How to make this will 'fair'?

[Hel81]

I am trying to work out what a ‘fair’ will would be in this situation and would really appreciate any thoughts.

The situation is generally pretty straightforward. The parents are both 70 and in good health. They want to rewrite their wills as the current version is old and pre-grandchildren. They have two adult children (age 39 and 41) each of whom is married/long term partner and has each has two children. No-one has disabilities or long-term health conditions. Both DCs and their partners work, both own their own home with mortgage.

The bit I’d appreciate thoughts on is this. About 18 months ago the parents gave DC2 and partner a large cash gift (100K+) to help them to move to a much nicer house. DC1 already had a house similar to DC2s new house. The parents told DC1 that they’d given the gift to DC2 and that they should see it as DC2 getting an advance inheritance. When the parents died they wanted to the DCs to remember the gift and sort it out so things were fair. Now that the will is being re-written they can think about putting it into the will rather than leaving it for the DCs to sort out when they die. So the question I’d appreciate thoughts on is how the will should be written to make this ‘fair’. Hopefully the parents will live many years to come so inflation etc may mean that the value of £100K looks very different by that point.

It’s obviously an awkward thing to discuss in the family but equally if people feel it’s not been done fairly it can cause real damage to relationships so I’d appreciate objective views thanks.

They surely want to talk to you about it just in order to clarify that they want to make it fair, so I do think you’re worrying a bit unnecessarily- let them lead, and if for any reason they don’t suggest the will formally indicating that you get a larger share then you can remind them that they had promised this before and how do they think that might be written in - and have they made sure your sibling knows and understands.

@cptartapp ‘I bet DC 2 is the daughter in this instance and DC1 the son’

You are projecting and generalising in a sexist way - daughters aren’t intrinsically needier or given an easier ride than sons. The OP has said she is DC1 and her brother DC2.

OP - I would actually talk to your family solicitor about this, even though it will cost you a couple hundred quid - there must be some standard way of linking to inflation. That way you can make a suggestion based on what your solicitor says, your parents can ask theres, and if necessary split the difference. It will be less personal if the suggestions come from solicitors/accountants.

You may have to accept though this won’t get fully addressed, depending on how much money your parents have overall.

They surely want to talk to you about it just in order to clarify that they want to make it fair hopefully but they want me to make a specific trip to see them (it's a 2 hour round trip) without the children to discuss it rather than just having a chat on the phone or just having a quick chat when we all meet. So it sounds as if they are anticipating quite an involved conversation. That's why I want to have thought about it first.

I know they didn't take any legal advice when they made the gift to my DB and his partner so it is possible that the solicitor they've now talked to about the will has raised issues that they didn't think about then.

You are projecting and generalising in a sexist way - daughters aren’t intrinsically needier or given an easier ride than sons. The OP has said she is DC1 and her brother DC2.

Yes in my case it's very much the other way around. I am the hard working sensible one who can be relied on. He's the golden boy and the baby who jokes his way though life and is indulged. I think we've been cast in those roles since primary school.

Why not start with your post about never expecting an inheritance and wanting them to enjoy it, to soften whatever comes next?

If I'm being completely honest, I don't think your parents should have given one sibling £100k and then said they want to make a split will "fair". It's not possible (as others have said - inflation, care homes etc.) to make it fair 20 or 30 years later. The fair thing to do would have been to give you both £100k, or both £50k etc. I think the best you can do in these circs is to take £100k out of the estate, with the rest split equally, and ignore inflation. Another option - to avoid the awkward grabby feeling - would be to ask that your share be directly willed to your children, so it's not about you, per se.

My DPIL gift both their children equal amounts, despite different circumstances. They have helped my siblings-in-law out of several financial holes, but are always (generously) adamant that they will give us the same money, to avoid any kind of falling-out. They have got quite cross about it when we've tried to return larger sums. Whenever I read these threads, I think they have it right.

Just because they want to have this conversation with you, doesn't mean you have to have it.

My parents "lent" my younger brother about £20k for a house deposit, he was supposed to pay them back but when it became obvious that that wasn't going to happen, they changed their wills to say that I'd get £20k before the estate was divided - no mention of index linking or inflation though.

