AIBU to feel cross and frustrated with mum? Money, mortgage, inheritance

[minifingerz]

I've posted about this on mumsnet before, but the situation has changed a bit in the past year.

The back story: dad did equity release on parental home a few years before he died. My mum never fully understood what she was signing her name to - she didn't understand the concept of compound interest, still doesn't.

Five years on from dad's death and mum now (now 81) lives in the family home with my older sister, who raised a 150K interest only mortgage on her salary to pay off the equity release, and is servicing this fairly large mortgage while she lives at home with my mum. If she hadn't done that it is likely the bulk of the value of the house would have been consumed in a fairly short period of time, leaving my mum stuck in a detached house with a massive garden, which she would struggle to maintain on her own, but unable to leave as she wouldn't have enough money available after paying the equity release off to buy another cheaper property in the very expensive area where she is determined to see her days out.

Now here's the problem: dsis has psoriasis which has become very very bad recently, to the point that her hands and feet are almost completely raw, and she is struggling to get through every day in her very strenuous and responsible (and physically active) job. She has to sleep with plastic bags on her hands and feet, comes home every with blood leaking out of the dressings, and has to spend half an hour after work every day debriding and soaking her hands and feet before wrapping them in clingfilm. This results in her barely managing to keep on top of her work and suffering from quite intense anxiety about it as a knock on. I can't see how she can continue in her job and neither can she, but if she leaves how will she service the mortgage? She is 53 and would struggle to get a job that in any other sector which would be feasible for her with her health problems. She has had this problem for years and has tried many different treatments which until recently kept it under control enough to allow her to function. In the last year however it's got really out of control.

Anyway, a family friend died earlier this year and left my mum 120K and my sister 30K, enough money to pay off the mortgage. As soon as my mum phoned me and told me about the inheritance I said 'brilliant, now you can pay the mortgage off and you can both stop worrying about your future in the house' (ie, can you afford to stay or will you have to sell and downsize if you can't pay the mortgage). DB said exactly the same, and so did my mum's best friend.

All fine. Except not, as mum has decided that she wants to use her part of the inheritance to get the (perfectly decent and functional) kitchen remodelled, go on cruises, and generally live it up, while my sister carries on servicing the mortgage.

My brother put it to my mum that my sister is really struggling with work, to which my mum's response was 'she's lucky to live here in such a lovely house, she's made her choices, now she has to deal with the consequences'.

I feel gutted and angry with my mum. My sister has grafted all her life and never complained. She has never had anyone who's 'got her back'. Her ex partner of 19 years was profoundly selfish and insisted on separate homes/finances until she left him. Then her next partner offered her the security of a home together, but turned out to be a violent abuser. He was a gambler and an alcoholic who ran through all the equity my sister had when she sold her flat to move in with him, and she ended up back in a rented property at 43 with nothing in the bank. She has never asked my parents for anything and is the most honest, sincere, principled person I know. I feel distressed that my mum can't take her needs into account, given that my sister is struggling so badly with her psoriasis. My mum's quality of life is so good for someone of her age. She has a very comfortable income, is active, is still driving, has enough of an income to eat out several times a week, go on holiday with her friends, employ a cleaner and a part-time gardener, and put money in the bank every week. She has a better social life than me and she hasn't worked full time since she was in her 20's. I could understand her wanting to live it up on her inheritance if she didn't already have a really good quality of life, hadn't already travelled the world several times over, been on a cruise, lived in beautiful homes etc. She's said that she wants to give some of the money to my db and me, but we've said firmly that we don't want it, that we want her to pay off the mortgage with it so that this stops being a worry for her and my sister.

It's like she can't compute that not paying off the mortgage means that my sister is trapped on a treadmill of full-time work which she is becoming too ill to cope with. If I try to get this point across to her she gets angry with me and closes down. Tells me to stop upsetting her, that she's old and can't deal with people upsetting her.

I feel oddly distressed about how hard-faced my mum is being. She's a loving person, but she's not behaving like a loving mother to my sister in relation to this issue. I can't see how it's going to pan out right now, and I'm worried about it causing a serious rift between us.

I, too, think we need to know whether your DM wanted DSis to take on the mortgage or whether there was any family persuasion.

I've not looked I must admit but tbh I'm leaning towards the not caring argument. By the time I get to that stage they can throw me on the tip, id rather that than see £800,000 disappear on a care home

I tend to agree pissssed, but it's hard on family. It's not about luxury, or even comfort. People with dementia, for example, are incredibly vulnerable and you have to be sure they're safe. It's like looking for a lovely nursery for your pfb and seeing place after place that you wouldn't want to leave a dog in.

