Inheritance -Family money?

[ZekeZeke]

Example:
Married 25 years, no mortgage both work.
2 adult children in University still living at home.(both working part time).
Widowed MIL dies. DH inherits £200,000
Is this family pot money?
DH Money?
DH and DW money?
DH ans DC money?

@jm9138 you make it sound like other’s deliberately try to disadvantage you by investing in their own family. I can’t imagine ever not working and providing for my children and ultimately grandchildren. Some people are hardworking and want to share it with their family only. I have paid a lot of tax along the way. I resent the government trying to claw as much as possible of family wealth back. This government has wasted so much of tax payers money and crashed the economy. Family first for me!!

We'd probably work together to maximise it for our future. It'd be a mix of mortgage, savings, pensions and investments for us, although we'd likely put 10% aside for once in a lifetime style trips.

That is in line with our general ethos towards money though. Last time my husband came into a lot of money (£300k lump sum from selling a share in a business) we paid off the mortgage, did up the house (new kitchen took a chunk), bought a car outright (£26k, we intend to own it for 10-15 years!), we put £30k into an easy access fund for emergencies, and put £30k into each of our bank accounts for each of us to invest.

I think this thread probably indicates the disparity of what an inheritance might mean to the family. Legally, it belongs to whoever inherited. Ethically, if you're married and both on the bones of your arse I really doubt anyone would be happy seeing money that could have paid off the mortgage and got all the bills paid to date spent on a unneeded flashy car! But if you have enough coming in day to day, the tolerance for spending it on oneself is probably higher.

I still think though - I can't imagine what I'd spend that kind of money on that didn't also benefit my husband. Not because I'm innately selfless, but because all the mega expensive things I might do with it (mortgage, massive holiday) would benefit him as well! I would be angry at myself if I just frittered away money that could have otherwise been life changing!

Been with DH for 15 years only married for 2- we always maintained seperate finances as we met in our forties. I have inherited a large amount of money which is viewed as mine ( DH doesn't have direct access to it) but he benefits to the point that we both took early retirement and I bought our latest home and car and am paying for the (significant) property refurb. I'll also pay for a holiday and eye surgery for him this year. Works for us and though he loves the new house he's not that interested in my money

Legally, it belongs to whoever inherited.

I don’t know what this “legally” means. The will, a legal document, leaves money to an individual (s), in this case a married man.

If the couple divorce, a court may consider a spouse entitled to half the inheritance as part of the matrimonial assets. It could be a matrimonial or non matrimonial asset depending on the situation. To argue for inheritance as non-matrimonial asset you have to keep it in a separate account in your name, don’t use it for family etc. If it’s a property you’d need to not live in it or use it for holidays. If the marital pot can be divided up equally without touching the inheritance then it will. If not, the spouse may be entitled to claim on it.

I'd give the DCs £100k each as a big deposit on a starter flat for both. If they can't get enough of a mortgage for the remainder from their part time jobs I'd encourage them to buy 2 beds so they can let a room and get a BTL mortgage.

From a legal pov I would assume it's joint money, as are all marital assets. If DH and DW were to divorce after such a long marriage, the starting point for the split would be 50/50, with a possible slant towards more to a partner if they had given up career for raising children.

You assume wrong unless the owner of the money chooses to amalgamate it into joint assets. If it remains in an account in the sole name of the heir it remains outside marital assets.

You’re both right - matrimonial assets and non matrimonial assets.

If it’s been used to buy a house, holiday home etc, or the home was inherited and used, it’s the former. If it has been ring-fenced it could form the latter. - That’s ok as long as there’s enough to divide the pot equally without touching it. If not, then the overriding principle will be division of assets based on equality and need. So where there is a need, to achieve fairness, there is no absolute ring-fencing of assets.

That’s what I said. In fewer words. 🤷‍♀️

You didn’t say that even “ring-fenced” non matrimonial assets will be called on as part if necessary. Nothing is “outside” marital assets completely depending on the circumstance.

jm9138 theres a bit of a lack of awareness on this thread that people’s circumstances are so different and that life chances are determined to a great extent by how much money the family you were born into happened to have. And how lucky some of us are, and make no mistake inheritance really is simply luck. Reading it has made me feel sad too that such inequality exists. It’s just wrong

It’s really not all luck though- some people will have saved and invested and saved some more to be able to pass an inheritance onto their children. Others with the same wage will have spent theirs on house renovations, cars and holidays if this thread is a good indicator of what people want.
Don’t blame those who have been sensible with money! Most inheritances aren’t worth millions.

Difficult one. I would tend for me to see an inheritance as being owned by us as a couple but then we have always pooled all money. On divorce if assets have been pooled (paid into a joint account or held under joint names), then generally they are pooled assets and will be considered. Even when they have been separated it can be difficult to hold assets out of a divorce but it is possible.

