Inheritance issues - part 2. AKA: Is FIL being manipulated and ripped off?

[ThornAmongstRoses]

This thread is for those who helped me on my previous thread about my FIL upping sticks, handing his a big chunk off his money over to his daughter to ultimately live in her garden. Sorry but I don’t know how to link to my previous thread.

The update from what happened last night when we confronted FIL with our concerns:

“And it turns out that SIL is 14 weeks pregnant.

Apparently when she and her partner first suggested the Cabin idea 6 months or so ago and FIL declined and said he was happy to buy somewhere so he wouldn’t be under their feet, she told him not to be silly as the arrangement would work out really well for all involved as she and her partner were hoping to have more children in the future but that they wouldn’t be able to unless they had a bigger house anyway. SIL then told him how much it would mean to her and how wonderful it would be for FIL to be around to watch new grandchildren be born and see them grow up, liked he’d been around when DB (my husband) had had his children. FIL then agreed that it would be really nice to be around for early days and from then onwards, and agreed it was something he would happy be to look into.

Anyway, it looks like SIL took that as him being board and to cut a long story short, she told FIL she was pregnant about 3 months ago but told him not to tell anyone as it was such early days (her prerogative so that’s fine). Anyhow, it appears that is why FIL put his house up for sale and sold it quickly so the new house could be bought in time for the baby’s arrival. Bit strange really seeing as the baby generally stays with the parents in their room for a good 6 months or so, but that’s the story FIL gave. Stinks of manipulation to me but FIL is clearly happy with what’s happened and he does seem excited about the idea of being around for the new baby.

We asked him what would become of the Cabin if he passed away and he said that wasn’t his problem (with a smile) and said that SIL and her partner could do whatever they liked with it.

He hasn’t looked into anything legal as he didn’t think it was necessary. We did advise it (and gave examples from this thread as reasons why he should) but he told us we are worrying unnecessarily. So that’s his choice to make.

We asked him about the time scale of him staying here which was slightly awkward but he promised us again he would only be here for a few months. We said that was unlikely and explained why (all the issues raised in this thread) but he said things would be moving along quickly and if there are any delays he would move out and rent somewhere near us until the cabin is built. I asked why he wasn’t going to rent over there to make sure he liked the area, but he said he wanted to spend as much time as he could with us before he moved away.

So yes, he seems to be going into this with an awareness of all the ins and outs and is happy to go along with it all, so that’s that. It’s all his decision and if he doesn’t take legal advice then that too is his choice.

We have told him we won’t be taking the offered £25k but thanked him for his offer. As has been said on this thread, he’s probably going to need a back-up fund.

FIL left about an hour ago and me and DH are off to bed now with a film as we feel drained. I just wanted to update you as I’ve had so much help and advice from you all.”

I had a PM this morning from a poster who had wanted to respond to my post last night but realised the thread was full so answered privately instead.

Anyhow - I just wanted to start a second thread as I’m sure others have lots of further advice based on my FIL’s revelation, and also because I doubt this is the end of the matter.

Me and DH struggled to sleep last night but we see it’s a done deal now and due to the pregnancy we know FIL isn’t going to back out the deal so now it’s a case of trying to get him to protect himself as best as he can.

That should be spent his last years.

Id expect the social services to tighten up on that bit of wooliness over the next few years, given the current crisis for care funding.
Its quite a move handing out some cash you have 'spare' as some people may do, to selling everything you have and handing it over.

Yes, it is the "wooliness" that gives the LAs such wide ranging powers, and it is coupled with the idea that we should all reasonably expect to need some level of care in our latter years especially as we're in general living much longer and are prey to various age related diseases.

There are a couple of legal challenges recorded based on the six month rule people thought existed, but in practice the LA have the right to challenge this to protect the public purse.

"and it is coupled with the idea that we should all reasonably expect to need some level of care in our latter years"

I mean that's hardly a radical thought is it?

If it is signed and dealt with by solicitors, and more than 7 years have passed with the gifting, I don’t see that the LA would have a case. The DF would have been living there after all and enjoying the benefits of the life which is a depreciating asset.

Lodge not life

@Stratfordplace

If it is signed and dealt with by solicitors, and more than 7 years have passed with the gifting, I don’t see that the LA would have a case. The DF would have been living there after all and enjoying the benefits of the life which is a depreciating asset.

Why seven years?

No it is fairly realistic. But as a species i think it's hard for some to imagine and a bit unpalatable to think of yourself riddled with dementia or another degenerative disease when you don't class yourself as old eg only 65 and fit and well although it is a real possibility. Plus the idea that you might be a "burden" to your nearest and dearest.

It's a classic example of having to hold two conflicting things in your head at the same time, and planning your financial affairs accordingly at the same time. If you don't ever need care, brilliant. If you do, you're in a strong position if you've thought ahead to make choices about how and where that care is provided. The real losers are those without assets at the mercy of the LA who will aim to provide that care as cheaply as possible. And a knock on effect is that care homes use self-funders to subsidise LA residents to a degree, hence the high price of care in private run residential homes.

Again, apologies for the de-rail, as this is just one small part of a picture with much more immediate things that need addressing.

7 years is an Inheritance tax rule ; not the same as DDofAssets investigations which can go back much further. just the way the law is.

To gift money as in a Lifetime gift you have to survive 7 years. However, you may be able to do it another way but I’m not sure.

Apologies as I've not read all the replies on here but I'm not even sure you are allowed to live in a cabin in your garden. We have one and we are not allowed to use it for a permanent sleeping option nor allowed a tv aeriel/satellite dish!

I smell so many rats with SIL!

