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

I think that your husband is correct and this would be the best way to go about it. It is important to your husband to maintain a good relationship with his step brother.
Unless there is something that you haven’t declared here then it really is up to your husband.

If it was me in MIL role, I would want the house to be sold first, so as to maximize the (chance of ) money going to my child.that would be the spirit and intention of my will.

The fact they ring fenced savings means it would never have been exactly equal either way.

But this is exactly it.

The stepbrother wouldn't have got an benefit from his stepmother not needing to pay for care, so why should he shoulder an equal burden because she does need it?

What are your DH and his step brother planning to do with the house when she goes into care? Letting it out might get complicated, leaving it empty is not a good idea. It would make more sense to sell it, and since it will technically still belong to her the money should be put into as high an interest account as you can find in her name but the proceeds not used to fund her care.

The house will go on the market but obviously it might take a while before it sells. The (former) joint account has enough money in it to pay for a few months of care home fees if necessary.

I think that both MIL and husband wanted to pass the proceeds of their previous family homes on to their sons (DH and his step brother) and use "joint" assets for care etc. But that's not overtly stipulated.

At the end of the day, DH will do what he feels is for the best for his Mum.

I think you're looking at this wrong OP. If your DH has power of attorney he needs to think what is best for his mum, not his inheritance.

This appears to be what your DH is doing. I guess you could try to decide what your mil would have wanted were she still capable.

The will seems to say the house is past on to both son and stepson but any of his mum's savings are his. But the mum needs to pay for care which is what the savings are for, surely

It sounds like you're seeing the house and joint savings as essentially frozen when FIL died. They have passed to MIL. We don't know why they set things up the way they did. MIL's savings and the proceeds from the house and joint savings all belong to MIL. I don't know how you'd guess which "pot" MIL would want spent first if she had capacity, or what either of them might have said if they'd anticipated this situation.

I mean, at most, you could argue that her individual savings should be used until the "pot" that is due to go to your husband is worth the same as the amount that his stepbrother inherited when his father died, and then the rest is paid for from joint assets.

It would actually be helpful if you should share some approximate figures.

It could be "we'll keep our own savings and pass those to our sons so that whatever happens, our sons get the benefits of our savings" or it could be "we'll leave the house jointly to our sons so whatever happens, they'll each share that". Who knows what their thoughts were here?

Your DH is right to use the savings first. His step brother only didn’t lose his as his father didn’t go into a care home. You may feel his care was superior through being cared for by MIL but who is to say a home wouldn’t have been a better option. The house isn’t sold either so he will need to use the money he has at his disposal which is the savings. Guess you’re thinking its unfair you both don’t get a share of savings and he did but it’s not because of anything he has done, it’s just how life has gone.

So, house is probably worth around £300k
Joint savings (now just in MiL name) approx £50k
Late husbands individual savings which went to his son on death £80k
MiL individual savings/investments currently around £200k but some of it is in shares so quite volatile.

I'm seeing the house as joint and the individual savings as individual, because that's how they set things up. The question is whether we think the OP's stepbrother should be equally responsible for funding his stepmother's care as her son for funding his own mother's care.

(Yes I know technically she is funding her own care and none of it belongs to either of them until she has died, but that is the ultimate impact of it.)

@Zanatdy you're right.

If MiL survives for a few years then all the money will be gone, whichever "pot" it's from.

They were married for over 30 years and always had the separate savings pots after selling their respective family homes in order to "save" the money for their respective children, ie DH and his step brother.

I'm aware I might be coming across as greedy, I really don't mean to be, it's just one of those issues which we didn't think about (and not did PiL) until you're in the middle of it

But would FIL have seen the joint assets as covering MIL's housing and living expenses? I don't know

If I had set my finances up this way, it would be so that my (imaginary) son got my savings regardless of whether me/dh needed care and the joint savings/house would be intended to cover living expenses and housing - each son inheriting equally from it when we are both gone. But I think the fact people see this differently shows it's not obvious

What is your husband's relationship with his stepbrother like?

DH gets on well with his step brother. They were 26 and 31 when their parents met and married, so didn't grow up together. We live about 3 hours drive from each other so only meet up occasionally. But the relationship is good and step brother is lovely.

I would personally do:

• joint savings first
• then individual savings down to £80k or whatever DP’s stepbrother inherited
• Money from house sale
• Rest of individual savings

That would mean that as far as possible both sons inherited the same from their parents, which would probably have been close to the intention.

@LegoPicnic that sounds very sensible. I'll suggest it to DH. He wants to do whatever is best for his Mum but also to be fair to his step brother.

Given that neither of them has any other siblings I would be inclined to give some consideration to what is most likely to preserve their good relationship going forward.

Sorry, I phrased it badly. Of course it's still his Mums savings whilst she's alive. I meant that those savings should be "ringfenced" so they are the last to be used rather than the first.

MiL might be in a care home for years and all the money used up, in which case it's academic

I agree with this. But remember as PoA he needs to always act in the best interests of his mother. That's the primary consideration.

Agree with this. Step brothers dad had different needs so didn’t obviously need to pay for care home costs, that’s just how it goes, no one’s fault. I think it would come across as a bit grabby to use the house money first!

ETA - your husband sounds like a good guy reading some of your posts about wanting to be fair to his step brothers!

So why dont you look after MIL so you don't have to spend her money on her care?

I think the fairest way to both your DH and his step brother would be to spend £120k of his mum’s savings, then move to joint assets with a view to spending the £80k left last. Using it the way your DH suggests gives the SB a financial advantage as he had 80k and benefited from your MIL’s labour caring for her DH and ultimately avoiding any care fees, and anything left from the jointly owned assets gives him extra money and leaves your DH with less.

I'm really sorry if the above comes across as crass or is written insensitively, that’s not my intention!