57:17

RuleBrittania, I don't know much about equity release, but surely someone can't be held responsible for the debts of another person, even if it is their parents? Fair enough for the estate to be responsible, but surely they can't bill the children? I really hope not, I know a few people whose parents/grandparents have done this, it would be a nasty shock!

tripletipple Sat 17-Nov-12 19:57:58

It's her money and if she wants to give it to you that is up to her. My mum has adjusted her will twice to take into account money she has given to me. She wants to treat us all fairly but my brothers just haven't needed the money to date and I have, but she has adjusted our inheritances accordingly.

I can see my brothers querying the figures when it comes to it, but then I live close to her and do so much for her every week - they rarely phone let alone visit.

Let her help you out , she wants to.

calypso2008 Sat 17-Nov-12 20:09:57

I agree totally with athinginyourlife Your DM is only in her 60's - you have no idea what may happen.

Also, don't you want to be responsible for your own life? You are married, you have a job, if you have a baby it is surely up to you to fund this (and it need not be expensive)

My friend did an 'early inheritance' from her Grandma - it ruined, totally her relationship with her brother. I agreed with him, TBH, she had a child, wanted another, he did not have a child and was not married - total entitlement.

Talkinboutmoney Sat 17-Nov-12 20:32:49

Dependent on how much your mum can afford to lend you, the Lloyds Tsb "lend a hand mortgage" could be an Option. See here. Basically it allows you to buy a house with a 5% deposit providing your mum can put a further 20% in a Lloyds Tsb savings account for 3 years. If all goes smoothly after 3 years you will have 10% equity and move onto your own mortgage and your mum will get her money back with albeit minimal interest.

We did this after my parents kindly offered us the deposit for a house. I like that it is legally binding. I am the oldest and although right now my parents could afford to give the same amount of money to my siblings, that might not always be the case. This way I don't have to worry about having to pay them/siblings back should something bad happen. We did make sure we could easily afford the mortgage payments and put extra equity in to do so. Again we were lucky to be able to do so, but the pressure it has taken off trying to save has been enormous. I

Although not for everybody, it has worked/is working very well for us.

NewRowSees Sat 17-Nov-12 20:43:33

I personally wouldn't - my parents have already made so many sacrifices for me, I'd feel too guilty. And home ownership isn't the be-all-and-end-all.

Your mum might end up living for longer than you're anticipating, or decide to go on a cruise etc. It's her money and she should feel free to spend it as she likes, not keep it aside to bankroll your lifestyle. (I know it's not as straightforward as that, but I'm over-simplifying).

cozietoesie Sat 17-Nov-12 20:45:22

Interesting alternative option, Talkin.

Should the OP talk to an accountant about it?

wink

Talkinboutmoney Sat 17-Nov-12 20:50:21

cosie Hope that didn't sound too sales pitchy, am a regular, but didn't really fancy posting my mortgage details in public blush.

cozietoesie Sat 17-Nov-12 20:53:48

No, no - it didn't at all. It was a good other option to suggest.

smile

Talkinboutmoney Sat 17-Nov-12 20:59:22

Oh ok, we didn't talk to an accountant (naive) but one of the stipulations was that my bankofdad had to seek independent legal advice about it.

cozietoesie Sat 17-Nov-12 21:06:24

Well that's always a good idea. Meeting needs while satisfying both legal requirements and individual aspirations ain't usually easy.

IWishIWasSheRa Sat 17-Nov-12 21:34:50

And make sure that there is a stipulation about what happens if you and your partner were to split up- am sure you won't but can you imagine how you and your mum would feel watching him walk away with the money She worked so hard for.

cozietoesie Sat 17-Nov-12 21:36:15

There's a thought - and that could be a deal breaker.

Talkinboutmoney Sat 17-Nov-12 21:53:51

Good point Iwish the money stays in the guarantor's name though and in a savings account so I don't think that would happen easily. I think the biggest potential issues come from either you missing mortgage payments or if the guarantor decides they want their money back early. Providing both parties are reasonable, which it seems the OP is neither should be an issue.

RevoltingPeasant Sat 17-Nov-12 22:12:47

Just checking back into this thread - thanks Talkin. We are already looking at a SavetoBuy account with Nationwide, where you save with them specifically for a certain amount of time and they offer you a </=95% mortgage. We wouldn't want that a big a mortgage but it is possible.

I think on balance this thread has convinced me not to. I already said no when she asks but as we live 350 miles away and only talk on the phone mostly, when we see her face to face for Xmas it's likely to come up again. But yes, generally I don't want to feel 'in debt' to my mum and don't want to take anything off her. I already feel uncomfortable about the trust but she was very insistent that that was what she wanted.

Thanks, all.

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