My inhertiance is causing issues in the family

[eastendgirl234]

Even writing this post I feel embarrassed as I am perfectly aware that we live in a world of financial hardship. So please know, I am not trying to brag and I don’t want a pity party. I just want some advice from an unbiased third party.

So here goes… I inherited a four-bedroom house from my Godmother last summer. She didn’t die but she wanted to distribute her estate before her impending divorce (so her husband, who didn’t own any of the properties in her portfolio, couldn’t take anything). In addition, she gave me a large sum of money to renovate the house as it was built in the 40s and hasn’t been renovated since. As a 22-year-old girl, this is something I should be happy about. It means I can live mortgage free for the rest of my life. However, it has become an issue within my family and my relationships.

My mum is a single parent and brought me and my sister up on her own - I am forever grateful! She thinks I should give her and my sister the money between them. My godmother explicitly advised that I use the money for bills (which are £900 a month including council tax and insurance) and to renovate the house as a builder quotes it might cost over £100k! I am only earning £21k annually so as you can imagine cannot afford to pay that on my own. I plan to rent out rooms to alleviate some of the costs but cannot do that until I renovate it. I decided to take my godmothers advice and renovate the home. Now my mum is suggesting I re-mortgage the house and give her and my sister £25k each. However, I don’t want the financial responsibility of mortgage payments and bills at my age and on my current salary. I suggested that in 2-3 years I might be in a better situation to do that, but she thinks I am being selfish, and this is causing issues between us.

I can’t help but feel guilty that I have inherited this house, because my family, my friends and people I meet that are my age are struggling and feel like everyone is judging me for getting the easy way out. Should I feel this way?

P.s. I am not a mum. But as this is a platform where family-oriented women share their stories I hope you won’t mind!

@pointtothetruth

What would possess you to spout such nonsense?

I would be over the moon if this happened to my DD and wouldn't dream of laying any claim to any of the money for myself. It's your family's response which is off here OP, not yours.

If I was in your position inheritance-wise I would want my family to benefit if I could find a way to do that without causing problems for myself but I think your longer-term approach is the only way that could work. It's not as though you've been handed the value of the house in cash, or a fully saleable, renovated property you could sell and split the proceeds of, you need to keep both the house and the money for a while at least.

And then there's your godmother's wishes to be taken into account. She left the house and money to you for her own reasons and presumably neither wanted nor expected you to share with your family or she would have split the inheritance herself.

You are left in an unfortunate position family-wise, they clearly feel some entitlement to your money and you will likely never be able to to change that opinion, even though it's wrong. So you have to accept that your good fortune will cause resentment, both towards you from those who think you should share, and from you because you can't fail to end up resenting them for their entitled attitude and behaviour.

It's a shame that this will likely cause a rift in your family, but it's their doing not yours. They should be wholeheartedly happy for you and celebrating your good fortune regardless of any potential benefits for themselves and they should be ashamed that they're making you feel bad about it instead.

If I was your sister I wouldn't be able to help being jealous, but I'd never expect you to give me anything. Same with your mum. Personally I may feel morally obliged to give them something, depending on the circumstances. But I certainly wouldn't expect a demand!

If my last post raises relevant points about later recovery of the funds in the divorce, that itself is a good reason for not complicating matters by further dissipating the funds (not that you should use this as an excuse to your mum/sister)

I totally understand. I was left a house by some one close to me.

I wasn't allowed to enjoy a second of it.

My mother wanted money, friends were jealous. Other relatives were jealous. I even inherited the house in very tragic circumstances, (an awful death) and it still didn't stop people coming at me, looking for money.

You need to be firm with your mother. I personally gave my mother a sum of money, much smaller than she wanted, but it stopped the endless asking. I told her - that is it - you are not getting any more.

Put yourself first. Do not feel bad about it because others are jealous, and don't let them push you into doing things that you don't want to

OP it sounds like you need to check the legalities rather than worry what anyone else thinks of it morally.

And also please remember that as she is not dead, it's treated as capital gains which means you now owe the HMRC 40% of the value of the house plus the cash.

This isn't true. Ignore this piece of advice, OP!

I agree that shifting assets because of the divorce could be questionable, but if your godmother's taken care of that the rest of the family will just have to get over it ... it's just a shame they can't be pleased for you instead of piling in with demands

If your sister gets anything from her godmother then she will be able to keep that won't she, we recycled our children's godparents so they both have the same ones, but many people use different people

Agree you should get some legal advice on all this if you haven't already. As for your mum she's being unreasonable and grabby, and frankly bloody rude to demand anything of you. I was in a similar position a few years back with my mum and it was the straw that broke the camels back (not the only reason mind) and we've now been no contact for 8 years and I'm a lot happier without her, good luck!

