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What do I do with this money?

(9 Posts)
TeenyW123 Tue 28-Jan-14 16:23:29

Is your father still alive/around?

I ask because in E & W the IHT threshold of your father may be passed to your mother making any estate over £650k subject to IHT, not the £325k as you thought.

I'd go and see a solicitor that specialises in IHT - I think they're called STEP solicitors. And I'd bring up the £20k your mother asked you to save for your brother as a hypothetical situation.

Deni99 Mon 27-Jan-14 17:07:58

Poshfrock, thank you so very much for your clear and concise advice. It all makes complete sense now. Hopefully it will all be resolved without too much difficulty. Thanks again!

poshfrock Mon 27-Jan-14 14:07:27

Deni yes you need to tell the solicitor about the gift. When your mum dies the executors or their solicitors will have to complete a from for HMRC which specifically asks the question about any gifts that have been made by your mum in the 7 years prior to her death. Your mum has made a gift of £20,000 to your brother which you are currently holding on trust for him. The gift will have the effect of reducing your mum's allowance for inheritance tax.

You haven't done anything wrong or stupid. You have abided by your mum's wishes. However the account that you put the cash into should have been designated as something like "Deni99 as Trustee for Deni's Brother" just to make it clear that the money is not yours.

This would have been particularly important for 3 reasons - a) if the money is in your name then the taxman will expect you pay tax on any interest received, whereas it should be your brother paying tax ( or maybe claiming a refund if he is a non-taxpayer), b) if you die before your brother and no-one in your family knows that the money is his then it would be included in your estate and distributed under your will as no-one would know any different and c) means-tested benefits. If your brother is claiming anything then this money needs to be declared as it is his. Conversly if you are on benefits then you don't want the DWP to think the money is yours and you have not declared it.
Finally, as I think someone has already mentioned, if your mum is no longer communicative then it is very unlikely that she would be able to validly execute a new will in which case the old one will still stand.

Deni99 Mon 27-Jan-14 12:08:54

Thank you both very much for the advice. I think you are right Nicky- i think the original will currently stands. My mothers estate is worth more than £325,000 so inheritance tax will no doubt have to be paid. I am not sure how the process works. Do I declare this to the solicitor before my mother dies? I really dont want to have to talk to the family about this until after the funeral. It should be all about my mum now and not about money!

nickymanchester Mon 27-Jan-14 11:52:11

First of all, there is absolutely nothing wrong with your mother giving a gift to your brother.

That is all perfectly legal. There is nothing that your other siblings can do about it. The gift has been made and the only question is whether you will have to pay inheritance tax on it or not.

With the house, unless the new will has been properly signed and witnessed then I would suggest that it is not valid. If your mother can no longer communicate with you then I would suggest it is unlikely that this will will be valid.

In this case the previous will will be valid - lot's of saying ''will will'' here but I'm sure you know what I mean.

With declaring the money to anyone this will only be of any concern if your mum's total assets including the house and any money she still has as well as this £20k gift are worth more than £325,000.

If they are then there will be tax that needs to be paid, but because your mum paid this money three years ago there will be some discount that you can get.

If not, then you don't have to worry about inheritance tax at all.

As has been said above, speak to a solicitor about this.

sykadelic15 Mon 27-Jan-14 02:29:01

Definitely see a solicitor.

Morally, you should declare it. Legally, i don't think you have to unless the account is in her name. They don't know that the money wasn't a gift to you.

Personally... I don't know what I'd do...

Deni99 Sun 26-Jan-14 23:14:15

No Armani, thanks so much for your quick response. I agree that for my brother to get to live in the house until he dies would be the ideal solution. As my mother is now no longer communicating with anyone I doubt that the will could be changed at this stage. Whatever happens, my other siblings will invariable contest the new will if my brother inherits the house. It is all such a mess! I will seek legal advice tomorrow. Thanks again.

It would be much fairer if the house remained spilt between the siblings but with a condition that your brother gets to live in it until he dies. Is that an option?

Depending on the value of the rest of your DMs estate the money she gave you could be viewed as trying to avoid inheritance tax so you should seek legal advice to be on the safe side

Deni99 Sun 26-Jan-14 22:48:53

Hi, I need advice please as I am worrying very much about this. My younger brother has been living with my mother in Scotland. My brother is lovely, but an alcoholic and has no income. My mother has been supporting him.

My mother's will is split 5 ways between the siblings but in the last few weeks my mother has become terminally ill and my brother has persuaded my mother to ask the solicitor to come to the house to change the will to put the house in her name. From what I understand the paperwork has been done. My mother just needs to sign it. My brother is obviously very worried about his future and what is to happen to him hence him trying to secure the house.
To get to the point I dont care about the house and am lucky enough to not to need the money but nearly 3 years ago my mother gave me £20,000 to keep for my brother(which i was to hold onto for his future as my mum was very worried about him). My other 3 siblings do not see mum or my brother therefore i am expected to look after my brother in due course. At the time my mother didnt want to change her will and didnt want my brother or anyone else in the family to
know about the money. Anyway I put the money in a bank account for my brother and didnt give it any further thought.
(stupid i know)

I now need advice about what to do with it now. My mother is fading fast and is not able to communicate with me. Do I declare the money to the solicitor? If my brother inherits the house he will not need this money, but if he doesnt, he will be homeless and the £20,000 would be vital for his future, I would really appreciate any advice as it is all going to be a nightmare when my mother dies and I dont want to get into any trouble legally or involved in any disputes and fights about money. I want to do the right thing for everyone. Many thanks for reading this far....and sorry if its confusing.

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