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.

Just remember your MIL was probably trying to do the best she could. Don't let this influence your opinion of her, however it pans out in the long term.

But this was about funding him to start a business. And it was hundreds of thousands of pounds.

So she helped set him up in business. She may well have done the same for your OH if he had bothered to ask her. And the amount is irrelevant, it's money she had. If it had only been £80k and that was still 2/3 of her savings would you still feel the same?

Oh dear what a shit situation you're in. However I do not think that you could legally claim that BIL has already had his fair share of the estate.

My very wealthy Grandfather did not leave my Dad (his son) and our family anything in his will despite having a good relationship with my Dad and knowing that we were in extreme financial hardship. His wife (my step-grandmother)'s already-very-wealthy-and-privately-educated great-nieces and great-nephews benefited instead!

Try to focus on other ways to improve your situation because getting too hung up on this will only hurt you even more.

These situations are really hard - but your MIL knew about the money and choose not to mention your BIL had the money to anyone or make provisions for it in the will. her money, her choice.

I sincerely doubt some of the people on here would be so self-bleeding-righteous if they were on the lean end of this. Either that, or they’ve all had tens of thousands off their mums at the expense of their siblings, , and are starting to feel a bit lousy about it . . . OP May well have to take her medicine if BiL refuses to acknowledge it was a loan - but she doesn’t have to be happy about it. Why should she be cautioned not to make things unpleasant? Doesn’t sound like he’s very invested in preserving the harmony of the family. So, it apparently wasn’t gross of BiL to get 100k off MiL when she was alive, but is when OP’s husband wants it now she’s dead, and is therefore completely past caring? Maybe he didn’t know it was available? Maybe he was too proud? ‘Grabby’, ‘appalling’ and ‘ugly’ (my favourite), indeed! Have a word with yourselves. And there’s literally nothing disrespectful or distasteful about going over the bank statements: if we hadn’t done that, we’d never have discovered the cheques made out to cash my batty great-aunt was ‘giving’ her curate, ffs. I really feel for you, OP. There’s shabby behaviour abroad, alright, but it ain’t yours. Remember some people go from one end of this shitty life to the other never having more than a few quid to call their own; that you’re still getting a good amount; that your BiL is probably feeling pretty queasy - and move on.

If all three brothers were equally close to their mother, how come the loan to BIL was news to DH?

Legal concepts are a bit beyond a number of people though. Fuck knows what they'd do if they ever had to execute an actual estate and HMRC came calling; or someone queried a loan or raised an equalisation concern.

Liney
Be specific

Yes it’s unfair and shit. Parents shouldn’t show such blatant favouritism.

Did you say the remaining estate (minus the loan) would still attract inheritance tax ie over £650,000? That means at the very least you’ll receive circa £215,000 or have I got that wrong? That might sugar the pill. Correct me if I’ve misunderstood.

In our case, MIL gave SIL £80K to help her buy her first home. This was open although her other 2 DC was upset with her decision and was openly vocal against it. She hasn't changed her will to account for this and my BIL is very hurt at this overt favourtism (DH, being the eldest is plain resigned to it
She probably didn't change her will because her son's believe her money is actually theirs, and threw a hissy fit when they found out she was going to spend some of it.

his wasn’t about helping BIL out of a desperate financial situation. If that was the case, we wouldn’t mind at all.

I think this is part of the problem. Your MIL, during her lifetime, lent or gave her son money. It wasn't up to you to "not mind at all" or otherwise because it was her money to do with as she saw fit and therefor none of your business.

I'd also say, you don't have a clue regarding your MIL intentions regarding the loan/gift or her will. For all you know MIL had decided to write off the loan as a gift, or she may have been chasing him for repayment. She may have meant to change her will to reflect this loan or gift, but never got round to it. Or she may have wanted her will exactly the way it was. You'll never know now.

Given that, the only issue here is whether there is a formal agreement between BIL and his mother (your MIL) in relation to the loan (or gift). If there is not, and he is not willing to admit there was and pay the loan back to the estate, then you'll have to seek legal advice as to whether his admission to you (presumably not in writing) would stand up from a legal point of view. If not, and it is within the last 7 years, the only relevance is in relation to inheritance tax due.

I'd also say, you don't have a clue regarding your MIL intentions regarding the loan/gift or her will.

Surely the fact the BIL has said it was a loan is a bit of a clue!

Sorry missed out the quotes for the first sentence

Sorry I've not read through all posts. Just wanted to say if I were in OP position I wouldn't challenge it. It was MIL's money and who she gave it to is her business.
This will most certainly cause a rift.

My mum has a favourite child and to be fair has already given most of her saving to them. Out of all my mums children I am the worst off. But I am not waiting for her to die to get hands on the inheritance. I've even encouraged her to spend it all.

