Inheritance going to 1 adult sibling

[Gafan]

I just wanted some advice from people who are not close to the situation to get perspective.
I am eldest of 3 siblings in our late 30s/40s .
My parents don't have very much money but have some in the house. Short story dad has a limited illness and mum has decided that she is too old for full time work as has been breadwinner for 20 years and has worked very hard.
Youngest sibling has wife 3 kids and got himself into lots of debt and basically can't get out of it . Unsure of the reason as parents are being coy about it however they have 3 kids under 4. My brother has had some issues with his own business and some mental health around that.
Therefore parents have decided to move in with my brother and family and the money that would have been split 3 ways from house they are giving it all to him to get him out of the debt.
Myself and sister are comfortable sister is very comfortable however I don't have 40k kicking around!!
So my point is are myself and sister in the wrong to be p....d that my parents have done this? Brother has not got in touch either.
My sister doesn't have a very good relationship with parents anyway and this is just the cherry on top of the cake! I think there relationship will be almost over. I am really unhappy because it's going to divide us as a family. I don't trust my brother that he will do it again and then there all screwed and will expect us to bail them out.
Also my dad was very poorly when first diagnosed and both myself and sister financed them with no payback ( didn't want it) brother was only teens so couldn't help.

Any advice would be helpful

What an awful situation. I don’t think I would be concerned about the money so much (and god knows I could do with some help in that area). My concern would be that no one has thought through the reality of how this will work.
For your parents they will be expected to be on call childcare and they will never get a break from that, very quickly it would be taken for granted. If the arrangement does not work well they have no second option as they have given away their asset. Would their pensions cover rent on a small place?
For your brother and SIL have they looked beyond the immediate advantages to think about their responsibilities to your parents as they grow older. The care the may need to provide, are they ready to do it.

For your part I would want to chat with my brother and make sure he has taken on board his responsibilities in the arrangement and ask what would he do if they have a falling out or tense atmosphere and to ask with good will that done kind of legal agreement is made to reflect your parents contribution to the house.
I would also talk to your parents about power of attorney and make sure you are named.

This decision seems to be to bail out the son again who has a habit of getting into debt…

These are good ideas.

I think the inheritance aspect of this is OP not seeing the wood for the trees actually. The DPs here clearly don't have a huge amount of money. They appear to still be below pension age, with one disabled and the other no longer feeling capable of working to support them. Meaning their modest assets always stood a good chance of being used up before their death anyway, even if they hadn't done this. It's the wider situation that's the concern, and it's a mess.

The threshold for IHT is much higher than anything they will be getting. So that's one thing they don't need to factor into the equation.

Your parents need to put their names on the deeds of the house, so that your brother can’t remortgage behind their backs…. They could technically all end up homeless!
sounds like your brother lives beyond his means and maybe has an addiction??… gambling perhaps??? Either way your parents are daft not to protect their investment in the house….. what happens if brother and SIL decide to divorce and the house then has to be sold and split? What happens to your parents then??
I would put all the scenarios to your parents and tell them it’s their decision but you both (you and your sister) are extremely frustrated with the situation and the fact they’re not protecting the equity from their house.

my brother has done similar with his inlaws. He lives with his wife and in-laws and basically it had written up that half the house is theirs (early inheritance) and the other half is the brothers who doesn’t live there… as they’re mortgage free my brother and his wife pay the other sibling an agreed amount every month, and it’s all worked out properly that they will pay til XX year to literally buy the sibling out of his half of the house.
Your parents should’ve done similar to this, they need to protect their £100k.

Something not dissimilar happened to me. Parent gave vast amounts to pay off brothers debt splitting the remaining of hardly anything between me and my brother. I knew this before my parent died. I took the view that it wasn't fair, I didn't like it but it wasn't my money and I needed not to let affect me because I was wasting my time and life getting upset about it.

They seemed to have moved in very quickly. Have they sold their house already?

I would sit them down and say the following: Bad idea and as a friend you would advise against them for numerous reasons. As their child you feel incredibly disappointed that they are favouring your brother financially over you. You have never had their financial support as an adult and you never will. If they dispute their financial favouritism tell them only a will where the proceeds of the house will be split three ways and the house not being sold will convince you otherwise. Failing that they can spread the proceeds of the sale three ways in their lifetime, which you won't advise them to do as they might needs this for care costs in future. If they don't do any of the above you are hurt by their financial favouritism andas a consequence you will not: 1) listen to any complaints about the new arrangements 2) Not feel responsible for any health and care needs they might have in future. You regard that as your brothers job given how much he profited financially. You will not step in should he fail. I would make this absolutely crystal clear to them and I would not budge from these boundaries. Then I would take a giant step back and disengage from the disaster which will unfold. If people make their beds they have to lie in them.

