Ex wants my mum's gift of 20k included in equity split

[DangleDonkey]

Hi all,

Partner and I (not married / 1 child) split in November last year and are selling our house. It was a wreck when we got it and we spent a lot of money on doing it up.

A rough summary is:
287.5k - bought the house for this in 2022
Made up of 80k deposit from previous property and 207k mortgage.

Spent 40k on the renovation plus stuff for the house (this extends from a rewire and carpets to storage costs and rent for where we lived during the renovation to a dishwasher and cushions and nice things for the house). We don't have an itemised list for this and it'd be almost impossible to do that nearly 3 years on).

20k of the above was from our previous house sale which we kept back, 20k was a gift from my mum. My mum sees this as inheritance that is more useful to give to us now (my sister also got 20k, which went into her ISA), rather than when she dies. My mum is 71 and in good health - I understand a gift of this size can have inheritance tax applied if she were to pass within 7 years of the gift.

When our sale goes through and we've paid our fees and 198k ish of mortgage, I'd like to take out that 20k as mine then split the rest of the equity as 79/ 21, which is stated in our deed of trust (with my share as 79%).

Ex is sore about this split, despite signing the deed of trust at the time. He does seem to understand that it's legally binding though as he signed it freely and it does accurately represent the share of the deposit we each put in.

He wants this 20k from my mum to be included in the equity split, ie he would get 21% of it.

Is this inevitable and I just need to accept it as we never had a document drawn up to ringfence that money as mine?

Or as we're not married and there's bank statements showing the gift, and my mum would attest it was for me not for us, can it be separated out?

Thank you in advance

Thanks for all these replies. The replies that say I should just suck it up, in kinder words, have been helpful actually, to make me see this in a more positive light. I'm just in that place where right now I can't stand the guy, and the way he's been behaving, things he's said etc etc made me feel like I wanted him to get as little as possible. Sometimes hearing that what you've got is pretty good is exactly what you need to hear, and I think that's the case here.

I've asked our solicitor about it but am feeling more accepting of just letting it go. He's been paying 50% of the mortgage as have I.

I said earlier that for £4K I would let it go. I stand by that, but in letting it go claim (silently) the moral high ground and don’t let the b**r get you down.

Am I really thick. You don’t pay inheritance tax on a 20k gift. Right??

You're misunderstanding. The split of the equity in the house is is governed by the deed of trust.

Op, this is on you got scrimping on legal advice at the outset. Don't compound that by failing to get legal advice now

If someone dies within 7years of a gift that gift counts as part of their estate for inheritance tax

He doesn't have a leg to stand on.

Call his bluff. Get yourself a solicitor and instruct the solicitor to send him a atrongly worded letter reminding him he signed away his claim on that money, and hinting you'll see him in court. Your mum might be willing to join any legal action against this rat.

Take him to court if necessary if he persists in stalling the sale. He'll get his arse handed to him on a plate.

The feed of trust is legally binding though, he can’t be forced to give you more than the 21%. It would cost more in legal fees than the £20k.

Negotiation is the way forward.

If he's been paying 50% of the mortgage for three years then 50% of the equity that has been paid of the mortgage in that time should go to him.

It’s worth the £4k to be rid. You will get your own back in years to come by being rid of him.

I agree with others that I’d write it off so you can move on. However I would get something in writing that says that should inheritance tax become due he has to pay 21% of it. I think inheritance tax is 40% so they’d be £8k to pay

it sounds like not all the £20k would have actually even added value to the house as you mention buying cushions and kitting it out with stuff which I presume you still have some of/most of? Who will keep this? I think you should honour the split in the deed, it’s still massively in your favour and as you point out he has been paying the mortgage 50/50. He probably feels a bit hard done to as it is.

Could you suggest, if its affordable, to put the 20k in trust for dd?
That way he's doesn't get it, but can feel he's 'won' because you aren't either, and it goes to dd so your mum's money benefits her.
I can understand you probably can't afford this but if you could he'll find it hard to justify taking it away directly from his dd instead of you.

Sounds like he didn't quite think through his feelings and consequences when he signed the split, sounds Iike you didn't quite think through your feelings and consequences when you put the 20k into the house without changing the split, sounds like you end up with something generally reasonable, and certainly (accidentally) agreed, if you go with the original split.

Sorry!

This ☝️.

it sounds like you’ve done really well financially out of this arrangement OP. He’s been paying 50% of the mortgage for 3 years but his equity share hasn’t changed. How much equity has been paid over 3 years? I wouldn’t argue over the £4k.

Yes, but not if their "literal life savings" amount to £20k

@Hamandpineapplepizza and @Greeksauce .

There is no inheritance tax to pay in relation to a gift, if gifts in the 7 years before death are less than £325,000.

It counts towards the total valuation of the estate to determine whether tax is payable on the remainder of the estate.

If your OH started a thread I'd advise him to get a solicitor. 21% of deposit and 50% of mortgage? He should only have been paying 21% of mortgage, surely?