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

(128 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.

ThisIsMummyPig Mon 10-Jun-13 22:47:55

I'm not an expert, but as I understand it you can transfer it into his name on Land Registry, and put a 'charge' on the property. I have only seen these done for a set amount (so £15k) and not as a proportion(10% of the sale value).

That way when he sold the property you would be paid out. If by some miracle he paid you out before, you could just contact land registry and get the charge removed. This is the same mechanism as a bank registering a mortgage.

I think you would need to see a solicitor to set it up though.

ThisIsMummyPig Mon 10-Jun-13 22:48:34

by 'it' I mean the property he wants.

ITCouldBeWorse Mon 10-Jun-13 22:51:31

Surely no one would get a mortgage or 15k, isn't that more if a personal loan kind of figure? Maybe he could get a loan instead?

Is inheritance tax sorted?

If you can't afford to write off ths money, I think you should consider a loan very carefully. His track record may not be great with money.

He wants a lot his way it seems...

exexpat Mon 10-Jun-13 22:53:55

I have lent money to two different family members to help them buy houses.

In one case they are otherwise mortgage-free; they do not pay me any interest, but we have an agreement drawn up whereby I will get back my loan plus a proportion of any profit when they sell the house. Actually they have been trying to sell for two years and may end up making a loss but never mind...

In the other case, they also have a mortgage, and I have a secondary charge on the property (so that if it were ever repossessed I would have a legal claim). They aren't paying me interest at the moment, but are due to at some stage in the future.

In both cases it involved getting legal stuff drawn up which cost a few hundred pounds, but it is probably worth it for your peace of mind, specially if your brother is not (by the sound of it) particularly good at handling finances. It is really up to you and what you thinks fair in terms of demanding interest or not - there is no set formula.

OldLadyKnowsNothing Mon 10-Jun-13 22:55:12

He needs a lawyer. You need a different lawyer.

You and db need to sit down and thrash out the details of the deal; that you're lending him £15k, to be repaid (insert your own details here). Get one lawyer to look it over from your POV, that you haven't agreed something stupid. Get the other lawyer to double-check from db's POV. Sign.

I'm lending a friend a similar sum to do up her house, and that's what we're doing. It's a PITA but protects us both; and she's someone I absolutely know will pay back.

ITCouldBeWorse Mon 10-Jun-13 22:56:51

If he does not have a steady income, how does he plan to repay you?

BIWI Mon 10-Jun-13 22:57:38

Why can't he just have one of the houses? I don't understand! The houses, presumably, will be part of the estate - he wouldn't have to buy it.

ExcuseTypos Mon 10-Jun-13 22:59:43

I agree with BIWI, he should just have the other house, or the £110K property should be sold, he should have his share and he should then buy a house he can afford.

exexpat Mon 10-Jun-13 22:59:49

BIWI - the house is worth more than his quarter-share of the estate, so if he just gets the house, the OP and her children end up with less than their share. The loan would be to even things out.

MissMarplesBloomers Mon 10-Jun-13 23:00:00

If you want to keep things easy/simple I'd let him "have" the property but no more money, up to him then what he does with it.

You could spend the £10k difference on solicitors, so don't throw it away.

Lonecatwithkitten Mon 10-Jun-13 23:00:04

BIWI the house he wants is worth more than his share of the estate therefore he needs to 'buy' the portion that is greater than his share out of the estate.

SilasGreenback Mon 10-Jun-13 23:00:36

Do you think he is hoping you will just gift him the money?

A more 'normal' will would split 50/50 to the children, with maybe a small gift to grandchildren.

Maybe he sees the will as 25/75 in your favour and is trying to rebalance it? Have you asked him how he wants to repay the loan? This might help you work out if he is ever intending to repay and might work out if you even want to loan the money.

QuintessentialOldDear Mon 10-Jun-13 23:01:44

I am with Biwi.

You and yours already have 75% of your fathers estate. Why not just let him have the house?

BIWI Mon 10-Jun-13 23:02:01

But in the scheme of things, the OP is inheriting a lot of money - does it really matter if he gets a little bit more?

ExcuseTypos Mon 10-Jun-13 23:02:26

Sorry pressed too soon.

I think you could be storing up problems for the future. It sounds like he can't afford to pay you back, so I don't understand why you would give him a loan.

BIWI Mon 10-Jun-13 23:02:35

And if he can't get a mortgage on his own, then why not allow him to have that property?

QuintessentialOldDear Mon 10-Jun-13 23:03:37

Do you know why your father did not share is estate equally between his two children?

quandry Mon 10-Jun-13 23:03:38

BIWI - by the terms of the will he is entitled to a 25% share, but the property is worth more than that.
We could possibly make what's called a Deed of Variation of the will, but that would mean that he would take the property, and my share would go down to £90K. I don't think we are allowed to alter the shares of minors whose money is left in trust?

There is no inheritance tax to pay, as my late mother transferred her full nil rate band.

ExcuseTypos Mon 10-Jun-13 23:04:14

Sorry I miss understood BIWI.

QuintessentialOldDear Mon 10-Jun-13 23:04:24

You and yours are still better off than him....

BIWI Mon 10-Jun-13 23:08:56

The property is only worth what someone will pay for it though - it's not an absolute figure. I really can't see that there would be an issue about you having one property and him having the other. The only really fair way to do it would be to sell those two properties and then you both take the appropriate amount of money to go and buy new properties - which would be madness.

Who says that you can't just take one property each? What would happen if you did that?

ITCouldBeWorse Mon 10-Jun-13 23:09:03

I suspect the will was purposefully constructed.

QuintessentialOldDear Mon 10-Jun-13 23:11:03

Does your brother have children? Or might he have children in future?

I am just not sure how you can squabble over you and yours getting 290k out of his estate, and him 110. Providing the house is worth that. Has it been valued recently? People offer much lower than the asking price these days.

quandry Mon 10-Jun-13 23:11:32

Quint - well, my father DID share it equally between my brother and I - but he also included his grandchildren.

I'm afraid my Dad felt that over the years he had lent my brother enough money, and never got it back sad. I suspect he gave the grandchildren more to prevent my brother getting it all.

My brother is very difficult to deal with. He is hopeless at making decisions or getting anything done. The house he wants is many miles away and full of all his stuff.
I am the executor of my father's estate. If we have to sell the property it will be a logistical nightmare, and will likely end up with my brother and I falling out.
I am trying to keep the peace by offering to help him have that property, but I am a bit hmm that he has started saying he can only move if he has some cash too to pay off his credit card bill and do some renovations.

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