I did know about the loan from the beginning, my mum was very concerned that I'd think it unfair, but I said it's their money to do what they want with, she's always much more concerned about giving us equal amounts than I am (although I suspect that my brother would cause a fuss if he thought I'd had more than him...)

A similar situation happened in our family. A large lump sum was given to one sibling to enable them to get on the property ladder.
It's written into the will that all the other siblings will get the same amount first to level things up and then the remainder split equally. Not sure how things will pan out if they need to sell up to pay for care...

It’s the index linking that makes it fair. Sure 100k sounds like a lot of money, but getting a lump sum later in life is not the same advantage as having a smaller mortgage all your life.

30 years ago DH’s parents bought his sibling a house for £30K. DH was told he would get the same but never did. When his dad died his mum gave DH the same amount of money. Getting 30k in your 40’s isn’t the same as being mortgage free in your 20’s. That house is now worth about 180K. They had years without having to pay a mortgage enabling them to save, before selling and using savings plus the equity to move several rungs up the ladder.

Your parents could invest the money in a bond/ trust between the 3 of you. When parent one dies it goes to parent two and then onto you.
Say 100k gives you a return of 3-5k per year. The markets are doing well at the moment so you could get more. That interest is reinvested back into the bond so the amount grows.

I can see how this has raised difficult feelings that are not just about the inheritance itself. I agree that there should be some way of index linking the 100k. Theoretically, it should be linked to property prices, especially because houses have gone up in price more than the standard CPI/RPI.

It might also help to have a sentence explaining the decision and how it was reached.

They're only 70. Could they give you a share of their house? It would increase in value just as your brother's has and it means it would be paid out to you before any care home fees come out.

The most straightforward way would be to mention the previous gift to DC2 and that DC1 would be entitled to 100k of the estate. The remaining value could be divided as your parents wish among their offspring and grandchildren.
How long ago was the "gift" to DC2? A transfer of wealth of this size would still come under inheritance tax rules for 7years after the date of the gift.

I remember your last thread OP. You were very stoical, but I remember being upset on your behalf that your brother got the money and your parents only told you right at the end.

I’m a solicitor, but not in your jurisdiction. But here you can have something in the will saying “I give [insert amount] to DC1.”

If you want the amount adjusted for CPI/inflation, you can include:

“The amount referred to in paragraph XX is to be adjusted for inflation from the date of this will to the date of my death according to the movement of the CPI between those two dates.”

However, we don’t have inheritance tax here, so you would need advice as to whether this impacts that.

You should also ask your parents, what is their plan if one parent passes first, does that gift come out of the first will, or are they mirror wills where it’s all left to the other partner, and the gift comes from the second will?

Finally, what if there is no money left - IHT or care home fees or just spending. What do they propose to do then to ensure the money is fair?

I’m encouraged that they are actively trying to put it right, and I would strongly encourage you to work with them to get wording and an outcome you are happy with. If you do so, hopefully you can move past the favourtism and hurt feelings from before (and despite what people are saying, I read the other thread and you are 100% right to feel this way!) and start to enjoy your relationship with your parents and brother again. I fully appreciate what a kick it must have been last time.

I think you should also share with your parents how this made you feel, as it their minds, they thought/knew they were going to be ‘fair’ later, so it was fine. But you knew nothing of the sort, and whilst it’s nice to assume families all ‘play fair’ after a death and can work it out between themselves, my profession shows me every day that is ain’t so.

Also, I agree with others that increasing it via CPI will be less than the value of increasing it by equity in a property

This is further complicated by he fact that what the brother has benefitted from is not paying mortgage interest on the money too and IHT could come in when the parents die

No easy answer unfortunately but a positive start that your parents have raised the issue of their own accord

If your parents were to die within seven years of the "gift" (I know you think this won't happen) it would become subject to inheritance tax rules. The overall estate value would be decreased because of the gift I believe?

party
You're quite right I am projecting. Just basing my assumption on thirty years of personal and others' experience.
This is probably the top of the iceberg.

Rather than changing the will to a cash allocation, which might not be available when the time comes, would your interest be better served by transferring to you now an interest in their property? So if their house is worth £300k and they want to give you £100 in today’s money, they actually update the house title to make you the owner of one third of the house. That way, you would benefit from the inflation in house prices on the same way that your brother is.

