Ethical quandary - what's fair?

[AnnaQuayInTheUk]

It's looking as though MiL may have to go into a care home. She's a self funder as she has savings and a house.

DH has POA as MiL lacks capacity to deal with financial matters. He is trying to work out what is the fair thing to do re using MiLs savings or proceeds from the house sale first.

MiL and her late husband married 30+ years ago. They each owned a house, sold their respective houses and bought a joint property. They had a shared account for everyday living but each had an individual savings account with the money each had left over after the sale of their original homes. MiL house was worth quite a bit more than her husband's, so her savings are bigger than his were.

MiL and husband each have one child. Their wills state that, on death, the house and any joint savings pass to the surviving partner but the individual savings go to their individual offspring. When MiLs husband died, his savings went to his son. Both wills say that, after both of them have died, DH and his stepbrother should inherit the house and any joint savings equally.

DH gets on well with his stepbrother. DH thinks that, to fund his Mums care home place, he should use her individual savings up which will find a place for 2 -3 years and, if she's still alive after that time, the proceeds of the house sale should be used. He feels that it would be unfair to his step brother if the house sale funded the care home place first, as DH would eventually get MiLs savings in tact. I think that, as his step brother has had his Dad's individual savings pot, DH should have his Mums.

Obviously MIL might live for years and all the money, both from her savings and from the house, might be used up in her care. And that's absolutely fine. But in the meantime, DH needs to make a decision.

So
YANBU - the money from the sale of the house should be used to fund the care home before the individual savings are
YABU - DH should use up the individual savings before touching the 'joint' assets

But step brother only got the funds because his dad didn’t need a care home is that right?

my instinct is your husband is being fair

Cash savings first. Apart from anything else it’ll be easier to access the savings than selling the house. Somewhat different situation but that’s what I did.

I'm not sure why you would be trying to change your husband's mind when he appears to have interpreted the intention of the will correctly.

While we aren't privy to the exact wording of the will, from what you've written it seems specific in terms of the house (it's definitely it's a house) whereas it's any savings (i.e. what's left).

If MIL, didn't need care and decided to spend the savings, it's still the intention that the house is split following her death i.e. implied savings used first.

Other than for monetary gain, why would you suggest husband does anything other than what he is suggesting?

What do you think the "spirit" of the wills were when they wrote them together in better times, what were mil and her husband trying to achieve?

In the absence of any big discrepancy in wealth within the family or complicated back story, my instinct is to use the house sale first, but actually I think I'd want to do as mil intended.

Of course the cash savings should be used first. The savings aren't your husband's, MIL is still alive! You should use them for the benefit of MIL.

The will is irrelevant- she is alive. All her assists are hers.
Her money should be spend on her care needs and where it is spent from will depend on timings and accessing funds.

I think your husbands approach is right.

I'm not sure I agree with pp. Although the will is not relevant here because MIL is alive, I think it is sort of a "clue" as to how she and FIL may have been thinking about money. The house has already been sold so in that sense, this isn't about using liquid assets before property. It's more about which "pot" funds her care. I think the fact that they each kept individual savings accounts ring fenced for their children says something about their views. The house is surely her home, and as such the care home is her new home so to me it makes more sense that that money continues to fund her living and care arrangements and day to day expenditure. Although, I think if he is unsure about it then it would be best to get legal advice.

MiLs savings first.

I think that, as his step brother has had his Dad's individual savings pot, DH should have his Mums.

But his mum is still alive so it's not his money to have!

Savings first then house; his step brothers dad didn’t need to be in a care home

It has to be savings first rather than a joint asset - the savings are going on her care as they should and then the house divided up later.

Your DH stepbrother should get the money from his Dad which was his savings and half the house.

Your DH will get whatever of that is left once care has been paid

I agree with this. Although if MIL’s individual savings were much more than PIL’s were I think that it would not be unreasonable to dip into them to even up the pots.

I'd just consider what's more efficient, and surely keeping the house whilst MIL can't use it is inefficient and means paying out bills and taxes.

Put the house on the market and use the savings in the interim.

Your SF didn't need care so obviously your husbands stepbrother will have more inheritance than him.

If I've understood your OP correctly, @AnnaQuayInTheUk, your MIL and her husband didn't use all of their money to buy their joint house.

So, with some made up figures to illustrate, her husband had 400k from the sale of his house, she had 600k from the sale of her house, and they jointly bought a house worth 700k to which they each contributed 350k, leaving him with 50k in savings and her with 250k in savings.

Acknowledging that the figures are made up, is that how it worked? They each put an equal amount into the house they bought together?

If that's the case then I think your husband is quite correct. They intended the house to be joint and their savings to be separate, as far as possible.

Your husband and his step brother each got/get an individual inheritance on the death of their own parent (the individual savings) and a joint inheritance (the house) on the death of both their parent and step-parent.

Your husband's stepbrother has had his individual inheritance already because his father has already died, and is still waiting for his share of the joint inheritance. Your husband hasn't had any inheritance yet because his mother is still alive.

Your MIL and her husband clearly didn't intend everything to be completely equal. If they had, they would have transferred all their individual savings into joint savings, or each left their individual savings to the surviving spouse first, and your husband's stepbrother would be yet to receive anything. If they had done that, either a larger share of the money your MIL originally brought to the marriage would have gone to her stepson (if she kept her word and left everything to her son and stepson equally) or her stepson would have got nothing at all (if she'd done the dirty after her husband's death and changed her will to leave everything to her own son).