Also, though not entirely relevant to the OPs situation, if the subject of a LPOA wants to give a substantial amount to the LPOA, or indeed offer a loan, it has to legally drawn up and passed to the Court of Protection for approval or not. Small amounts such as habitually given birthday or Christmas presents for example, are exempt, but anything which might deplete capital that should be ring fenced for care costs, even if only potential at the time will be scrutinised.

There is a certain irony in that he sees renting as wasted money yet is happy to sink £90k into a depreciating asset....

I hope it all goes well chatting with FIL, but you might want to prepare yourself for him not listening or dismissing everything you say.

Even if he may have doubts himself, it doesn't seem like he would share them with you. He was prepared to make these major plans behind your back and then lie to your face about wanting to buy another property in your area. You say you have a really good relationship, but I wonder how true that is now.

I've nothing to add except I just hope he can be brought to see sense.

@2beesornot2beesthatisthehoney

Planning will be needed if its going to be slept in

This 100% This is a given .

The get out clause for the company is that the cabins they supply might be for other purposes- yoga room, games room.,etc all incidental to use of the main house.

Yes. Friends have a cabin, one bedroom, a bathroom and a room with a kitchen area, so three small rooms, it is not large. They have had to apply for planning permission and they have been granted permission for a holiday let but not residential.

OP, I am so sorry you and DH are having to go through all this. I completely understand how hard it is to sit and watch DP get shafted by a sibling - wanting to help parents and not cause an everlasting family rift at the same time.

I think you should write a list on paper or email and give to FIL. Tell him that whatever he does is his choice however, you have huge concerns about the plan and have made the list. Tell him if he wants to discuss any of these in more detail then you are happy to do this with him or will help him to find a lawyer or someone independent if he would prefer. Once you have given him the list you will never bring the topic up again as its his business however, you hope for his sake that he has a long hard think about what he is doing because the concerns are real and you care about him a lot and don't want to see anything bad happen to him.

Ideas I have for the list however, there are tones of concerns on the two threads...

If FIL definitely wants to move near to SIL, he must maintain some ownership rights to his capital - can his name be put on the house?

• If not, SIL and BF can ask him to leave at any time and he will be entitled to nothing.
• If SIL and BF break up, he will be entitled to nothing.
• If SIL and DF ever more again, he will be entitled to nothing.

If FIL eventually ever requires care home, there could be a battle with the council over why he gave his entire net worth bar £25k to his DD. They may dispute this as deprivation of assets and insist the house is sold.

Is planning permission definitely not required for his chosen cabin type? (we looked into this as an option on my house's land - initial cabin did require planning permission and we were told it would be refused, we then chose a cabin type did not require permission to build however, we did need permission from council to have someone live in it permanently and were told this would be refused. There was also an issue that at the cabin site on my land, there was not enough room to turn a car - we did not believe this to be correct but the council can be difficult. You can contact the planning officer for the council concerned via phone or email and they will be able to give you info. FIL should definitely do this. It costs nothing). What happens if planning/permissions are not granted?

FIL and SIS BF have a difficult relationship - does he really want to live in their garden?

Why put himself at risk of homelessness when he could buy a small house near SIL, free up cash and give SIL some cash towards a bigger house - not £90k but maybe £25k???

@Mummyoflittledragon suggestion of a house with a proper annex good idea but FIL needs his name on the deeds.

You might not want to mention it but I would tell FIL that DH feels totally deceived.

Best of luck with the chat .

I would emphasise the options about different ways of moving to Skegness and somehow securing his 90000 share in the SIL house so he owns a share . Consider that as his security for ALL the grandchildren .
Say if he won’t listen to you he needs advice from a solicitor . And again why not just buy a smaller property on his own in case it does not work out . He is still young . He should be enjoying his money . Not giving it away .

@MistressoftheDarkSide

7 years is an Inheritance tax rule ; not the same as DDofAssets investigations which can go back much further. just the way the law is.

thanks for pointing that out, I realise now that I had unthinkingly conflated the two things, probably others will too and LAs will exploit the confusion to their own advantage! This has given me concerns about my own situation, several years ago my parents decided to give a regular small monthly allowance to my adult children...I don't know what prompted this but I sense that the real purpose is to make ME feel beholden to my parents. Could the local authority pursue my children for this money in the event of my parents needing residential care?😮

Dasher
Yes. This is what I said way upthread. The house I posted may not be perfect. But op’s fil could buy it outright, rent a portion at a reduced rate to his dd and she could rent her property out. I know there will be income tax implications but that way everyone is protected. His property can be sold when he needs to go into care. Or perhaps his dd / partner can sell their house and buy him out if she has the funds.

No way should he pool his resources and buy a property with them either.

As regards your DH's relationship with his DF and DSis (and yours), for now I'd be focusing on the hurt caused by him lying to you both. You and his son asked him about his plans when he put the house up for sale and he lied. I (or particularly, your DH) would be asking him why he did that. And ask him to imagine how you feel when you've been seeing him every week for the six months he's been planning this, and he never said a word. I'd absolutely push him for an explanation for that.

That's the bit I find disturbing. Apart from the fact that it shows that he knows on some level that it's a bad idea, he needs to understand how he's undermined his son's trust in him.

@Miasicarisatia
A person can give 3k away tax free per year. A small allowance is just a gift. It doesn’t sound as if your parents are purposely disposing of all their funds.

Was just about to respond to @Miasicarisatia and thanks @Mummyoflittledragon for saying what I was about to say. If you do have any concerns, just run it past an appropriately qualified solicitor to set your mind at rest would be my advice.

thanks @Mummyoflittledragon🙏
(just me being paranoid🤦‍♀️)
we need proper ways to accommodate our increasing longevity, a culture which encourages all of us to think ahead and think clearly.
Not a culture where people end up making convoluted and precarious deals with their children!