No will and worried about a gift from MiL

[worrieddil]

Just checking.

[Optimist1]

And the gift was ...?

[worrieddil]

Mil has passed away recently, no will but only 2 siblings. There is a property, a bit of money in the bank and personal jewelry and the like. Nothing particularly valuable except a couple of rings. The estate is over £100,000 under the inheritance tax threshold. DH and sibling are acting as joint executors, they are in the process of filling in the forms for the letters of administration.
This should be straight forward.
However, about 5 -6 years ago Mil lent us a sum of money as we were in difficulties. When it became clear we were not going to be able to pay it back, she said to make it into a gift and to forget it and move on. There was no formal agreement, no repayments and nothing in writing. The amount will not affect any IHT liabilities.
Sibling is now insisting we pay it back, that we put it down on the form as a loan, not a gift. Can they make us? This and their attitude to Mil's bits and pieces are really getting to DH, making him ill. Not that it is relevant in legal terms, but they have so much more than us [7 figure pension pot is mentioned frequently for example] the amount of money would be very little to them, but a lot to us, so please don't flame me as it is hard enough losing a much loved mum and Mil with out this extra worry.

[Optimist1]

Sorry, OP, beyond my experience! It sounds as though you could do with a bit of legal expertise here. Sorry for your loss, and the anxiety the estate is causing you.

[VanitasVanitatum]

No you do not need to give it back, but it will need to be accounted for as a gift on the private forms.

You may choose to deduct it from your husband share if there is any for the sake of family harmony.

[JeanSeberg]

Phone the probate registry, they are very helpful on the phone and these are the people who your DH and siblings will be dealing with to sort the letters of administration.

www.justice.gov.uk/courts/probate/probate-registries

[Optimist1]

Vanitas - for the sake of family harmony the husband should deduct only 50% from his share, otherwise the situation is just reversed, surely?

[worrieddil]

Thanks for the link, Jean. I'm afraid family harmony is fast disappearing, after the unpleasant and hurtful comments last weekend.
Write a will everyone! List your stuff and say who gets what, don't leave your family an argument.

[Quinteszilla]

And of course if mil had ever lent the other sibling money, your dh would not necessarily know?

[goldencity1]

No, I don't think she did, they earn far too much! Really grating with DH that they were put through uni, had help with their first car while he was expected to leave school and work, his parents would not even stand as guarantors for a car loan when he was working [you needed one then if you were under 21] and insisted on full board right up to the week we got married, while taking food parcels to the other at uni. Dh has not thought about this for years, but siblings attitude has brought it all forward. It is horrid.
If only she had written things down, we could have avoided all this.
Family meeting again this weekend, not looking forward to packing things up.

[Quinteszilla]

So they put your brother in law through Uni, and not your husband?

Is the gift of money you received a way of evening things out?

[poshfrock]

If it's a gift and was made within 7 years of death ( and a written off loan is a gift) then you will need to include it on the IHT forms. Be aware that your DH will need to complete the more complex IHT 400 forms rather than the more straightforward IHT205 form. The only effect it would have on the estate would be if it were to breach the IHT threshold but as you have said it does not then it's simply a matter of a bit of extra admin. Was the gift more than £6000? If it was less than this then it then it is covered by MIL's annual exemptions ( £3k per year plus carry forward for 1 year if not used) so you wouldn't need to declare it anyway.
I'm a probate lawyer and fill these forms in all the time. PM me if you need any more help.

[goldencity1]

Thanks, it was 6 years ago and we know it's got to go down some where as it was over the exemptions limit. DP has offered to "up" the others share to even things out...I suppose we were hoping for a more fraternal reply. Stupid really, I know.
Good to know they can't force us to repay now though.

[JaneinReading]

It comes down to who a court would believe. If you say it was changed to a gift and other family members say no way - liars and the court believes the others then they may get their share of it. If the court believes you and your husband then you keep it. Is not even an email or none of you made a diary note on the day she said this loan now becomes a gift?

If it was a loan at first and then made a gift say in the last year then ... oh it does not matter as even without it I think this is all under IHT limits so the timing won't be significant.

[poshfrock]

OK but if DH "ups" the others' share then he does realise that unless you do a formal deed of variation ( which will need to be prepared by a solicitor) then he is himself making a gift for inheritance tax purposes which could have implications for his estate if he dies within 7 years ?

So for example if MIL's estate is £100,000 and the gift to you was £10,000 then your DH might be thinking that rather than he and BIL having £50k each he will take £40k and BIL will take £60k to "even things out ". Is that what you mean ? If so then your DH has made a gift to his brother of £10k which is above the annual exemption. So you either need a formal deed to vary MIL's estate under the intestacy or take a chance that DH won't die within 7 years. The costs of preparing the deed should come from the estate by the way and not from you personally.