Thanks for the replies. I am just checking in whilst having lunch at work and will come back properly this evening. I can see the part ownership of their house might be fair financially but I'd be really uncomfortable with anything that would compromise the securiity of their home.

I think it probably is impossible to make it fair because getting a gift at this point in life has such an impact on what else you can do e.g. using money that would have been spent on mortgage for pensions or getting children started in life without debt etc. The main aim now probably has to be trying to re-set relationships.

Setting aside the £100k.

As someone who recently lost a parent, I know having a face to face conversation with your parents about their will and wishes can be very helpful.

Knowing whether a parent wants a DNR, what their funeral wishes are, what they want to happen when one dies, Power of Attorney, downsizing their home (too many leave this too late), etc. All of this can help both with decisions you may need to make during their life but also grieving after their death. I would urge you go and have the wider conversation.

With regard to the £100k, I am in a similar position and what matters to me is a clause my parents will treating me equally. It doesn’t matter that there may be no money, it is my parents saying we loved you equally. It’s very hard to convey that it’s about love not the money. What still upsets me is my sibling asking my bereaved parent for a further lump sum for their children (grand children) before we had even had the funeral.

There really isn't anyway to make this fair and there are a number of pitfalls ...

It's straightforward enough to write the will so that you are given the first £x, and any residual is divided between you. This means that your allocation benefits from the IHT free allowance.

One way of capturing the 'fair' capital growth would be to adjust the £100k by the increase in value of the other sibling's house. Tricky to get a market valuation but that is where I would start.

£100k was x% of the house purchased
Your adjusted amount would be whatever that x% is worth now.

Any share that you were given of their existing house would be subject to capital gains tax when sold, which would significantly reduce your share.

Good luck.

I am very sorry for your loss Margaritatime . I think you are right that as we are going to have a difficult conversation anyway it would be a good opportunity to go through those things. You are right, the issue is really about love not money and the emotions involved can be very strong.

Thanks very much for the thoughts on how to make it fair and especially FollowYourOwnNorthStar for the really detailed points to consdier. The gift to my brother was about 18 months ago, not long before COVID hit. My MIL has very suddenly developed some quite complex needs in that time and is likely to need care for a long time. Looking at the costs of that for her I also worry about deprvation of assets etc if anything were to happen to them. Happily all of my grandparents lived at home till late 80s/90s and none needed care for more than a few weeks so I think they might be a bit optimistic in planning.

Completely understand where you're coming from OP. Exactly the same thing has happened to my DH, his other siblings were each given £50k around 10 years ago. He was told he'd get his £50k as inheritance. Likely they'll forget though and he's accepted that he's unlikely to get anything from them.

What stings though is that £50k reduction on our mortgage would represent a £200 per month saving, and 10 years on, we could have saved £24k. So the siblings' gift is already worth £74k, and that's without inflation.

I have no idea how this could be done fairly, but I really feel for you. I feel very sad for my DH, he's always there for his parents, they rely on him, he's the only one who does nice things for them.

I'm making sure that our children won't ever feel this way.

One of your early posts made it obvious you were DC1. It was the line about planning for children. It read that you feel penalised for being prudent and I don’t blame you. I couldn’t understand giving one child so much and the other nothing.

This happened for my mum’s family too, but for a smaller amount (but still a considerable chunk of the estate).
The will didn’t get rewritten, and the beneficiary of the original gift (who hadn’t talked to her remaining parent for eighteen months before their death) still contested the value of the house.

I would say to them that you feel relieved that they are wanting to balance the gift they gave to your brother, but they should discuss how best to do this with the solicitor drawing up their will. However, as a starting point, they might like to suggest that the first £100k of any estate goes to you.

Then say “it’s an emotional thing to think about, and these things sometimes require a more dispassionate head so best discussed with the solicitor. But it means a lot to me that your intention is to balance out the gift. Good luck with the solicitor!”

Then they know it is a ‘thing’ for you, but gives you a way out.

It’s tough stuff, OP, and I am sorry you have grown up in the shadow of a Golden Child.