Exactly this.
I was lucky to have an inheritance, which means that we have a small mortgage, which means we have a nice life without too much financial strain, which means we have money to put aside and build so that one day our children will also have these opportunities.
My children won't have an inheritance by accident or because I took anything from anyone elses child, but because I took my own good luck (which was also on purpose by my grandfather, I'm only lucky to be his granddaughter) and decided to nurture it and grow it into to "good luck" for the next generation. Many other people would just spend it all having a bloody good time, as is their right.
I resent the notion that looking after your own children is some sort of moral zero sum game. We aren't millionaires, just normal people trying to look after our family 🤷🏻‍♀️

This is your DHs money for him to do with as he pleases. He can of course choose to share it.

@GrannyRose15 and what a lovely husband he would be if he chose not to share it with his wife or children.

I do know of a bloke who inherited from his parents, moved out of his family home and into a hotel. Hedonistically, he blew the inheritance on gambling and having a ‘good time’ including prositutes. When the money ran out he went home. Wife took him back 🤷‍♀️ I hope some of your husbands who have inherited and you firmly say it is his money, are a bit more thoughtful.

@Perky1 and from some of the responses on here that would be absolutely fine 🙃

Obviously it wouldn’t be fine but I can’t help thinking he didn’t suddenly turn into a waste of oxygen immediately after he inherited. If you marry someone like him you can’t complain when his behaviour is in character.

Just for context I have a close friend/neighbour who inherited a reasonable late five figure sum from an aunty recently and has not even told her husband. As far as she is concerned this money is hers and no-one else’s. I know a number of women who would also say an inheritance they receive is theirs. The logic is that this is a once in a lifetime opportunity for them and they want complete control to do some dreaming.

In our house all money is family money (we both work, with different higher earner at different times). So any inheritance would also be family money. However I think the person inheriting would have slightly more of a say than the other person, given they are also bereaved.

DH and I are pretty aligned on financial thinking though, so we'd probably want to spend some on a family holiday, pay off our remaining mortgage or in your position, save half and split the other half between DC as a deposit contribution for first property. Probably a little treat for the inheritor too. I can't imagine one person in a marriage wanting to live at a different level of luxury than their spouse!

I’d say a marriage is pretty poor if assets aren’t shared.

On the contrary I don't think anyone is trying to disadvantage me or my children by investing in their own family. Indeed if investing is making them well functioning and productive members of society then that can only advantage everyone. I also don't think anyone is thinking leaving my family money is to maintain and entrench inequality. People don't think like this on the whole.

I don't think that a massive amount of unearned income received by an individual meaning that they can outcompete someone who has worked hard for the money to obtain a scarce asset such as housing is 'investing in a family' though. All it is doing is allocating pre-existing assets based on birth right. There is nothing new able to be done or being produced.

We often hear people saying that they don't want their children working hard like they had to and be able to enjoy life. But then who do they think is going to be doing the work for their children?

Yes life is unfair and if you are on the positive side of that unfairness you will say 'suck it up'. Unless you are an absolute stoic then if you on the negative side of the unfairness you will be a bit miffed and point it out.

As for inheritance tax, I do find the arguments against it a bit ill thought through.

Whilst I might not like the government and think they waste money, the overwhelming majority of government spending goes on pensions, health and education and the issue is in most of these areas not enough money is spent and the decisions on spending in these areas is largely efficient.

The argument that the government is taxing people twice with IHT is just nonsense. The first £325,000 is exempt. Very few people will have actually saved £325,000 through just savings from their earnings. The majority of an estate over £325,000 (if not the majority of any estate) will be based upon property where prices have risen independently of what the person who died paid for it (so just a capital gain) and through investments (again a capital gain).

The person who receives the inheritance does not pay tax on the estate - it is the estate that pays the tax. Even if the person inheriting was the one who pays the tax it is unearned income and I cannot see a logical reason why unearned income should be taxed differently to earned income (well, I can see a logical reason why it should be taxed higher than earned income but certainly not lower).

I don't see a lot of evidence that entrenching inequality through resource allocation via birth right result is optimal either socially or economically.

I don't see a lot of evidence that entrenching inequality through resource allocation via birth right result is optimal either socially or economically
Is there evidence that stripping assets at death and making everyone equal at the the starting blocks motivates people to work/strive/save/invest?
I don't think I'd bother if I couldn't pass a legacy on, what would be the point? Can't take it with you after all.

I can't really believe you are saying that seeking equality of opportunity at birth (however hard that would be to achieve) so that people get the rewards they earn is somehow going to mean people are less motivated to work.

Your proposition that you only work to pass a legacy on is a little a bit odd. You presumably work to be able to do things that you enjoy doing, and your legacy passed on could be well brought up children or a charity or business you founded, a piece of art, setting up a trust for scholarships or any number of good things that would help your children live in a better society. I don't really see the 'only reason I work is so my offspring don't have to' argument being true really. It implies that striving itself has no value and if you follow it through it means that the children you pass the wealth onto does not have to work (or not work as hard). So what are they getting up in the morning for? Just to enjoy life? But then you could have done that yourself but then you don't seem to want to as the only reason you work is to pass something on not to enjoy life.

I can see a strong argument that we want better lives for our children than we had ourselves. But my own view is that this should come from nurturing our children to learn more, be more skilled, and understand more.