Inheritance angst - shocked & angry

[hoopyloopy2]

MIL died like last year and we are just getting to grips now with the details of her estate. FIL died 13 years ago.

To cut a long story short, it’s emerged that she gave a very large amount of money (hundreds of thousands of pounds) to BIL a few years’ ago after he divorced and to enable him to start his own business. DH and I have never received money from his parents - in fact we didn’t even know she had that kind of money.

It’s become clear that DH’s other brother has also received financial support over the years but nowhere near the same level. DH is certainly not more financial comfortable than the other two now or in the past - so there’s no logic as to why he/we were overlooked. Their mum did play favourites over the years, but there was no rift or issue (that we know of) that would explain why she should have skewed things in such an extreme way.

DH has confronted BIL after working all this out by going through years of bank accounts. BIL says it was a loan that he was intending to pay back at some point, but he hasn’t. Issue now is whether this is taken into account when dividing up the estate, DH & I think it should be as amounts to 2/3rds of her savings. MIL did not suggest it should be in her will. But it is SUCH a significant amount of money. BIL is embarrassed & defensive at being found out, and is implying DH is being nosey by going through their mum’s bank accounts in detail - ridiculously.

To put things in context, DH and I are in a financially unstable situation now. He isn’t working after being made redundant several months ago, for the 3rd time in a few years, all very stressful & difficult. I work but we cannot survive on my salary alone. DH has become disillusioned with his line of work and would dearly love the kind of financial support that BIL was given to make choices -ie start his own business or make a career change. We would never have dreamt of asking his mum to bail us out while she was alive though. But it seems BIL had no such qualms - this has shocked us both.

So are we BU to ask for this large payment to BIL to be recognised in how the estate is now divvied up? Ie that he gets a lot less as a result. I know their mum was entitled to spend her money as she liked, so there is no legal case here. I am worried that asking will cause major upsets & divisions but at the same time, it feels profoundly unfair & will fester with DH (and me) if we just let this go.

I think it should be taken into account and the overall result being fairness to all.

PS I think it would be out of order for the brothers not to take a cut to reflect what they had already been given.

I do wonder how many people replying on here have had 'gifts' from their parents that their siblings know nothing about ?

I don't think people make wills IRL to reflect every little thing they do. People are encouraged to make wills when a major life event happens, like marriage or children, but other than that how many people change their wills every few years to reflect anything else? 'I loaned DS1 £50 k, must change my will to say that if he has not paid it back, then it goes out of his pot'?

People put off writing wills in the first place. They rarely to never go back even every 5 years to re-write it. It may not be 'sending a message' about who was loved more, or who deserved more, but the MIL wrote her will, and then put it out of her mind.

Interestingly, dsis recently told me she had given Her ds £50k as a house deposit. She didn’t want her dd to know, but said she thought she ought to think about mentioning it in her will, which she can’t be bothered to sort out at the moment.

I think many people kick doing wills into the long grass. And I don’t think they mean to play favourites with gifts, but just don’t want the hassle or awkwardness of having conversations about it with their offspring. I have heard so many people say, “You can all fight over it when i’m gone!” They just want a quiet life (and won’t know about any subsequent fillings out when they’re six feet under).

Fallings out, I meant!

I disagree with the suggestion the the BIL has been "found out" or that he's done something wrong and sneaky. He was part of a private transaction with his mother and its nobody else's business whatsoever. A gift where he vaguely hoped to pay her back someday is not a loan. If she wanted it considered a loan she would have put it in the will as such.

Your demonizing your BIL because you feel entitled and envious...I understand the feelings - life's difficult for you in the moment and you see a lifeline but there be dragons IMO

It’s not your inheritance it’s your dh and his dbs, it’s nothing to do with you and how it is shared out, your mil would have written the loan in the will if she so wished. It was her business between her son and herself. This is the type of shit Sil would try and pull. Be thankful that your dh gets an inheritance. Disgusting trawling through bank statements tallying up what each brother got.

OP - you and your DH and his brothers may all be experts at filling in forms and working with rules and regulations. So please excuse me - I really don't want to sound patronising. But - as others have said - Probate and IHT have to be taken seriously. Many people do find it useful to seek legal /financial advice when filling in the application for Probate and the (numerous) IHT forms and schedules.

Indeed, before you can file your completed IHT papers, your DH and his brothers will need to decide whether they, as executors, are declaring to HMRC that the money your BIL received (and when) was a gift or a loan. Either way, there are financial and tax implications. In an ideal world a legal or financial professional would talk through these with you all, with actual figures, so that your DH and his brothers would clearly understand the situation they are in, and avoid potential problems .