Surely it's fairly clear cut, the loan was given within the last 7 years, BIL admits the agreement was to repay it to MIL, but he hasn't. This is therefore an amount that needs to be included in the estate, this is the legal requirement for loans and gifts, and given the amounts is not a nominal sum that should be swept under the carpet.

Other BIL gifts could be viewed the same way, which also makes two brothers treated equally with regard to gifts/loans from MIL.

Your DH should add the value of the total estate (including loan amount and gifts paid), settle debts of the estate and then divide the final amount by 3 and this is each son's inheritance. There is legal backing here that this is what should happen and that gifts/loans are still tied to the estate.

BIL's business has had the benefit of interest free startup money, so hopefully he sees this money isn't his to be kept with no consequences.

OP, I don’t think you’re being unreasonable. Your BIL has admitted it was a loan. The Will does not state that any Ioans convert to a gift on death of MIL. Even though no evidence of the loan, your BIL’s admission should be sufficient and the loan needs to be repaid to the estate. Or the executors could agree to set off loan against BIL’s inheritance.

If BIL back tracks on admission of loan you would have to decide whether to take legal action and it would then become contentious.

Hopefully it won’t come to this as your BIL already admitted it was a loan so the debt still stands. He may not have been in a position to pay it off before but now has no excuse.

The executors including your BIL should be recovering or setting off the debt as part of their duties and proceeding on this basis. It shouldn’t require any discussion.

If your BIL denies admitting to the loan, whether you take legal action or not the relationship will be damaged, in which case you might as well obtain legal advice on your options.

Will be up to you whether you choose to take formal action.

Hopefully it won’t come to this. Your BIL might be expecting the loan to be taken into account now it’s been uncovered but be ready for a dispute just in case. As an executor your husband has a duty to recover loans and pay debts/tax before distribution of the remainder of the estate. And your BIL has the same duty as co executor. Awkward as it may be, they need to address the loan directly.

We have had a similar experience to you OP .it was excruciatingly painful at the time and still is to some extent as sadly it has affected my DH perception of how his DF in this case felt about him . Although nothing in writing sib who had benefited readily acknowledged that the loan sum should be deducted from his share of the estate. It was the decent thing to do and I hope your bro in law does the same - good luck sorting it all out.

@hoopyloopy2 you can do a search on BiL's company at Companies House. What you are looking for is the Memorandum of Association which will detail shareholders.

If MiL is a shareholder (which given that the money was to start a business wouldnt surprise me in the least) then what your DH & BiL will have inherited will include an interest in first BiL's company.

This may go a long way to explain why first BiL wants the money to be described as a loan .

Your MIL's money was hers to choose what she wanted to do with. She didn't have to give/leave any of it to anyone. I know it seems harsh when there are life-changing amounts at stake, but the ethics remain the same whether it's £3 or £3m. She didn't owe your DH or his siblings (or you!) anything. IMO if your BIL is decent about it he will allow this loan to be taken into account, so an appeal to his better nature might work - but whining about what's fair or not fair isn't a good look. And it's not worth losing more family over. Sorry to sound so blunt but bitter experience talking here. Honestly I think your energy would be better spent on improving your career/salary and finding a new job for DH. Also read/re-read Bleak House .

OPs dh May not want to have a relationship with his brother after this if he doesn’t do the morally correct thing. I know I would struggle.

We had something similar once. Will split three ways, 20k had been loaned to one member of the family. Well it wasn’t really a loan it was given to be put in her bank account with the idea of hiding it due to inheritance tax reasons......I wasn’t involved in this and the whole estate never was over the threshold anyway. But the elderly relative was very clear (verbally) to everyone several times....”I’ve given 20k to x to look after for me, when I die she will put it back in the pot to be split up”

But of course x refused and there was nothing in writing. Funnily enough we don’t speak to x anymore. I hope the 20k keeps her happy. Personally I couldn’t rip my own relatives off like that.

LassoOfTruth I agree with what you are saying but I think the problem is not what she has done with her money in her lifetime but what is actually her money now that her estate has to be settled. Was it gift, loan, investment? Each have different implications both for inheritance and tax purposes.

Without paperwork its simply hearsay. Money could have been given as gifts and no way to prove otherwise.

Well, yes, but since BIL has acknowledged that it was a loan, that's pretty strong evidence that it was.

Gnome, true, good point. Best thing would be to sit all the siblings down together and to try to work out as a family what is the true situation/what would make no-one feel hard done by going forward. It's really hard though and requires pretty frank discussion of tricky (and sometimes emotional) stuff. You need everyone involved to be honest and BIL might not be! I wish you luck OP.

A previous pp makes a good point. How is that money taken into account in your BIL's business? Would he list it as a loan on tax forms?

This his why you need proper legal advice.