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!

Sorry, I should elaborate on the comment "Personally I may feel morally obliged to give them something, depending on the circumstances."
My DSis is well off, so in those circumstances I would not offer her anything and she wouldn't be jealous of that at all. But I would offer my parents something, because they have been so generous and helpful to me (but I expect they would refuse). If my DSis wasn't well off, then I think I would offer her something too.

VanGoghsDog it is the person disposing of the asset who has to pay CGT, not the recipient.

You should get some legal advice. What your godmother has done sounds v dubious and her ex H may seek to claim the property or money.

If she’s not dead then you haven’t “inherited” anything.

Anyway, no you don’t have to give your mum or sister anything, that’s obviously not what the giver of the gift intended.

As others have said I’d take financial advice before spending any of your own money on this because it sounds like she’s trying to deprive herself of an asset and it could technically end up being reversed.

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.

...IANAL but I'm really not sure this puts you in the clear. There are reasons that people don't usually give people their inheritance before they die, and you and she have freely admitted that she deliberately deprived herself of assets with the aim of frustrating the divorce process.

Get your own legal advice, is my advice. Your aunt's lawyer works for her not you.

If the OP is in her early twenties it's very unlikely her godmother will be in a care home any time soon.

Everything @ChateauMargaux said.

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.

Sorry @eastendgirl234 you are deluded if you think what your Godmother is doing isn't wrong/dodgy/illegal.

I would consult a solicitor if I were you, and don't accept anything off her yet.

Congratulations OP though I appreciate this will cause you some trouble in the short term. I can see from your updates that you understand you should ignore PPs talking about IHT liabilities or who don't understand the circumstances.

You would be right to make it clear to your DM that your Godmother has given the gift with reservations, that the cash is used to complete the renovation of the house and that you cannot mortgage the property.

Good luck.

Thanks OP for your update. It still doesn't sound right. I'd imagine that regardless of what is written in a will, her DH has a claim over what would be seen as joint assets.

Based upon the limited information it seems like this could be a particularly underhand transaction where the DH is financially disadvantaged.

The divorce is concluded and he accepted a payout. Without divulging too much into their dirty laundry I think he has been in and out of prison for domestic abuse and also fraud. So I don’t think her husband has much of a leg to stand on so accepted the payout. Again, I’m only relaying the information she has told me. But as far as I’m aware I’m legally sound (or at least I hope).

Why is it appalling that the GM left money to her godchild and not the sister/mother?

Nobody bats an eyelid if a stepparent e.g. leaves money to their children and not the DSC, in fact posters are quick to say that “the DSC will inherit from their own parent,” this is no different. The sister will inherit from her godparent, or should that godparent also make provision for the OP in her will?

As for the OP’s mother demanding money, the fact she has demanded it would be just more reason for me to not give her any.

My parents’ neighbour recently died and it transpires that she left all her money to a donkey sanctuary. I like her style.

Money is the route of all evil IMO. And there’s nothing quite like other people’s money to bring out the worst in people.

1. Take advice from your own solicitor on where you stand with the gift with a concern about her deliberately depriving herself of assets.

1. Ignore the stuff about inheritance tax. If she dies within 7 years of the gift it becomes a failed PET. IHT (if any) is chargeable to her estate, not you. It's only really your problem if you're the sole beneficiary to her estate and/or executor.

1. You may have to accept that your mother is jealous and grabby, and adjust your relationship and outlook accordingly. You may be in a position to assist financially given your new circumstances, but don't feel obligated. Its your asset and your income. If you want to be kind at any time, its on your terms.

@eastendgirl234

The divorce is concluded and he accepted a payout. Without divulging too much into their dirty laundry I think he has been in and out of prison for domestic abuse and also fraud. So I don’t think her husband has much of a leg to stand on so accepted the payout. Again, I’m only relaying the information she has told me. But as far as I’m aware I’m legally sound (or at least I hope).

You are breathtakingly naive!

Lastly, my godmother is only 49

OP the main thing is, did the ex know the house existed and was he fine to accept a payout that didn’t include it?

I have seen many a family split and divided, because of a rich/wealthy relative favouring one sibling over the other(s.)