It's not your mother's money. You need to renovate the house and keep the money for bills and then in a couple of years when you are in a position to rent out rooms maybe you can help your mum and sister then. They're being selfish.

I think you need a bit more information before you do anything with this gift.
Has the divorce settlement been concluded?
Did your Godmother speak to a solicitor about the legal implications of this?
What if the divorce hasn't been concluded and this property has to be included in marital assets along with the money? You'll end up having to give it back.

If she dies within 7 years and the estate is subject to inheritance tax, there will be inheritance due on the gift you have received so you will have to find the money.
Not sure what happens if she goes into a care home but I'd imagine these are assets which will also be taken into consideration and used to pay for her care.

You need to find out more and possibly speak to a solicitor yourself.
You should not give your mother or sister any money until you know exactly what the position is.
Tell them that you are taking legal advice - no need to go into details as to why.

Assuming all is legit regarding the divorce, you should then assume that you may have to pay inheritance tax on the gift should Godmother die and keep aside enough money to cover this.
Then and only then, should you get on with renovating it and deciding what to do with it. You could at some point in the future help out mother and sister but now is not the time to be doing this.

I'm a Godmother and want to leave the bulk of my money to godson (have no children myself) but worry about how such a sum of money might influence family dynamics when his brother and sister don't receive anything. I'll be thinking about this a bit more having read this OP.

@Rainycloudyday

I think what your godmother has done by giving you a life changing financial gift and ignoring your sibling, is appalling. She is stupid if she didn’t know full well that she was likely throwing a bomb under your relationship as sisters. How that kind of situation could ever not lead to resentment I don’t know.

This. ^

The Godmother may be quite entitled to do what she wants with her money and assets, but it's a really shady and nasty thing to do, to give to one sibling, and not the other. Who cares if she is not the OP's sibling's Godmother too? It's just awful. And of COURSE the mother and sibling will be very hurt. Did the Godmother seriously think this would not cause anger and resentment?

Also, I agree with pp saying that what the Godmother has done, is probably illegal. I would be taking the most severe form of legal action possible if I was her soon-to-be-ex-husband.

@eastendgirl234 I would refuse this 'gift' if I were you, as you will most likely end up having to give it ALL back!

My sister hasn’t asked for a penny. At 25 she’s earning £32k and has saved enough money to put a deposit down on a house by the end of the year. My mum isn’t struggling, she just doesn’t doesn’t have the disposable income to save as much as she would like.

In terms of the legal issue. It isnt as dodgy as it’s sounds. Maybe I didn't explain it correctly. Basically I’ve always been in her will but she has decided to distribute her will before she dies. Her husband threatened to divorce her during this time so she sped up the process. Her divorce lawyer has said as long as she doesn’t die within 7 years I don’t have to pay any tax. So please don’t worry on that front.

Also for everyone saying I should give them some money, please refer back to me saying in 2-3 years when I earn more than £21k I would be happy to potentially remortgage for them. I don’t even think a bank would give me a mortgage as I’ve never had a credit card or etc. So never built up a decent credit score.

Lastly, mg godmother is a family friend on my dads side. No relationship with my mum. I used to nanny her daughter for 4 years, hence we built a strong bond. My sister has a different godmother and she’s in her will.

Yes I would be concerned the ex might claim deprivation of assets by the house transfer. Don't soend the money on improvements until you have full legal clarity. Your family do not get to benefit from your good fortune but it may cause a falling out. Presumably godmother is a family friend.

Greedy bitch, your mum. Tell her you can't give anything because of the shenanigans re tax and divorce.

When it's sorted, house your DSis free.

I would be very wary - when I got divorced I had just inherited a sum of money from my late father - my sister wanted me to put it in a bank account in her name so my XH couldn't get his hands on it, but I was told by my solcitor that this was not allowed and the money had to be included in the general pot of assets.

Also although it is a very generous gift (if legal) surely your God mother foresaw that this might cause problems within your family. It must feel very unfair to your sister. I don't think your mother has any cause to feel agrieved - I would be happy if one of my children received a legacy which left them financially secure, I certainly wouldn't think I was entitled to any of it, but I would feel a little sad for my other child that a stroke of pure luck caused by my choice of Godmother had left my children so unequal in fortune. Feelings are valid, but they are not rights and you can understand that people may be upset without it meaning you have to rectify that situation.