Same kind of scenario happened to me. It hurts & it's hard, but you just have to suck it up I'm afraid

@MargotBamborough the point I was actually making is, if there is no will then it will benefit OP as any assets are split equally regardless of verbal intent by their parents. Apologies if this wasn't clear.

'If I were your mum's friend, however, I would caution against removing her own safety net - what if she could no longer stay with the brother for any reason? Where would she live if she's past working age and has given him all her money?'

Not saying your brother is at fault for his debt, things happen, but with MH difficulties in the mix it could so easily go pear shaped for your parents.

I wouldn't be bothering about an inheritance, I'd be more concerned about parents' welfare.

Same with me, and I did the same as you. Much more peaceful

"So my point is are myself and sister in the wrong to be p....d that my parents have done this?"

You are not wrong and not being unreasonable. My family went through a very similar situation more than 20 years ago. Our parents gave all of an inheritance to my sister and her hubby (4 kids) so they could pay off their home (already in arrears), on the proviso that when parents needed to, they could move in with S and BIL. S and BIL spent a good portion on new furniture and 12 months later bank was talking repossession of the house. After dad died, mum had major falling out with sister, and ended up staying in parents old house while it fell down around her. Our brother wanted the old house (but couldn't afford any repairs or to buy it out - he expected to inherit it) so in the end I had to make arrangements to sell the house and for Mum to move to a social housing unit. Brother got everything in Mum's will (cash remaining from sale of house minus living expenses).

You can see how many problems might arise from your parents 'solution'. Others have pointed it out here. Your parents have every right to spend their money how they like (no-one is entitled to an inheritance) HOWEVER you have every right to draw your own boundaries. First, make a list of all the things you have been advised might go wrong or that you can see for yourself that might go wrong. Talk to your parents about these concerns (in private, not with either sibling involved) and ask how they intend to protect THEIR assets. Mention in passing that while you have helped out in the past, you won't be able to in future and that they will need to rely on your B and SIL for all future care.

Second, if this does not give you the required peace of mind, see a solicitor. Discuss it with them and have them write a letter to your parents listing all the legal concerns and point out to them that you won't be able to help them out financially in future. I know that sounds extreme but the implications of your parents plan are extreme. Having it in writing from a solicitor might be the jolt they need, and they can show it to anyone they like. No doubt you will be the worst in the world but you'll be the worst in the world if they go ahead and any one of those foreseeable things goes wrong. At least you are giving them fair warning.

Kind regards,
Me Too Over Here

I do think (ideally this should have been done pre parents moving in) the bil and sil need to sit down and go through their finances with a fine tooth comb and I also think your parents need to do the same.

Both of these couples don’t look like they are making financial decisions that are in their best interest.

They both need a budget they can stick to otherwise your parents and your brother and his wife and children are going to be royally screwed over without any back up.

I can’t believe the naivety of your parents who haven’t put in place anything that will protect their future.

Even if they believe families don’t do the dirty on each other, there are so many other issues to consider.

Whilst your mum thinks that part time work is all she wants to do, has she sat down and gone through her finances

Presuming that the studio flat has a kitchen. Has your brother had through the new rateable value for the house and who will be paying the difference.

If your brother is desperate to pay off debt where is the money going to came for the extension

Have they got planning permission, building regs sorted

Make your parents aware that you won’t be bailing them out and that your brother and his family will be expected to (and will have to!) look after them in old age/poor health as your parents won’t have the money to do this themselves anymore and neither will you. Then forget about it - which is much harder said than done I know. Sorry this is happening @Gafan but it is their money to do as they wish. They just need to understand that there are multiple consequences to their actions - not in a nasty way but in a common-sense practical way. Or maybe this is their agreement. Unless they lack the capacity to make the decision then they are free to do as they like, however stupid and I’ll-thought-out you may feel that might be.

This has happened to me, diff reasons and 7 figures and only one sibling. But it is never the child's to expect. You and your sister have each other. That is what is important.

I would assume my brother as the sole child with the right to the parental house (or funds from it) will be responsible solely for their care too, and will just make myself available for a visit and a chat when required.

Update
Parents have moved in. They have regrets but it's done now. They are building the extra dwelling and the building regs fire officer are all on it so should be done fairly soon.
Lots of mixed messages I don't think my parents know what to say to which sibling.
I have told them how I feel but I don't want to fall out with them at the end of the day they have now made their choice and have to live with that. It's been very stressful and my mum is just unpaid babysitter but she's not going to say no to the kids same as she wouldn't to mine she's a good nan! My sister's relationship is pretty non existent with them it's always been very poor this is the straw that broke the camels back!!
Thanks for all your messages it was nice to not feel alone and validated my feelings too.

If dear parents dies within 7 years DB will be liable to tax on the gift made prior to death