Potential Problems with being 'left some cash'

[54isanopendoor]

If a person is given / left some money in cash, with an instruction to 'put it towards property', how could they do so?

presumably it's a problem as they cannot prove where the money came from?

would it have to be in a UK bank account for a certain period of time?

even if the person who gave it was able to sign to say that that is what they were doing, do they have to prove where they got it from?

I'm thinking of a scenario where an older person had saved up small amounts of cash at home for many years then gave it to a friend at the end of their life.
All perfectly legal / morally ok, just a very old fashioned approach.

But, would there be all sorts of issues re modern money laundering rules?

I think our conveyancing solicitors said it had to be in the account for more than 6 months for them not to need proof of whee the funds came from.

Mind you, they were pretty useless and said unless my dad signed a form that wasn’t completely true (saying how he’d gifted my deposit when it was a different scenario) they wouldn’t progress our purchase.

There must be a way of dealing with this, not everybody is 100% traceable all of the time.

If it's in a will, you get a copy of the will as evidence.
If it's a gift I would assume it's like any other gift (e.g. parents help) and they sighn a declaration. I don't know if they trace past that.
Either way, if substantial, inheritance tax might be due.
But either way it's going to have to go into a bank at some point.
If appropriate, I would ask not to have the money until mid purchace or death. It'll be more awkward if she dies after gifting it.
Alternatively put it in a separate account and use for solicitors fees and home repairs. They only audit the money you're using for the purchace, but morally you're still using it and will be able to safely stretch yourself further.

@Letsnotargue thanks.
It's a friend of mine. She wants to buy a (cheap) property. She has been left 50% of the money in cash. She could get a mortgage for the other half. BUT...
How to explain the cash / will she be able to actually use it?
I understand that The Rules are in place for a reason (tho Govt / big business seem to get away with £ laundering / tax avoidance but that's another thread)
But yes, there are a few older people who still operate in cash / don't trust banks / lawyers / have a bag of £20's saved up for a grandchild etc. It's tricky...
I guess she could just ASK the sellers but their lawyer / her mortgage providor would probs say no

Oh and whilst you need proof within 6 months, they can also ask for proof from further back. Presumably if they're suspicious, but we weren't explicitly told that. I think it's also if you're self employed it might be longer that they want statements for.

@Letsnotargue
@TamSamLam

thanks x

I understand it's 'around £50K' (!)
the person who left it has recently died (& had no other estate to speak of)
this would be an absolutely LIfe Changing amount for friend: they're in shock!

But, if they cannot 'use it' for a more secure roof then it's not quite what the giver intended which would upset friend. The giver was elderly & would not have appreciated ramifications of modern money laundering rules etc (they didn't even cope with a cashpoint) I guess friend can keep it under the bed but that doesn't seem very secure / sensible ?
(& they'd want to know whether they needed to declare it to pay tax etc)
I just had a quick look at the Govt site but it's not terribly clear to me (& my friend doens't use MN & is even less able to use the internet than me ...)

To be clear I'm not a lawyer.
I think if it was declared on probate (regardless of If it's taxable) it's 'clean' and she's fine, I'm assuming probate was required.
www.gov.uk/inheritance-tax/gifts
If it wasn't declared and should have been, that's probably fraud or something (on the part of the executor, probably unknowing), and therefore your friend might be money laundering and it should be picked up.
(Sounds like both death and gift were recent)
She needs to talk to a solicitor, but one specialising in wills and inheritance and gifts, not a conveyancer.

@TamSamLam

I think she was simply given a box of cash by an elderly friend who didn't leave any sort of will (they didn't have any other money / property at all)

I have recently lost my own Mother intestate & will be cut out of any inheritance.
I must admit, I thought my freind was rather fortunate to be in this position but it's clearly not as straightforward as it might be (or the giver intended I expect).

thank you for your advice, I will pass it on x

Sorry for your loss.
Apologies for misunderstanding, I assumed people with £50k in a box would own a house, I shouldn't assume. Probate may not Have been needed.
Still needs a solicitor to advice though. It definitely needs to go in a bank, it's just how to do that to avoid problems. And I don't want to give money laundering advice by accident.

@TamSamLam

Yes, I think my friend doesn't want to do anything wrong either but is scared to ask. A solicitor is the answer for sure. thank you for your posts above though x

ps thanks also for kind comment re Mother x

I’ll say your friend has problems. If the person who gave your friend £50k in cash has died intestate and there is no written record of the “gift” could find themselves accused of theft. The legal heir are effectively being deprived of their inheritance.

I think it should be handed into the police/solicitors dealing with the estate and allow the laws of intestacy to apply. However, I also appreciate that life can be hard for some people and this sum of money where the apparent victim has died seems like a no brainier. Note: the victims are the legal heirs who may be aware money has been stored in the house.

I have n/c as I can think of a way you can convert the cash into money in a savings account but this would take at least a couple of years, possibly 5+, depending on current income levels and whether or not benefits were being paid. This would then allow the money to be used as a deposit with an apparently clean history. Im not going to tell you how as I think it’s immoral.

Hi @Honestgov

As far as I am aware, there were no 'other potential heirs'.
My friends elderly friend didn't have anyone & my friend was a good friend to them for years. There is nothing immoral about the personal circumstances.

It was more whether she should 'declare it' & who to that she was worried about. The Police sounds a bit scary (!) so I think a lawyer phone call would be best.

There's always an heir, that doesn't mean that they have more right to the money, especially if only distantly related. Of course any heir is free to contest it, but if the woman was in sound mind and without financial obligations she can give her money to whoever she wants, they aren't entitled to an inheritance. If it is contested, then that's a totally different question than is being asked, but one of the reasons it needs banked so it can't be argued that it was being 'hidden'.