I would also think that the presence of a neutral, professional, well-informed advisor at important meetings between your DH and his brothers might also be helpful, but that is of course up to them, and you.

I see the same thing happening to me down the line. My mother gave my brother a flat. Our relationship hasn't been great over the years as I've always felt she's favoured him to my detriment and also gave us a terrible childhood as she decided to stay with my father so I have a lot of resentment. We haven't spoken in five years so I'm guessing I'll be out the will completely. The only thing is half her estate came from my paternal grandparents and my father, none of whom would like me to be written out.

It's not grabby. As the child of anyone you wants what's fair and to know you were treated equally. For me it'll be the final slap in the face when she dies. And of course even though we didn't get on she's still my mother and when she's dead it will be final, yet I won't speak to her after she's done this. What mother does that?

I don't speak to my brother either. He knows what he's done. Funnily enough it was me that needed more help financially over the years as I was a single parent paying London prices for accommodation with barely two pennies to rub together for years when he has no family and few outgoings.

I think it’s fair to say to BIL - had you paid back the loan the inheritance would have been x and ourselves and other sibling would have received Y. On that basis we think it’s reasonable for us to still get Y and for you to accept that you have already had your share. As the amount left won’t cover that we suggest that you take nothing as you have already had the lions share. We won’t ask the estate to pursue you for the remainder owed. If he says no then he has chosen to create a rift as you have been reasonable. He would be the greedy person in that scenario not you. Also how do you know the money was not coerced/ embezzled from Mother? And how is his business doing out of interest?

its nobody else's business whatsoever.

It is if there are going to be tax implications which will affect all the legatees.

Disgusting trawling through bank statements

Have you read the thread?

You really don’t need to specifically mention loans in a will (though it may be wise in practice). If it was unequivocally a loan (ideally but not necessarily in writing) and if the will says “my estate in equal thirds” then the value of that outstanding loan is automatically part of that estate just like the money the bank holds for her in her savings account.

When it’s not quite clear whether it was a loan or a gift, or a gift which the beneficiary hoped to pay back, or an advance payment on a bequest then it all gets much messier of course.

How do you know that your MIL didn't fully intend for BIL to have this money?

Would the bil not have to pay tax if it were a "gift" ?

Well given that the only living witness to events has described it as a loan, which is against his own interests, surely you’d assume he was telling the truth?

Dancing As we have repeatedly said (those of us who are professionally qualified in these things) it is a legal requirement as the executor of an estate to account for gifts etc from the deceased in the 7 years prior to their death. There may be Potentially Exempt Transfers which may be liable to inheritance tax. It is feasible that the gift to the BiL could attract inheritance tax of between 8% to 40%. This must be accounted for under tax & probate law to HMRC. There is absolutely nothing disgusting about OP's DH looking through bank statements, as he must do it. The naivety on this thread about dealing with an estate is incredible.

If the money was a gift then the remaining estate would have to pay tax on it.

That the BiL said this was a loan (once you found out about the transaction with MiL) would make me wonder if there is something in the set up of BiL's business.

OP don't be surprised if as your DH digs further that he discovers that MiL is in fact a shareholder in BiL's business. If so, that is part of the estate and would go a long way towards explaining why BiL wants the contribution from MiL to be described as a loan rather than an investment.

There is a sliding scale of tax paid on gifts if paid within the past 7 years Iluv. That is why executors have to trawl through bank statements and account for it all to HMRC.

HMRC got wise to deathbed gifts some time ago, which is why it is an issue now for the OP. It is very much the business of her DH.

How bloody sad that parents helping out their children when they can, leads to such accusations of being unfair, showing favouritism, the child who received the help being called greedy and so on. I am bloody glad I come from a family where we are all happy for someone to receive help if needed without everyone else feeling hard done by or entitled. I know my parents love us all equally, we all love each other and I couldn't give a shinyshit if my parents give my siblings money when they need it, I certainly don't expect it to be taken out of anything left when they die.

Fengshui thank you for the insight.

iluv the Estate pays the inheritance tax before the balance of funds can be distributed, so OP's DH and BiL2 would both lose an even greater share of the inheritance. If the IHT due was (say) £30k on the gift, all 3 will each inherit £10k less and BiL has still benefited from the original gift. However, if it is a loan, BiL has to effectively repay the full amount into the pot, IHT is calculated and the 3 brothers will each get 1/3 of the loan value less the IHT back (in very basic terms).

All outstanding loans or monies given were deducted from inheritance. Fairest result all round I think.