Inheriting money

[MAT525]

Hi,

My sister died in an accident. She left no will and was single. Next of kin are the parents (Mum and dad). They don't want any of the inheritance. Inheritance money is roughly around 130k in total. They are happy for it to be passed to the 2 brothers/grandchildren. I would prefer the money to go to my children, however my other brother wants it to come to him and not his children.

Therefore would like to know:

1. Would it be possible and advisable for something like this to be done - i.e. My Parents pass half the money to one brother and the remaining half of the money to the 2 grandchildren equally (rather than me who is the other brother).

2. What would be the best way to invest the money for the children or would it be advisable to put in a trust?

Sorry, if this does sound like a silly question but am not financially savvy. Would parreicatie any help/ suggestions.

Thanks.

Not going to comment on the investment issue but if you don't want the money then it makes sense to pass on to your children. Its quite straightforward to do a deed of variation for an intestacy - you can do it yourself but I'd recommend a solicitor just to be on the safe side if it isn't something you're used to. The whole thing can be done in one letter signed by your parents, your brother and you as guardian for your DC (assuming they are under 18).

Thanks a lot for your prompt reply. Any idea if there would be any tax implications if this is done- either for my brother or for my 2 children (both are below 18).

The only other thing to consider is do you want your kids to have access at 18 as they can then choose to spend their money on a holiday or a fast car rather than the Uni fees or house deposit you had hoped they would spend it on.

if it comes to you, you can control what it is spent on, if it goes to them they can spend it all on whatever is most important to an 18 year old.

I think your mum and dad might need a bit more time. It must be incredibly traumatic for them.

If there's no will or the person who inherits, i.e. a parent, doesn't want it, wouldn't it automatically go to the next person on the list i.e. her siblings?

I do think that your parents should accept the money and stick it in an investment account until they decide what to do with it. It's already causing problems in the family from the sound of it.

So sorry to hear this terrible news. You must be devastated.

Your parents need legal advice. If there was a will I think they can do a deed of variation to give money away to whoever they wish but I don't know what it's called, or how it's done, if there is no will.

But have to be careful with deeds of variation too. Things like are they on benefit, or maybe soon need care, that sort of thing can be seen as deprivation of assets if given away rather than accepting an inheritance.

So they do need advice. And possibly they need some time too.

@ Ohmylovejune

We are in the process of applying for the Grant of Probate , there is no will. Yes a deed of variation will have to be done to pass to us.

Thanks - I was not aware of such a thing as deprivation of assets.

In regards to deprivation of assets - just spoke to a solicitor about this , he seems to say that if you do the deed of variation then they cannot be deprived of the money as my parents never possessed it in the first place.......

But the more I read about this online, I'm still not convinced by what he has said and so am quite confused

Is the DWP informed about a Grant of Probate and if a Deed of Variation is done automatically.......or would we have to inform them about it...... or would they only look into it in time if my parents needed care say in the next few months......

Thanks.

I'm not a solicitor so I'm afraid I don't know.

I think you need proper legal advice. I understand you wouldn’t want the money either but think very carefully about what age your children would have access. With the best will in the world young people do silly things, maybe you could consider keeping it in a pot somewhere for them until you think they are sensible enough to have it. I’m sorry for your loss.

I got a modest inheritance at 18 & same again at 21 still at uni and frittered both amounts away on nothing except nights out and partying. My dc have a similar size inheritance to what you are proposing for your dc and we set up a trust (what a bloody palaver it was too!) that we can access for them age 21+ if they are at a stage in life where we think it might benefit them otherwise they will have it at 25.

I am so sorry about your sister.

wrt Deprivation of Assets, when a local authority looks into reclaiming care costs, they have to be able to prove that the assets were given away with the specific purpose of avoiding care costs (obviously not the case here) and at a time when it was known that care was going to become necessary. So again not an issue if your parents are well, not suffering from a life limiting illness etc.

Is it possible you will have any more children? If so, would you want the money shared equally between all your children? In which case keep it in one pot to give to them all when they are older?

I don't think it is wise for children to inherit large sums at 18.
You don't know how your cute sensible 10 year old will be when they discover sex drugs and rock and roll.

I'm sorry for your loss.

I'd put the money on trust for them until 25, with provisions allowing the trust to pay out for education and property before then.

The guidance here on deprivation of assets is good https://www.ageuk.org.uk/information-advice/care/paying-for-care/paying-for-a-care-home/deprivation-of-assets/ Nothing you've said suggests that this will be an issue for your parents.

@MAT I think I’m right but your parents should just accept the money right now. You don’t need to vary or decide anything. This is unnecessary and costly.

There’s no IHT to pay. The inheritance then becomes your parents money. You are all making the mistake of thinking they/you need to decide now before distribution. They don’t. You don’t. Just accept the money initially goes to your parents. Thry do not have to jerking! Just give it away as the family wish. Who wants money snd doesn’t want money make no difference to how the inheritance is distributed. You are greatly over complicating what needs to happen. It’s simple: parents get money then distribute. As long as they live for 7 years this is the simple solution. If they are very old and ill, go down your route. 7 year rule is IHT liability.

So sorry this has happened. Try and persuade your parents to do the above. You then have time to sort out trusts for Dc etc. The money will come out of your parents’ estate for IHT if they live for 7 years after giving the money.