Also the police aren't going to be interested, there's no accusation of a crime as it stands and it's not lost.

If the gift giving occurred under questionable circumstances that's different. And I do recognise that whist the scenario presented seems entirely plausable, it also seems like a plausable backstory for actual money laundering.

Their is always a legal heir, the last one being The Crown. Before that all possible blood lines are investigated. So it can be a 2nd cousin twice removed who inherits. Often the person themselves may not know the relative(s) who inherits. This is why a will is so important.

I wasn’t suggesting your friend was immoral, it was that in the absence of a will or a letter confirming the gift your friend may struggle to prove her legal right to the money. I acknowledged that in this situation some people may go down dubious routes which I would personally find immoral.

As your friend wants to do this properly she needs to consult a solicitor to advise how she should proceed. Ideally a STEP Solicitors www.step.org/about-step/public who are well versed in intestate estates. Your friend will need to take evidence of the friendship and any correspondence about the money. It may be your friend has to take on the administration of the estate to resolve this.

Your friend needs to be prepared that if she cannot demonstrate the money is legally hers that HM Treasury may take an interest (they act on behalf of The Crown), they can be quite tenacious. Note: How the person who died gained the money is a separate issue for the executor/administrator of their estate e.g. bank account statements showing cash withdrawals.

Just wanted to point out that the cash was gifted before the person's death. Therefore, assuming the deceased person had capacity, the cash would never form part of their estate. Cash gifts can be taxable and your friend should contact a solicitor for advice regarding this.

The laws of intestacy have nothing to do with who has more right to the money. Trust me there are a lot of people, like the OP, who don’t inherit when morally they should.

I agree that the money was gifted and had it been a cheque that would be fine. What we are talking about is £50k in cash, likely a mixture of old and new notes with currently no paper trail to say where it came from.

If there is a note confirming the gift, then great. Without a note this can appear that an unscrupulous person (not the people in this thread) has slowly taken the money from hiding places. How many times do we read of carers/family/friends doing just that.

When I said who has more right, I meant legally not morally. If it's disputed then the courts will decide whether it was a pre death gift (no intestacy) or theft (intestacy applies). The laws of intestacy are literally about who has the legal right to inherit, but not about how much. They obviously apply to all other possessions.
It should have been counted in the estates value, but it's not on death part of the estate. It can't be inherited if it's already been gifted. If I write a will, I don't have to respecify any gifts already made to prevent them being given back.

I'm not going to debate the likelihood of NoK or the crown accusing the OPs friend of theft, because I have no idea on the matter, equally I don't know if it was gifted or stolen. But the friend doesn't have to automatically give it up just because the elderly friend died without a will. And she already knows to give it back if she stole it.

I would increase my monthly mortgage payment (not too much) and use the cash to live on.

But it sounds like the person can't get a mortgage (or property) without the money?!

Tell her to phone her bank and explain the situation and how to proceed so she can deposit the money and then get her mortgage/house.
Having worked in a bank in Central London, we would get people turning up with thousands in cash, we would have to ask where it was from and then just make a note of the answer, eg working on a market stall.
The bank wants her money, they will help her deposit it!

@Starlitexpress yes, that would be ideal but I think I'd be worried she might be arrested / the bank would 'report her' (not sure to whom but some 'money laundering dept' ? refuse to deal with her as a customer after reading the thread?

It's really sad as the person who gave her the money really wanted her to be able to use it for her to have some security & it seems that might not be possible.
She has been in receipt of income related benefits so will need to declare it to them anyway & was worried there might be some tax implications but defo didn't dream anyone might think she 'came by it' dishonestly. It's quite worrying.

As far as I know, no tax implications for her, though not 100% sure but might affect benefits.we used to flag unusual transactions and NEVER saw one come back as dodgy. Including a carrier bag of 8k.....no further action required!
Your friend has done absolutely nothing wrong.

OP you haven’t answered the question, just posed a what if, does your friend have a letter/note explaining the gift? This could be crucial. Sadly due to fraud the rules are very stringent and honest people, like your friend, have to jump through hoops to prove they are legally entitled to money that is gifted.

Who is administering the estate, sorting the funeral? If no one steps in and there are any assets someone may be appointed to do this. Does your friend know 100% all the financial details of their friend? Unclaimed estates are passed to Bona Vacantia www.gov.uk/government/organisations/bona-vacantia who publish a list and heir hunter firms use the list to track relatives charging a % for their services. As your friend wants to do it properly she should declare the gift , it may be she is best place to administer the estate.

pp are correct that as the money was gifted your friend they should be able to keep it. Your Friend’s friends estate is liable for any inheritance tax and the £50k should be included as a gift within 7 years of the death.

The difficulty is when your friend deposits the money it triggers a chain of events.

As your friend is on income related benefits, timing depositing the money in a bank account will be a factor. The normal process if savings go over the limit is to stop benefits until you are under the limit. If it is to be used as a house deposit I believe there may be a time limit to invest the money. Again you need expert advice on the rules.

I appreciate you are trying to help and you will not be able or want to give exact details on a public forum.

I again strongly urge your friend to get legal advice asap.

Is there not also the risk of possible other fraud? Did the gifter receive any means testers benefits? Am sure there was a similar thread recently where someone had been gifted a wack of cash from an elderly relative but then worked out they'd been claiming things they shouldn't? Maybe that person was still around though so makes it different?

A distant relative has an enormous amount of cash in her house, due to long term benefits and claiming everything going when her parents were alive.

All benefit money cashed every week, virtually nothing in the bank so as not to affect said benefits.