I agree, great post from Pees.

Whatever the rights and wrongs of DM's attitude, it's pretty clear that DM and Dsis are in some kind of co-dependent relationship that isn't really healthy for either of them, but most especially for Dsis. Interesting that Dsis has been in unhealthy relationships before. I wonder if OP's best strategy is to support Dsis in recognising that by encouraging her to get some counselling and carve out some breathing space away from DM, and possibly also from work - and then to let the cards with DM fall where they may.

My 2 cents is. .
Your Sister likes being the martyr. She loves that you and your BIL fawn over how much of an amazing person she is. How selfless and caring she is. She wants that house.
If she wants to solve this situation than she needs to leave the house.
Tell her you don't want to hear her but ching anymore. That if it's that bad for her she needs to put her BGP on and do something. Not just words but actions. See what happens. I doubt she'll do anything but throw a pity party.

Your mother sounds like a self indulgent bitch. She doesn't want to downsize. Tough tits. But then she gets what she wants because your martyr sister needs your mum so she can contine her saint hood.
They're in a seriously dysfunctional relationship where they use and abuse each other and it's all going to end in misery.
They are also using you and your Brother. You should both throw your hands up tell them not your circus and not your monkeys and that what ever shit show they're creating you don't want any part of

I think focus on your sister's health. Encourage her to see a specialist and push to get better treatment. Maybe attend consultations if she wants (it sounds like you have the experience of battling to get the best care). Encourage her to get counselling. If she's a teacher (just a guess based on what you've said) her school may have a wellbeing plan which covers counselling and a first consultant appointment. My last two schools have.

Maybe for Xmas you and DB could pay for her to see an IFA too. It's my experience family are much more likely to take advice from professionals than their nearest and dearest.

Leave the issue of your DM for the moment. Nature will force a decision one way or the other eventually.

By the time I get to that stage they can throw me on the tip, id rather that than see £800,000 disappear on a care home

Would you want to see it disappear into the pockets of ER shareholders, though?

And FWIW, I don't think any of OPs concerns.or her sister's, have been to do with any future inheritance. they have been genuinely concerned about ensuring their selfish cowbag mother was cared for and that she would have cash to fund any care she needed.

It has come back to bite them, but they were and are doing their best.

I think you and your db need to say you cant speak to her and have anything to do with her if she uses the money in this way with your sister in purgatory its awful.

If the house is large and attractive, would it be possible to take in some lodgers - either long-term tenants or short-term visitors like language students who would stay for a couple of months?

If it's in an attractive village with lovely grounds, could you stick it on Air BnB?

I think you can bring in up to £7.5k a year before it causes issues with tax.

At least that way your sister would be generating some income not linked to her job, which could give her some breathing space and / or eat into the actual debt rather than just the interest.

"If the house is large and attractive, would it be possible to take in some lodgers"

It's not huge - only three bedrooms.

No one could tolerate living with my mums and sisters dogs. I'm talking random piddling, CONSTANT hysterical barking, and my mum's dog in particular is bitey and a thieving, bold animal.

Fuck me it sounds like the house from hell and I have three teenagers, a mad puppy and a ninja turtle 6 year old !

How much has your sisters share of the house gone up? If I understand right from the posts she owns part of the house?

She will surely have made a fair amount of money having a share in a house in the south in the last few years?

Pisssed the dogs are horrendous.

It's a whole other thread

If your DM luffs her dog then that simplifies things a little,

pay debt - keep house - keep dog,
don't pay debt - lose house - lose dog.

At some point your sister won't be able to work her health will deteriorate to a point that she can't. The. The house may have to be sold in assuming the mortgage she took out is a charge against the house. You say small percentage but it isn't 150k as a percentage of 800k is 15% and that's flat rate without interest

Sounds like your mother has decided to live her old age as she sees fit. Its her money and her children are old enough to look after themselves. I guess its hard to see your 'inheritance' spent.

Its you mothers right to do what she wants with her own money. She looked after her children and believes its now her children's responsibility to look after her.

Not saying I would do that...

No one's actually come out and said this bluntly, but... wtaf was your father thinking, OP? The equity release deal, if I understand it correctly, was for a lump sum of £50K at a rate of compound interest so punitive that it was on track to swallow up a £600-800K asset in, what, 10-20 years? Your mother claims not to have understood all this, but presumably he did. And presumably therefore he understood the restrictions it would place on whoever outlived the other. And - not that I am a subscriber to the 'my inheritance' school of thought, but - presumably he also knew that there wouldn't be one for you three unless they both died in very short order. All so they could go on a £50K spending spree? Despite having savings and a very healthy pension pot?? I'll say it again - WTF was he thinking? What do you think is the story there? And does it bespeak an attitude either to your mother or to his children that might shed light on the current situation?

