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.

But the sister didn't just give her mum £150k - she bought a part of the house which she continues to own. ...
I wonder if part of the problem is that you do see the debt as being your parents debt. It isn't legally or morally. Your parents debt was repaid by selling part of the house. It is entirely your sisters debt. She got a share of the house in return.

Blistory, I wonder if you're forgetting that it was an interest only mortgage? The mortgage monies paid off the equity release debt, thereby enabling the mother not only to stay in her home but also to maintain it as an asset against the possibility that she may have care home fees to pay in the future. That money is gone now and won't be available to pay off the capital debt at the end of the term. The % of the house dsis currently has a charge over will pass to the mortgage lender. Meanwhile dsis has to continue to work to cover the interest payments, but will have nothing to show for that at the end of the mortgage term.

If there is a mortgage on the property and your mother and sister both own the property jointly then they will both be party to the mortgage and both be jointly and severally responsible for the mortgage payments. If your sister has to give up work due to her health issues and your mother has funds she will be responsible for paying the mortgage. I know it can be hard getting an older person to understand financial issues. But I think you just have to keep trying for your sister's sake.

In other words, the £150K debt is owed by the mother to the dsis. Which she now has the wherewithal to repay but is refusing to because she fancies a new kitchen and a couple of cruises.

Your sister paid off the equity release scheme to protect your inheritance - not something your mum (or presumably your dad before her) was too concerned about. You've said none of you have taken a penny from your parents. All your mum seems to care about is staying in her own home - which she could have done with the equity release scheme as it was and the inheritance she has just had. I feel sorry for your sister and her ill health and can see why you are worried about her, but I think perhaps you and your brother (who will presumably benefit from the inheritance from the house) should help out your sister - that way the three of you will be taking the place of the equity release company and reaping the benefit on your mother's death while your mum will have some liquid assets which was presumably your dad's intention when he did the equity release in the first place. Your sister can carry on living with your mum in her lovely house and help out as much as the psoraosis allows assuming that suits her and that is what she wants.

Not so different from my experience.

I think I know what you will say but, cant your sis sell her share of the house to your mother to recoup her contribution. Then Mother has to use the money she was left to buy her out and whilst she is still able to afford to stay in house no longer has spare money to waste.

I imagine your sis will say no but therein lies your problem and because sis wont stand up to your mother you will be forced to watch her waste 100s of thousands of pounds on a glorified bucket list and leave no estate behind to help your poor sis.

Umm, no that's not how it works. The sister didn't loan her mother money, she bought a share of a house. The mother used the purchase money to pay off her equity release loan. The new loan is the sisters. The fact it is interest free is neither here nor there.

I suspect the loan is secured against the whole property hence my earlier comments about it being risky for the mum but it's the sister's borrowings. If the sister hadn't gained a share of the house then the argument would be completely different.

The mother now has a smaller share of her house and the risk of a mortgage that needs servicing, albeit by her daughter, monthly unlike the equity release mortgage.

Yes, I agree that your sister is part of the problem here, OP. Given her health, would she be able to bring herself to go through with an ultimatum, if you and your brother were ready to backstiffen her? Because an ultimatum from dsis sounds like a better bet right now than holding out for your dm to come to her senses.

I'm a bit at the number of people who seem to think this is all about safeguarding an inheritance tbh. OP's dm seems like she's not going to shuffle off anytime soon, but will inevitable accrue health and mobility problems if she lasts another decade. Have any of you pp looked into the cost of residential care lately? And I'm just guessing dm isn't going to want to live just anywhere...

"you and your brother could chip in. That way you'd help your sister - remember, you want to help her? That would also protect your inheritance for he future."

We can only just manage our own mortgages and living costs. I have an autistic child and a mentally ill teen and can't work full time. DB has a massive mortgage, like most people our age living in London.

I'm sure they'll work it out in the end. I think I'm just over protective when it comes to my sister. I've never really come to terms with what happened to her in her abusive relationship. We were witness to some of the horrors of it but we didn't act strongly enough to help her extract herself. If she had got out earlier she'd be living in her own place now and not in this situation with my mum.

I find the whole attitude to the mother by some posters to be really offensive and ageist. She is old, not worthless or simply a hinderance to her children's inheritance.

She deserves to live her life to the fullest while she can. Refusing to give her daughter £120,000 may just be a sign of a sound mind, selfish or not.

Blistory, OP's parents got £50k from the equity release deal, which was presumably spent by them gradually. By the time OP's df died, the interest on that meant it cost £150k to buy back the ER company's interest, in order to provide dm with a saleable asset, should she need to downsize for practical reasons, or go into residential care. That £150k was raised by dsis, who selflessly, if unwisely, committed to a mortgage, which she is now having to keep working to maintain the payments on. Yes, in exchange, she gets a percentage of the asset, but that is only on paper, because that percentage will belong to the mortgage lender on completion of the mortgage term, since there is no investment vehicle with which to pay off the capital sum. The only net beneficiary in this picture is the mother. The debt, therefore, while dsis's on paper, is morally speaking the mother's, imo.

Tbh, it would have been better if dsis had characterised it at the time as a loan to her mother, and a form of contract had been signed. It also doesn't seem as though any sensible thought was given to what would happen when the mortgage term ended, but perhaps it was assumed that the house would have been sold by then, which dm now seems in denial about the necessity of. (Unless she uses the inheritance to buy dsis out, of course.)

Tbh, I'm not sure why anyone is seeing the mother as a victim here. The real villain of the piece imo is OP's df, but the fact that the estate he left his widow was less valuable than she feels entitled to is hardly the kids' responsibility, even though dsis, at least, has had a valiant attempt at making it so.

