It's a Will one. Probate question.

[cheekychops68]

Df found out a sibling was given a large sum of money when their only dp sold their home. This was last year. They're both in the will. Sibling has POA.
The dp is very old and will be lucky to live many more years.

Surely that amount will be counted when the will is read?Are there searches to see what's been given? Df tried looking but it gets so confusing.
Sibling is the closest to the dp.
Sounds awful talking about a will when someone is alive but I feel there's going to be a shit show.
Any advice or has anyone been through this? TIA

Is the PoA active? As in, is the sibling actually managing DP's money, or is it just set up so they can do so in the future?

If the former, I'd be reporting this to the office of the public guardian. It's not at all OK to help yourself to someone's money. I have no idea about wills, but it's theft.

If the DP still has capacity and is managing their own money then along a gift like this is their decision, and would have no impact on a will.

When you fill in Probate forms, it asks if any money or gifts over £3,000 each year, have been given by the deceased person in the last 7 years, so anything above will be looked into and more evidence will be needed, but as I don’t fully understand your question. Power of Attorney ends when the person dies and it will be down to Executors to delve into financial background of the deceased person. This does seem like deprivation of assets, to either not pay inheritance tax or care home fees.

Thanks. At the time of the gift the dp was in charge of their own money. The sibling is now. I think that's why the gift was mentioned. They have been transparent.
Df was confused as they read something about going back 7 years?

Has DP said that the gift should be deducted from the siblings share of the estate when they die?

I think the question about gifts over £3000 on the probate paperwork is to do with Inheritance Tax.

If the DP is mentally competent and gave the money away without undue influence then I think it's tough luck for your friend

If there a hotchpot clause in the will relating to lifetime gifts then that may be a solution but otherwise......

That's the end that would be achieved by a hotchpot clause in the will.

Tbh this would be the best outcome.

The 7 year rule is about IHT so nothing to do with the will as such. If DP dies within 7 years of gifting the money then some IHT may be due on it depending on the size of the estate. The 7 year rule wouldn't impact the distribution of assets to beneficiaries.

Either the sibling has got 'an advance' on their inheritance then the will should reflect that, or DP has just decided to give extra money to the sibling.

No

Just to clarify: sibling was given a large sum by dp who was managing their own money. If that's the case then the other sibling(s), your DF, has missed out but has no recourse because DP has given the money as s/he wants.

7 years - A person can give a sum of money (up to £325,000) to anyone, but if the giver dies in less than 7 years, there is tax to pay. So people giving gifts like that need to record them.

Thus if the dp dies less than 7 years after giving the sibling a large sum, there will be inheritance tax to pay on that sum.

Does the elderly parent have capacity to have gifted the money, who helped them sell their house and deal with the solicitors and finances. Are their bank statements that your friend to go through, can they ask their parent how much money was given. If parent has capacity they can gift the money, it will be declared as a gift during probate when they die. If your friend parent lacks capacity then it's theft and needs reporting. What poa is being used,financial or health. If your friend is concerned they can also contact their parents bank fraud department. What does the will say, that's a different matter.

The going back 7 years relates to inheritance tax on gifts made by the person who has died in the 7 years prior to death, there may be IHT to pay.
However it has no bearing on the assets that fall into the estate and which are distributed by the Will or intestacy.
So for example, if the will states that everything must be divided equally between 2 siblings, that means all assets at the date of death are valued, it is irrelevant whether one sibling has had a large gift made to them prior to the death.

Then unfortunately for your DF it sounds like their DP wanted to the sibling to have a greater share or their estate. There is no obligation for anyone to split their assets during their life in a way that reflects their wishes on death. So i can leave my estate 50/50 to my 2 kids but give one of them 90% everything I own the day before I die if I am of sound mind. They then each receive 50% of the remaining 10% upon my death.

The share of the estate and the probate are two separate things. The gift will have to be declared on the probate form. If tax is payable it is paid from the Estate as all taxes have to be paid before probate is granted.

Whether you can dismiss the gift from one or more of the beneficiaries share depends entirely on the Will and any paperwork given at the time of the gift. This will need a solicitor but beware of solicitor fees outweighing the benefits.

if there is real trust between the parties a gentleman’s agreement can be used,

If the parent sold their home, where are they living now? With one of the siblings or somewhere smaller, or in a care home of some sort?

If they need long-term care, then giving away this money could be construed as 'intentional deprivation of assets', in order to prevent the money from being spent on future care fees. That is frowned on by the powers-that-be and could cause all sorts of problems.

Thanks it was 60k. So they'll have tax to pay. They're nice enough so I'll warn them. They do a lot for the dp.
Hopefully there'll be no stress.

The dp and sibling looked into this and I know the council won't chase it. At least that's cleared up. They have that in writing afaik? It's the will part that's a worry.

The will says a share to a dgc (small amount) the rest split between the 2 siblings.

Firstly, unless the Will specifically states that one sibling will receive less, and if the estate is left to the two siblings, they will simply receive an equal amount. The gift will not be considered when dividing the estate unless the Will specifies this.

Secondly, IHT. Is the estate likely to incur IHT? There is a tax free allowance if £325 + an additional £175k if the main residence is left to direct descendants. So a total of £500k. This rises to £1m if the deceased has also accumulated the tax free allowance from a previously deceased spouse.

If the large gift + the remainder of the estate takes the total value over the tax free amount (less smaller amounts allowed as annual gifts) AND the gift was given less than 7 years ago there may be IHT to pay.

And none of that will affect the division of the estate as specified in the will. (The estate pays the IHT… which will in effect deplete the sum given to each beneficiary equally).

If the sibling who accepted the gift was so minded they could voluntarily even things out after the death of the parent either by a straight gift to the other sibling, or by doing a Deed of Variation to the Will, which is signing a document to say they agree for a portion of their sum to go direct to the other sibling.

Did the DP have a specific reason to make a gift to one sibling ? E.g they were seriously struggling to house themselves and DP grandchildren and also giving lots of care and support to DP, while other sibling is already wealthy and not able or willing to help on a regular basis?

People are allowed to make decisions with their money.

No, the sibling won’t have tax to pay. IF tax is due, it will come out of the estate. See my post above.

@MilletOver yes the gifted one is poorer. And it was so they could get away from somewhere. That's why hopefully there'll be less of a problem. It's the legality of it that's a worry. I know all concerned.
I do know a solicitor who deals in wills but don't want to drag people into this as they know the siblings. I'd ask the siblings if I were to do this. But said I'd ask here.

Thanks the estate is not over 325k.

What legality exactly is a worry?

Do the siblings want the DP to change the will?
Is the whole estate likely to be worth more than £500k (or £1m if a deceased spouses allowance was included)
Is the other sibling, the one who didn’t get a gift, wanting things equalised?

Right: so no IHT will be due.

No it's when it goes to probate and they look at bank statements. Seeing the large sum go out.

Sounds like it will be OK though?