I'm relieved to see your sister has a dog too. I was thinking she was paying for your Mums dog to be walked which sounded outrageous . 😂

I Don't like the idea of ER either but apparently there were 12,000 new plans issued in the U.K. in the first half of 2016 INFO HERE Equity Release Council. The OPs Dad was one of many.

Interesting, some plans now offer a downsizing protection plan.

This typically allows the loan to be repaid in full without the requirement to pay an early repayment charge if this is done in conjunction with moving to another property, and providing the loan has been running for at least ve years. This exibility now allows for more choice to either repay or port the loan to the next property

"but... wtaf was your father thinking, OP? The equity release deal, if I understand it correctly, was for a lump sum of £50K at a rate of compound interest so punitive that it was on track to swallow up a £600-800K asset in, what, 10-20 years?"

Well, quite.

My dad was generally quite sensible, but this was a stinker of a deal. Which is why he kept quiet about it until it was signed and sealed I reckon.

"I guess its hard to see your 'inheritance' spent."

She no longer has the equity release - her decision.

There are no benefits FOR US in her using her recent inheritance to pay off her mortgage. The opposite in fact. If my mother dies leaving an unmortgaged house worth 800k (or so) more inheritance tax will be due from the estate. If she leaves the mortgage on the house and just spends the 100k (she wants to give some of it to us - we have said no) then it's actually more tax efficient because it reduces the value of the estate.

So, suppose your dm gives you and db some of the money - say, £10k - could you give that to your dsis to cover the mortgage payments (which as others have said seem high for interest only 150k mortgage - worth seeing if a lower rate is available?) giving dsis time to try to get better, and shunting off the problem for 18 months? Or, give it to dsis to repay some of the mortgage with it and reduce the payments/increase her equity?
Neither is a long-term solution, but is it the best that you can do in the circs?

But as i say, would be sensible for your to take advice from ifa - depending on her equity plus your dm's gift to you maybe she would be able to buy somewhere cheaper if the house were sold, stop work or work part time? Drastic i know but it sounds as though things may have to change drastically anyway once the 120k is gone?

But what about taking another one out now? It allows your DM to keep her inheritance to spend as she wishes, she keeps house until she dies and allows her to pay back your sister. Yes you may lose the equity in the house over the next few years and thus your inheritance, but it solves your sisters problems.

Obviously I can see why you wouldn't want to do this, but it is your mums money to squander as she wishes.

There are no benefits FOR US in her using her recent inheritance to pay off her mortgage. The opposite in fact. If my mother dies leaving an unmortgaged house worth 800k (or so) more inheritance tax will be due from the estate. If she leaves the mortgage on the house and just spends the 100k (she wants to give some of it to us - we have said no) then it's actually more tax efficient because it reduces the value of the estate.

Sorry, but this is incorrect. £800k minus inheritance tax is a greater sum than £650k minus inheritance tax.

The £650k is more "tax efficient" in that the state gets less tax, but the sum inherited will be lower.

Am I right in thinking that part of the 150k to be paid off was quite a hefty redemption penalty? Otherwise, for the ER amount to have rolled up from 50 to 150 in ?8 yrs (guessing) seems a lot, though I suppose interest rates were higher when your df took it out?
It's totally irrelevant, but it is interesting that the family friend did a £120/£30 split between dm and dsis - I wonder what the rationale for that was.

Do you think dm feels she has to 'keep up' with her friends by affording new kitchen, cruises etc, if they are all leading fairly affluent lifestyles? (though you did say the best friend also said 'pay off the mortgage', so perhaps not.)

Could your dm take over the interest payments on the mortgage for a year or two (I think another pp has suggested this, but it may have got lost in the thread!) - so she keeps a chunk of the 120k but your dsis gets time to rest. Maybe they could adjust the shares in the house accordingly. I am struck by the pp who said that the problems seem to have arisen from the financial enmeshing and the solution is more likely to be unmeshing than further entanglement. But financially it may be in your dsis' best interest now to keep the house going. Whether that is in your dsis' emotional best interests is another question, but only she can decide that.

As I understand the changes to inheritance tax providing Op's DM lives long enough for the phased changes to come in there will be no IHT (2020 I think). Up to £500k per parent, transferable to spouse on death, protected from IHT if it has ever been invested in a family home. This continues to apply even if the property is sold prior to death.