What a mess.

As for those people who are appalled that any adult child would feel gutted at a parent handing over their entire estate in lieu of rolling interest charges on a loan, I'm not going to lie - of course it matters to me. I have a disabled child and one with a serious mental health diagnosis who are extremely vulnerable. I fear for their financial future when DH and I can no longer work.

But the ER is not an issue now. My mum made a decision years ago to get rid of it (with my sister's help) and talked it all through with a financial adviser. She was never keen in the first place. It was my dad's initiative. Mum wasn't really properly on board with it anyway.

your poor poor sister :(

"which was presumably spent by them gradually"

Nope - New car. Holiday in India. New windows in the house. New kitchen. Poof - gone!

Oh god, even worse!

Isn't the intrest only mortgage cheaper than private rent? Surely your sister would have to live somewhere? I'm not saying it's fair if she is struggling with her health but even then she'd have to pay rent,bills etc.
Mother is being rather selfish, although if your Father controlled all of the money I can understand why your Mother is like this with money, is there no compromise? Maybe half of the inheritance so payments go down?

Sorry but that's completely wrong. The interest only bit is irrelevant. The sister owns her share, the bank don't own it but simply have a security, presumably over the whole house. The fact that the sister chooses to pay only the interest and not the capital means that her monthly outgoings are lower but the quid pro quo is that her equity will increase slowly, if at all. Nothing about the transaction benefits the mother to the detriment of the sister.

Sister gave money - got a part of a house.
Mother sold house - got some money.

Both got something from the transaction.

New windows in the house. New kitchen. Poof - gone
I know a couple in their 70's and 80's who have recently taken out equity release, they spent much of it doing up the house, increasing the value of an asset which no longer belongs to them

it's such an inefficient use of money and they are getting too old to manage the garden, why not just downsize ffs

"She deserves to live her life to the fullest while she can. "

I suppose it depends what you mean by a 'full life'. My life is full and it's not costing me loads of money. It's friendships, love, hobbies which make for a full life, not a new kitchen and conservatory. My mother has travelled all her life. She has loads of friends, had a long and loving marriage, children and grandchildren who dance attendance on her. She is learning the piano. She drives. She goes to her book group and lectures. She goes on holiday with her friends, she has dinner parties, goes to the theatre, lives in a beautiful home, has caring neighbours. She only ever worked part time. When we were children she didn't work at all and had nannies, servants, gardeners and drivers. For 5 years she had no children at home (we were in boarding school) and her days consisted of shopping, lunch with friends, afternoon naps, dropping in on the odd orphanage, mahjong.

My sister on the other hand moved out at 17 and spent years living in a flea infested bedsit and working as a waitress. She has grafted for everything she's got and has never asked my parents for anything. She is single, childless and has problems with her health. She has never in her adult life had anyone look after her when she's struggled. I feel very much for her. She is hurt by my mother's lack of concern for her wellbeing.

It would appear that the issue then isn't really about the house but runs deeper.

Your sister is not lesser because she is single or childless. Her health is affected at the moment but hopefully she will get control of this flare and be able to focus on healing. Aside from financially support that you feel is missing, does your mother offer no practical or emotional support to your sister ?

it's as if your sister is serving your mother in the vain hope that your mother will respond with some love and appreciation
and your sister is locked into needing this

the sister needs some help to move her out of this Sisyphean situation before it destroys her

What on earth is wrong with claiming DLA if entitled with six figures "sat" (sic) in the bank? David Cameron has millions and it didn't stop him

Am I missing something?

I think the house has been described as being worth ~£600K. Under the terms of the equity release agreement, 100% of that devolved to the ER company. By buying out the ER company to the tune of £150K, dsis has enabled her mother to reclaim ownership of the remaining 75% of the house's value. That is cold hard cash that she could realise if she needed or chose to sell it.

The remaining 25% belongs on paper to the dsis, but will devolve to the lender at the end of the term because the mortgage is IO. Not having a repayment vehicle was presumably a choice dsis made out of financial necessity. So by maintaining interest payments on a £150K loan she couldn't really afford, dsis has effectively gifted her mother £450K dm would not otherwise ever have seen again.

We don't know how her monthly payments compare to rent, but I can't believe she's quids in even if they are smaller, since apparently she's also expected to contribute half the cost of dm's cleaner, gardener and dogwalker! At the end of it all, she will have no more to show for all of this than if she had rented.

And she's ill, and needs to rethink this arrangement, but her mother won't release her from it, even though she could. Because her daughter has 'made her bed'.

I don't understand how all of this adds up to: Nothing about the transaction benefits the mother to the detriment of the sister.

So no, OP, it isn't means-tested and your DM may be able to claim attendance allowance.

I know this is not at all the point of your thread OP, but might be worth your sister trying the Dr John Pagano diet for psoriasis. DP has it and has had some success with excluding nightshade plants. I know it sounds a bit odd but seems to work in some cases. Sorry for derail! Just felt so sorry for her.

MrsLupo - the mother owned 100% of the house. At no point did the secured lender own the house or any part of it. They simply had a security which was worth £150k at the time it was paid off. The mother didn't get 75% back - she always owned 100%.

So mother had an asset worth £800k and a loan of £150k. She ended up with an asset worth (in terms of her share) £650k but no loan. Same equity. Assuming the daughters share was at least of the same value as the loan.

Daughter had no asset and no debt but ended up with an asset worth, say £150k and a loan of £150k.
Same equity.

The practicalities of the loan may have had advantages and disadvantages but there is no financial benefit or loss to the mother at the time of year the transaction unless the share sold to the daughter was worth more or less than £150k.