If she had died first, her husband could have changed his will and left the entire house to his son, leaving your husband with nothing except his mother's individual savings.

Perhaps they were advised to keep the individual savings separate to avoid the risk of either son being (deliberately or accidentally) completely disinherited.

So...

With all that in mind, what you are suggesting is that your husband's stepbrother should part-fund your MIL's care from the joint inheritance he is yet to receive his share of, rather than your husband wholly funding his own mother's care from his own individual inheritance.

And since your MIL brought more money to the marriage than her husband and had a larger individual savings pot than him (meaning that, if neither of them needed any care, your husband would stand to inherit more than his step brother), what you are effectively suggesting is that your husband's stepbrother who was in line to be less well off than your husband should subsidise your MIL's care costs to protect your husband's, larger, inheritance.

Now, if your MIL needs care for a really long time, her individual savings might be exhausted and the house will have to be sold and your husband's stepbrother will end up paying for some of his stepmother's care. But from the way they set things up, I think it is clear that they intended this to be a last resort.

Or to put it another way, your husband's stepbrother would not have shared most of the the financial benefit of your MIL not needing care, so why should he share most of the financial burden of her needing it?

TL;DR, your husband is right.

I’m not sure where the ‘ethical quandary’ is as this seems like an absolute no-brainer to me: individual savings before joint assets/savings

Your DH is right

Your husband's interpretation of the intention behind the will is correct. MIL's savings are used first. Was the house held in a common or joint tenancy though? This is why estate and care planning is so important.

I think it's clear what MIL and her husband wanted: that the joint assets be shared equally between their children, but that each child should inherit alone whatever their parent brought into the marriage.

One of them had to die first, given how exceedingly unlikely it is for a couple to die simultaneously.

It just so happens that the husband died without needing care home fees paying for. The question is: is this because MIL cared for him "for free"? If so, I think her care home fees should come out of the house proceeds. If he went without needing any care (lucky bugger) DH just has to accept that that's the way the cookie crumbles. MIL's savings pay for her care.

I think the ethical quandary is because no one knows what either parent would want to happen and how they would have wanted their care to be funded. So it's basically guesswork, which is why I think maybe legal advice is the way forward.

If neither of them had needed care then the OP's husband's stepbrother would have ended up with a smaller inheritance than the OP's husband, because the stepfather's individual savings were worth less than the MIL's.

What you're suggesting would result in the stepbrother with the smaller inheritance paying for half his stepmother's care in order to leave his stepbrother's much larger individual inheritance intact, which really doesn't seem fair.

I think it's likely that they kept their individual savings separate and left them directly to their respective children (i) to ensure that the stepbrother didn't get half of everything despite his father bringing less to the marriage, and (ii) to ensure that the son of the first parent to die wouldn't end up with nothing if the surviving parent then changed their will leaving everything to their biological child.

The OP's mother hasn't changed her will leaving the entire house to her own son, so I think it's clear that she wanted to be fair.

There are so many factors e.g. MIL having more money originally, MIL needing a care home when her partner didn't, her partner's child already having had some inheritance, the will not quite fitting with the reality of the situation that I think that there is no "right" answer as such.

What I would do.
Remember that money is fungible - defined as replaceable by another identical item/mutually interchangeable - so £1 from your MIL savings is identical to £1 from her house.

That being the case and there being no clear "right" way what I would do is consider the estate as a whole paying and the different pots drawing down proportionally.

As an example.
If MIL has 400K in individual savings and 600K of "joint" savings including the monies from the previously joint property she has £1 million.

If when she dies she has £500k she has spent 50% of her estate.

You could consider this being her individual monies reduced by 50% to 200K (going to your husband) and the "joint" savings reduced by 50% to 300K (to be split equally between your husband and the other beneficiary.

I think it's as good a way as any to take account of the various factors and attempt to be fair and reflect the true wishes of the will.

Could the savings be used until they are at the level of the amount step brother received in inheritance and then use up to 50% of the residue from the house and then switch back to using the savings?

That's true, but he was incredibly frail in the last few years of his life and had dementia. The only reason he didn't need a care home was because MIL did everything for him. If she hadn't been around, he'd have possibly been in a care home for 3 or 4 years before he died.

@MissScarletInTheBallroom I don't think it's obvious. Retaining the house and joint savings until after both pass away could suggest to me that is for housing and living costs, presumably for whoever lives longer. The fact they ring fenced savings means it would never have been exactly equal either way. I think unless there is a legal question, it basically comes down to what they would have wanted to happen. That's quite hard to guess as MIL doesn't have capacity. It may be they wanted each son's individual inheritance to be protected for them, and whatever is left of their joint assets to be split equally. But we simply don't know.

Thanks everyone for your views
I'm not looking to change DH mind as he has to make the final decision himself.

DHs stepdad would have had to go intia care home if MiL had died first - he had dementia, was incredibly frail, and was not capable of independent living. He died aged 95, having spent the previous 5 years being supported in most aspects of daily living by MiL.

It's an academic discussion in a way - at the end of the day, what we all want is for MIL to receive the best possible care, and that may use up all her assets and savings if she lives for another 5 years. We are just trying to work out what's ethically fair, and have different views.