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Inheritance - My brother wants a property which is worth 110% of his 'share'...

(122 Posts)
quandry Mon 10-Jun-13 22:41:50

My Dad left everything divided equally between four of us:
My Brother
Grandchild 1 (my child) (in trust until 21)
Grandchild 2 (my child) (in trust until 21)

For the sake of simplicity, let's say the estate is worth £400 K, so we are each entitled to £100K.
There are two properties, and my brother wants one of them, but is is worth £110K.

He has no money to 'buy out' the extra £10k.
He cannot get a mortgage, as has poor credit record and irregular income.
He has said he also 'needs' an extra £5 K to move/ renovate the house etc.

I am happy to 'help' him by 'lending' the extra £15K, but I'm not sure how to do this under the terms of the will/estate?

- Am worried about how to ensure I get my money back?
- I don't really want to part-own the property, as I am worried about being linked to him in any way on credit searches etc and being responsible if he defaults on any bills etc.

Should I just set it up as a loan, repayable when he sells the property, of gets more income? What rate of interest should I charge? Could I link it to the growth in value of the property?

I am really going round in circles trying to think this through.

missyb123 Sun 23-Nov-14 19:22:49

My ex has a legal charge over my house due to our divorce to be repaid if I co habit with someone for more than six months , if my child ceases to live with me or when my child is 18. He has asked to come in and look around my house to make sure it basically worth his 25%. Is this right that he has a legal
Right to enter my house ? I read it as the lender can enter my house but he would not be classified as the lender would he? Has anyone else been in this situation ? He is threatening to take me back to court if I don't let him enter my house . Any advice would be appreciated . Thanks

Allalonenow Mon 17-Jun-13 22:26:53

I think the brother is just pushing his luck, and trying the old emotional blackmail on the OP, which no doubt served him well with his father.

He has already had a chunck of his father's money over the years. Why should he get more than his alloted share now?

Samnella Mon 17-Jun-13 21:24:14

I would just let him have it given you and your children already have 75% of the estate and this is your brother who by the sounds of it is not well off. I would draw the line at the extra money by pointing out he has more than his share courtesy of your generosity. It really isn't worth falling out over. I speak from a position of someone who won't inherit a penny so I have different view on all this stuff.

fubbsy Thu 13-Jun-13 15:58:54

Sorry worried, I wasn't trying to have a go at you. It's just when you said 'up to them to provide for their own dcs', that sounded to me like an opinion.

Lavenderloves Thu 13-Jun-13 15:04:37

Lots of people bypass their children and leave to gc.

worried111 Thu 13-Jun-13 14:16:07

fubbsy I didn't express an opinion, I just said this arrangement wasn't one I'd heard of before. I also said entirely up to the father how he leaves his money.
If he had died without a will, would the default position have been a 50/50 spilt? I think probably yes.

MrsGSR Thu 13-Jun-13 13:30:24

The OPs life might not be any easier with the money going to her children. If they go to a school without fees the money will only be used to pay for their university, which very few parents are able to help out with anyway. Everyone I know at university is funding it through loans without any help from their parents. So the money given to the children may not help the OP at all.

Alwayscheerful Thu 13-Jun-13 11:19:55

All the options you mention happen regularly, they are not unusual, the bigger the estate the more plannning and thought goes in. It is personal choice, and for different reasons. Sometimes people use a deed of variation, because the will was not thought through properly and there can be substantial inheritance tax savings.

In an ideal world we you would all split our money equally between our children but for various reasons one might do things differently,and to be completely fair perhaps consider taking in to account gifts made during a lifetime.

if your children already own assets worth over £650,000 you are effectively giving them an inheritance tax problem, an effective way to address the problem would be to leave money to grandchildren instead, result- Inheritance tax problem solved.

OP's father perhaps addressed the lifetime gifts to her brother in his own way, he left a bigger share to her children, perhaps he gave his will lots of thought. Yes parents can benefit if GC are left money because they have access to money for school fees and university.

fubbsy Thu 13-Jun-13 10:26:02

That's your opinion worried, but I have seen it before too. My uncle did it that way because he reckoned the money would make more a difference to the lives of his grandchildren when they were young.

EverybodysStressyEyed Wed 12-Jun-13 23:15:28

I have seen this type of arrangement twice

In both cases one sibling was always getting bailed out nd when the parent died the inheritance had been split to take into account all lifetime gifts

From what the op says it sounds like her dh has had his share throughout their fathers life

worried111 Wed 12-Jun-13 22:49:30

Entirely up to your dad but I have never heard of such an arrangement before - parents leave money equally to their children, and then up to them to provide for own dcs (ime). And it's not that they only receive the money as adults - OP's life will be made financially a bit easier if school fees/university can come out of the trust fund.

Alwayscheerful Wed 12-Jun-13 22:29:46

Sorry you asked how you go about it, I am fairly sure the red book is the set of rules the RICS surveyors work to, some Estate Agents will have the relevant qualification or use a firm of Chartered Surveyors, with a member of the Royal Institute of CHartered Surveyors.

Alwayscheerful Wed 12-Jun-13 22:25:00

Like all things red book valuations are negotiable, sometimes you are charged a flat fee, sometimes a percentage, probably best to negotiate one fee for both houses, red book rules ensure that the valuation will stand up to the scrutiny of the inland revenue.

quandry Wed 12-Jun-13 20:03:01

Just to re-iterate, there is no IHT to pay, as the estate is less than £650,000 with a full transfer of my Mum's nil-rate band.

quandry Wed 12-Jun-13 20:00:32

Xenia - yes, the money can be used to pay for 'educational purposes', so school and university.