If I had a lot of money, I would NEVER favour one sibling over another.

It's grim, thoughtless, nasty, and cruel behaviour. It says a lot about a person who does this, (and also about those who think it's OK to do it!)

I'm torn on this one.

Firstly, I agree with other posters. I'm not sure that your GM can just divest herself of a huge house and a big pot of money prior to her divorce so her soon to be ExH can't get his hands on it. You really need advice on that. It's not as simple as it sounds.

Secondly, I am very close in age to a sibling who had an extremely generous Godparent. He was always giving him money, stuff, and left him a legacy. Whilst my DB was perfectly entitled to that, and I never said anything, I was resentful. Because not only in his life as a child and a teen was he showered with money and goods, but then he was left money too. I didn't even get acknowledgement as to who my GPs were as my DPs always said they couldn't remember!

So whilst I don't think it's right that your DM has anything, I would, in your shoes, feel awkward about my sister if this was my situation.

You are breaktakingly rude. You do realise I’m 22 and never been divorced and wasn’t present at their court proceedings. So forgive me if I am coming to this thread for advice.

Sorry OP, missed the update. Seeing as the divorce is concluded (and if decree absolute issued) I can't see there is any problem.

Assuming the paperwork is sorted and above board the money and house is yours to do with as you see fit.

@HollowTalk
My godmother was 50 when I was born!

OP, you need to use a couple of hundred £s and see a solicitor regarding this gift off your godmother. Then decide what you want to do with it. If your GM has actually transferred ownership of the house to you, and you have the money too, she actually can't be telling you what to do! £900 a month running costs for a mortgage free property sounds very high to me. And how do you know how much it will cost to renovate? Maybe get a couple of builder quotes in. Do you really want to have the hassle of tenants sharing with you in order to afford to live in the house?
If I were you, I'd most likely sell the house as it is and put that and the cash towards a home I could afford to live in by myself on the income I have. And honestly, I would probably give my mum and sister a few thousand too.

Just tell your Mum that you cannot mortgage the house and give any money because a mortgage co would not allow it in case (god forbid) anything happened to your GM and HMRC came after you for IT or the LA for care home costs.

This would be partly true: the mortgage co would take into account what amounts to a charge over the property. And as you say, may not agree to give you a mortgage anyway.

Your GM’s deal still sounds somewhat dodgy, what is in her will is irrelevant since she is alive.

Has the house and money been transferred to you?

Sorry OP, missed the update. Seeing as the divorce is concluded (and if decree absolute issued) I can't see there is any problem.

I'm not sure that's the case. If the XH didn't know of the house/cash sum and discovered that his XW deliberately divested them to hide them from him, I think he may be able to take it back to court.

I really think OP needs to retain her own solicitor.

Power corrupts, ultimate power corrupts ultimately.

Is it really worth losing your family over this new wealth. Money isn't everything despite what the millionaires on here might say.
I think family comes first.

If the finances are concluded, then you are safer. The only issue for me as a divorce lawyer is if she didn't disclose this (and any other) transfer(s) of assets/cash and if he found out he could seek to reopen his payment and get more. What he is entitled to is very fact-specific (eg length of marriage) and without knowing all of that it's impossible to say whether the transfer to you of the house/cash would have made any difference, or whether it was a transfer designed to avoid/reduce his claims.

I realise this isn't what you are asking about, but you are young and I would like you to understand this is not risk-free. However, if it ever comes back to bite you, you will have the refurbished house to sell if you need to repay anything.

The real issue - should you or should you not share your windfall - is perhaps more complex than all the potential legal pitfalls. GM's gift has thrown the cat among the pigeons, in that it potentially comes between you and your DSis, but you say your DSis is not expecting anything, it's your DM who is making waves. Even if GM had or should have anticipated driving a wedge between siblings, I don't think she could be expected to have anticipated your mother's reaction, nor in a month of Sundays could it be said she should have given something to your mum as well as to you, that's just stretching it too far.

I'm a mother and I would never, ever take any money from my grown up DC in these or similar circumstances (huge lottery win excepted)!