Family feud and inheritance

No, inheritance tax on gifts should be paid prior to disbursement of the estate, from the estate, by the executor, not by the recipient of the gift.

This thread has displayed how little so many mumsnet people know about inheritance tax - from those who seem to think that there is IHT on everything that's left, not understanding that there are tax free allowances to the ones who think that IHT is paid on gifts by the recipient of that gift.

It does not surprise me one bit.

It also does not surprise me that it doesn't seem to be realised that most estates aren't large enough to pay IHT. Not everyone lives in million pound houses with squillions of £ of savings.

Tax man? How sexist of you.

Why would HMRC be especially interested in a gift a year before the death of the donor, assuming the executor has done their job properly?

I can see why your DB is upset as you have been treated more favourably han him financially.
Although they clearly had a strained relationship at the end of your parents life presumably tbey had a loving relationship for most of it , he ws still their son and there will be unresioved feelings.
If it was a gift then you dont have to share it or give it back to the estate,if it was a loan then you do. If Inhertance tax is due on it because of the 7 year rule you should pay the additional tax from your share if the estate.

If it was a gift- no. You don’t get on, and have no need to talk again after this.
But I’m not sure how the tax man would feel about such a large gift so close to your father’s passing. I think it would be included in the estate and so yes, half would be to your brother.

My parents ( both still alive thankfully) gave my sibling a large amount of money towards a house purchase , but I was told this & it was a gentleman’s agreement that I would get the same & if didn’t happen before my parents died then my sibling should ‘ make it right ‘ .
I have since had the same amount given to me but I have a great relationship with my sibling and I have no doubt that they would’ve paid up if it came to it .
Its entirely your call tbh but if you think that your dad would have wanted you to ‘ square up ‘ with your brother then that’s what I would do .
How does brother know about your gifted money? Did dad tell him?

Well there you go !

I think it’s reasonable to go along with your Fathers wishes given he made the will well after giving you the money. And he still wanted it that way after brother complained whilst he was dying. Very sorry for your loss 🌺 Stuff like this makes dealing with grief even harder. People seem to think they can treat people awfully,or go NC but are entitled to “their share”.

This!!

At the time the Will was written, the £90K was not part of the estate, it had already been gifted. The Will was written prior to his death and after the gift, stating 50/50. The son disputed it prior to his Fathers death and the Father stood firm if we are to believe what was written by the OP, so in my head its clear what was intended, whether its fair or not, I am not in a position to judge but it seems that is what the Father intended.

And neither is AI, she is asking for an opinion, mine differs from yours and the truth is that she needs to speak with the solicitor and decide how important her relationship with her brother is to her as this could be a relationship breaker. Obviously there have been issues but she hasn't said if the relationship issues were between Father and Son too. I suspect there will be some tax implications but I do not know.

If the brother doesn't like the decision, its then up to him to dispute the Will.

@MellowPinkBee Did you brother continue his relationship with your Mum and Dad when you were not speaking. Di your brother get any money over the years from your parents?

"...and left nothing to his wife!!!"

What wife?

The OP mentioned that her mother died shortly after her father. She has not indicated that they were married.

If, for example, they were divorced then it would be very normal indeed for her father to leave nothing to his ex-wife.

You will note that the OP said that it was her father that gave her the money - not her parents.

@Soontobe60- my dad changed his will a while ago to leave everything to me and my brother, cutting out my mother, but then she was already in a care home with dementia. Her share of the house, her savings and shares and pensions etc were fair enough to go to the care fees but he wanted his share of their assets to come to us. (As it turned out, this wasn’t necessary as she suddenly took a turn for the worse and died before her personal savings ran out, he’s going strong.)

@Soontobe60 I’m very unclear as to why your DF, on his deathbed, changed his Will and left nothing to his wife!!!

Quite understandable if she was already suffering from dementia or in a care home

All the backstory is completely irrelevant. I’m very unclear as to why your DF, on his deathbed, changed his Will and left nothing to his wife!!!
You have failed to clarify if the money your parents gave you before they died was given as a loan or as a gift. If it was a loan, then it should have been included as a debt against your DFs estate when he died, and as such any other inheritors should receive their share.
If it was a gift then technically it’s your money. Personally I wouldn’t be able to keep it all from a moral point of view. How you feel about your SIL is completely irrelevant :

You dont automatically pay iht on any gifts with the 7 year rule. The gifts are just supposed to be included as part of the estate for probate. A married couple can leave up to £1m before any iht is due.

Well there's your answer then. Imagine saying that to your dad when he was sick in hospital! Fuck him just for that tbh

Pot and kettle? You just called the OP greedy? There's always one child in a family left to help the parents out and the rest are never seen until the parents die. Always. With your attitude I'd say your were never that person who helps out.......

So @MellowPinkBee- ignore the background. Your dad made that will after giving you the gift. He clearly wanted to be fair and split his estate 50/50 but didn’t see the need to match the gift to your brother in his lifetime.

Your brother hasn’t been part of your life for quarter of a century, and your long OP makes it clear you hate his wife and his life choices, so I’m assuming you aren’t all that keen to rebuild a relationship with him.

Just stick to no, dad made that will after giving me the money, these are his wishes and we’ll stick to it. (The only issue I could see is the tax might need to be paid from you, not from the estate)

It doesn’t matter if the estate was under the threshold.

"He may well have been perfectly aware that a gift one year before makes it part of his estate for tax purposes and he willed his estate to be split 50/50." [emphasis added]

Exactly, for tax purposes only. A gift made before death means that the gift is no longer part of the estate.

The executors cannot touch the gift in this situation or take it into account when following the instructions in the will (unless the will says otherwise - but in that case those instructions would be in the will).

It is possible to follow the will, take the inheritance, restore a relationship with your brother and give him a gift of your own £45k

That's assuming that the father's estate is worth more than £500k anyway. Otherwise this whole discussion of IHT is irrelevant.

"Well, you'll have to pay 40% tax on that OP"

You are mistaken about this. That would only be the case if the gift (or total of multiple gifts) was greater than £325,000. IHT would then be payable on the excess above £325k.

"You should pay that out of your share of the inheritance, not out of the estate before payout, as that wouldn't be fair to your brother"

Fair or not, the beneficiary of a gift under £325,000 is not required to pay anything.

In addition, the executors of the estate cannot force a beneficiary of a gift under £325k to pay anything.

While the gift is counted by HMRC as being still part of the estate for IHT purposes, it is not part of the actual estate itself. As a result the executors have a reduced nil-rate band available to the estate and have to pay any IHT due based on that reduced band.

Rightly or wrongly, your brother chose to cut you out for many years. He will now pay for the consequences of that choice - I would give him nothing.
Very poor of your DF to treat his children differently.

Your father could have left you less in his will. He didnt. So his intentions were clear and you follow his wishes. What happened to your mother's estate - also 50/50?

The background has nothing to do with this. You follow the will and abide by your father’s wishes. If he wanted things to be different, he would have changed his will.

One extra consideration might be to look at your mother's Will.
Did your mother leave assets for your DF to utilize but that were in trust for her two children, equally, after his death?
Only seeking legal opinion will give you an accurate answer to your question.

How did DB ever know about the financial gift to you if you have no contact? Was he an executor of your DM's Will or something?
Is there nothing much left now to share?