What I had hoped to do was buy a holiday cottage which would then be let out, and then when they each turned 21 if they wanted cash, DH and I would try to buy out their share.

Does anyone know how much a Red Book valuation costs, and how I go about it?

Xenia Wed 12-Jun-13 14:52:31

If he with you decide how the children's 50% is spent it is probably going to be best if it is just stuck in a savings account with reasonable interest rather than anything complex as it is going to be very hard to get his agreement to any complex investment. Can the children's money be used to pay school fees for them and things like that under the trust whilst they are still under 18?

hollyisalovelyname Wed 12-Jun-13 14:43:42

You and yours appear to be getting 75 per cent. Why don't you just give him the house and be done with it (him) ? The ten thousand extra would soon go on legal fees to sort an agreement.

Alwayscheerful Wed 12-Jun-13 14:21:47

I suppose the main point here is that you dont know how much each of the properties will actually realise, until the main house sells you dont know if the house your brother wants is 90% or 110 % of his inheritance.

We recently had a property valued by an estatge agent at £450,000- £460,000 (free appraisal), we spoke to a solicitor who said play it safe and pay for a probate valuation, a red book valuation for inheritance tax purposes came in at £420,000.

We managed to achieve £417,500 (only offer in 6 months) so the £2,500 loss was set against the tax bill, the reduction made little difference to the beneficiaries.

Accurate valuations and adjustments are essential if you wish to ensure the estate is being split fairly, it is too early to be arguing with your brother about £10/15 k at this stage it is merely speculation.

Chubfuddler Wed 12-Jun-13 14:15:05

Oh dear.

If you run into difficulties with him as a trustee he can be over reached by appointing another, but it needs a court order.

I would lend him the money and go down the charge route myself.

quandry Wed 12-Jun-13 14:10:31

starfish - oh, just to add to the confusion the trustees are.... my DB and I

I really don't think my DF got good advice about constructing his will !

That's another reason why I don't want to fall out with DB, as he will then make it impossible to do ANYTHING with the children's money.
He is completely unsuitable as a trustee - of course he has already suggested that we 'invest' the children's money in the house so that he can live in it!

I've had to do everything with the the 'other' property, which was DF's main residence, and is close to me... I've completely cleaned it out, replaced curtains & decluttered, tidied garden etc, so it woud seem completely fair for DB to 'deal' with the other one, as necessary.

starfishmummy Wed 12-Jun-13 10:38:38

That is solicitor not solo tor!

starfishmummy Wed 12-Jun-13 10:38:07

I think legal advice from the ops solo tor is absolutely essential.
There are four beneficiaries in the estate and therefore it is highly likely that all four of them are joint owners of this property; so it is not up to just the op and her brother to decide on what to do with it; the children's trustees will have a say. In my experience, where trustees are involved their role is to protect the assets for their wards; they may want to sell.

Rolf Wed 12-Jun-13 10:04:59

Sorry about your father, OP. I think varying the will so that your db gets the house is very sensible and generous of you. FWIW, my brother and I are executors of our father's estate. The main asset is his house, which was in a terrible state. Emptying it was a time consuming and upsetting task, it's been burgled twice and is now on the market. Whilst I appreciate how fortunate I am to (eventually) have my share of the proceeds of sale, at the moment it's a bit of a nightmare. We're having to pay council tax, keep an eye on it (and I'm too scared, after the burglaries, to go there), deal with estate agents etc. We've twice had to clean up after burglars and paid to improve the security. If you can make your father's holiday house your brother's "problem" and not have to have deal with clearing it out and selling it, and also avoid having further financial dealings with your brother, you can get on with the administration of the estate in a much less stressful way.

Alwayscheerful Wed 12-Jun-13 09:41:57

It is possible there is inheritance tax to pay as the estate is worth over £325 (unless there was also a spouse with an unused allowance so £325,000 x 2). If there is tax to pay your brothers share will be reduced.

Who has valued the property at £110,000? Is your valuation merely a free valuation letter from an estate agent or is it a formal valuation you have paid for, a "red book" valuation for inheritance tax purposes? There is likely to be a difference between the two. If your brother takes the property as his share of the estate You will save on solicitors fees, estate agents fees, council tax and house and garden clearance costs. It would be reasonable to give him a discount.

The very least you can do is obtain a red book valuation for the property and deduct likely estate agents costs say 2% ? from the valuation figure, he is doing you a favour in speeding up the process of liquidating assists from the estate.

Jeezaloo Wed 12-Jun-13 09:34:17

I'm sorry for your loss OP, and sorry that on top of the stress of caring for your ill father, you now have to tread through the minefield of executing his will.

I just wanted to add that I'm pretty sure my DMum has a similar will which splits her estate evenly between me, DSis, and all grandchildren. She mentioned this to me years ago when I had no children and my DSis had 3, (so 20% each). It never occurred to me that this was in any way unfair, and I would certainly have never considered asking any of them for some of their share! But I guess everyone is different.

Your DB is being cheeky and you should execute the will as your father intended. That said, there is a legal way to change the will to give him the house if you wanted to do that (can't remember what it's called now). Meet with a solicitor and chat through your options.

Good luck OP. Tough times ahead I fear!

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