But it is what it is - if legal - then it is entierly up to you what you do with your money/house and you should make decisions based on what you feel is best without input from others. No one here know your situation, your relationships with your family, or any of the other things that might come into play. It is great that you have received such a legacy, but I can see also that such a large gift can bring probelms and be a bit of a poisoned Chalice. Don;t make any hasty decisions or feel pressured. Take financial advice if you feel it would help you. But if your GM is insistant that the money is for house removations the it will be hard to go against her wishes.
I wish you luck !

I think your mother has little idea of the costs you are incurring. Maybe someone else could sit down and explain it all to her. I am sure you are not mean. Later on, when all is settled, you'll probably treat her and your sister but at the moment, it just isn't on the cards.

Congratulations to you on receiving a handsome inheritance, it's quite exciting.

Without causing too much panic there have been three issues raised by previous posters:

inheritance Tax:
If she dies within seven years this will be added back to her estate and inheritance tax may be payable, depending on the size of the whole estate. As long as she has sufficient other assets, the tax will be payable from the estate and not by you. It would be useful for you to understand the possible implications of this but if you have renovated a house that has not been touched for 60 years, it is likely to be worth a considerable amount so if it came to it, you could see the 4 bed house, pay any inheritance tax due (based on the valuation when it was given)

Divorce and hiding marital assets: You can ask for clarification of the risks in this situation. If the financial arrangement has been completed, what risks are there that this will be overturned and does your god mother have sufficient other assets to correct this if required or is there a risk that the gift will have to be reversed.

Fees for care in old age: I think you can assume that if this woman has a property portfolio, that she has sufficient other assets to fund her future care needs. You can ask her if you feel the need to have this reassurance.

As for your family, you can remind them that you cannot afford to carry out the renovations or pay the council tax on your own without using the money so you cannot, at this stage, give them any money. It is also possible that you would not be able get a mortgage to refurbish the property depending on it's condition. I think it would be difficult for your mother and your sister to see you in a property, earning rental income and living mortgage free. I do not however, know what the solution would be as they have no legal claim to this money.

Hi OP. Any transfer such as this between individuals are considered a potentially exempt transfer. IHT may be payable should she die within 7 years, however this will be the estates problem, not yours. The misinformed armchair probate lawyers and financial advisers are out in force!!! The divorce thing may cause issues if the property wasn't hers to give away, but I'd suggest getting advice in this area.

In terms of the actual question, as sad as it may be, your mother and sister are entitled to zero, zilch, nothing. Don't saddle yourself with debt based on misplaced generosity or coercion . By all means help them out on your terms with the odd thing once your finances settle. But as and when you see suitable and not so it hurts you.

Some shocking advice on this thread. Be careful and only listen to accredited professionals. Did your Godmother seek legal & tax advice re giving away these assets ?

From experience she should have done......

Give them nothing now. Give them nothing in the future.

Seriously, you are talking about taking out a LOAN... to give THEM money, because they are butthurt that you got a gift they did not get.

Do not do this.

“ Her divorce lawyer has said as long as she doesn’t die within 7 years I don’t have to pay any tax. So please don’t worry on that front. ”

I’m not. What I’m thinking is that the husband might try to claim on it as part of the divorce, or if your godmother needs to pay for care, the state might see it as deliberate deprivation of assets.

As others have already pointed out, I suspect your grandmother's gift isn't what it seems and is possibly illegal. I don't think you'd think a man who divested himself of assets before divorcing his wife in order to deprive her of income/ money was a shining example, would you? You need to be really careful, otherwise it's possible it could turn out that the house isn't actually yours or that you own capital gains or inheritance tax on it.

What your godmother has done strikes me as designed to cause ructions within the family. Giving to one sister and not the other, or making one member of a family wealthy while leaving others struggling is a cruel thing to do and may cost you your relationship with your mother and sister even though you gain a house.

As long as things are legally watertight, I think you just need to grit your teeth and put up with it. If you did remortgage and give them 25 K each, what’s to say your mum wouldn’t be back with her hand out in another 10 years? If you are only in your early 20s, your mum can’t be much older than mid 50s, she’s got a lot of years ahead to spend (or earn) money.

The Tax (IHT )would not be payable by you, but the estate. The issue is that ex may claim it as a marital asset and it not be fully hers to give away. If you do not live in the house and sell it you may become liable to CGT. If you rent it out there is income tax on the rental income. I'm not sure her divorce lawyer is best placed to advise you.