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Original poster

Did she inherit the car or not?

72 replies

Chopsticks888 · 27/10/2024 05:20

My FIL recently passed away leaving his estate to his 2 children- my DH and my SIL. A couple of years ago my SIL had a new car, there was no conversation about the car, and none was expected other than “What a lovely car” etc. It was just assumed she had bought it herself. When my DH and SIL were sorting through FIL papers they discovered that the my FIL had been paying for the car on finance. SIL said that she had believed it was an outright gift from him and was surprised that it still had £5K debt to pay on it. They are now having a disagreement about whether she should receive the outstanding £5K in addition to her half of the estate, or whether it should be included within her half of the estate.
I’d be grateful to get a wider perspective on this to help resolve it.

OP posts:
SheilaFentiman · 27/10/2024 07:15

rwalker · 27/10/2024 07:09

As others said debt come out of estate

but from DH point of view it always shit no matter how old you are when kids are treated differently
the sil has already had a handout of thousands and he got nothing

Maybe he got nothing. And maybe he lived at home for longer, or he went to uni and SIL didn’t, or FIL gave him some money for tools to start a business one time.

My brother has been gifted more than me along the way because he happened to need it more than me. I am at ease with it because I love him and his life is better for it.

ReluctantSwimMum · 27/10/2024 07:17

Chopsticks888 · 27/10/2024 06:58

2 siblings stand to inherit £60-80K each depending on house sale, so £5K not overly significant. But I see both sides of this, and am interested in what others would do.

I wouldn't fall out with SIL over £5k in that case. Stick with her plan for 50:50 of the remainder and let it go

Honestyy · 27/10/2024 07:21

SheilaFentiman · 27/10/2024 07:10

I don’t think there is a mechanism for this to happen. It was FIL’s debt and should be settled by FIL’s estate before the estate is distributed. If SIL and DH want to rearrange the money between themselves afterwards, then that’s separate.

Show quote history

Threads like these make me so happy I don't have parents who play favourites. OP's SIL received 1000s £ maybe even 10s 1000s £ from her dad so she's a CF for asking her brother to cough up £2.5k of his half of the inheritance so she can pay more towards her car.

ManhattanPopcorn · 27/10/2024 07:22

I agree with your Sil. Her father clearly intended it as a gift. If it was intended to come out of her inheritance he'd have said so.

These things can cause long term rifts in families. I think your husband should drop it. It's not worth losing his sister over.

anon2423 · 27/10/2024 07:23

It depends on where you are based and whether there was a will. In Scotland if there’s no will the debt would be settled from the estate (so any outstanding or upcoming monthly payments would be covered but NOT any balloon payments for PCP as the estate didn’t agree to cover those). Then any large gifts given late in life like this would be deducted from what SIL would receive from the estate (so DH share would be increased by this figure and SIL reduced). Not sure of if system in the rest of the UK.

Hercisback1 · 27/10/2024 07:24

I wouldn't fall out over it, it's 5k and the inheritance is much bigger.

Minor resentment perhaps but I'd get over it.

We don't know SIL or DHs standard of living/financial situation so perhaps FIL was trying to even things up a little?

Greenbike · 27/10/2024 07:26

Iloveglitterballs · 27/10/2024 07:05

This all sounds very messy. If the car was leased then it wasn't "owned" per se. If the finance is all in FILs name then it was leased to him. In what way did DSIL own it? A V5 in her name does not make her the owner, just the registered keeper.

If there was no will then your SIL has no right taking any money from FILs bank accounts to pay off the lease. How has she accessed the money? If the death was recent (and sorry for your loss OP) then probate won't have been granted yet. Has your DH applied to be an administrator of the estate?

It was daft of FIL to gift something he didn't own outright.

Edited

This. If the car is leased then neither SiL nor FiL are the owner. The lease company is the owner. SiL is the registered keeper. Legally the finance should either be immediately paid off so the estate can take ownership of the car, and SiL can then inherit it, or the car should be returned to the finance company. The lease agreement probably contains a provision about what happens on the death of the leased (FiL).

Personally I would say the executors should use the estate to pay off all remaining finance, such balance to be deducted from SiL’s half. Saying “but FiL gave her the car” doesn’t wash because he didn’t give her the car, as legally the car wasn’t his to give.

VioletCharlotte · 27/10/2024 07:27

It's not always about playing favourites. Sometimes parents help out a child at a time when they need it. For example, if SIL was single, struggling financially, her car broke down and she couldn't get to work, then why shouldn't her father help her if he was able? Would people seriously expect him to gift her son the same amount, just to be fair, even if he was in a secure financial position?

Without knowing the backstory in this situation it's hard to judge who is correct, if this was me and my brother though, I wouldn't be quibbling over an extra couple of thousand.

Honestyy · 27/10/2024 07:27

VioletCharlotte · 27/10/2024 07:27

It's not always about playing favourites. Sometimes parents help out a child at a time when they need it. For example, if SIL was single, struggling financially, her car broke down and she couldn't get to work, then why shouldn't her father help her if he was able? Would people seriously expect him to gift her son the same amount, just to be fair, even if he was in a secure financial position?

Without knowing the backstory in this situation it's hard to judge who is correct, if this was me and my brother though, I wouldn't be quibbling over an extra couple of thousand.

He could've got her a cheap car out right. Sounds like it was a new expensive car.

SheilaFentiman · 27/10/2024 07:32

Honestyy · 27/10/2024 07:27

He could've got her a cheap car out right. Sounds like it was a new expensive car.

Show quote history

And if he had got her a cheap (or expensive!) car outright, then that value wouldn’t be in the estate and SIL wouldn’t have its value taken off her share.

StinkyWizzleteets · 27/10/2024 07:33

Depending on the country your FIL lived and how long ago she was gifted the car, it might be that the gift is taken into account as part of inheritance.

in Scotland we as inheritors had to declare any financial gifts (including big things like cash or cars) in x amount of years prior to the relatives death. It was I think for inheritance tax purposes even although the amounts of inheritance were nowhere near the threshold.

Why is a lawyer not sorting out the financial aspects of the estate and arranging who is owed what according to either the will or rules of intestacy?

MikeRafone · 27/10/2024 07:36

Legally debts have to be paid - so the car finance needs to be paid to the car finance company ( not sister) the fact the debt is for a gift to sister is immaterial- it could be a bank loan for a purchase and no one knows what the gift is or who had the gift

then the estate is divided as the will dictates and must be done in accordance with the law

SheilaFentiman · 27/10/2024 07:43

@StinkyWizzleteets there is no will. So it wouldn’t be a lawyer. I assume SIL or SIL/DH have applied to be administrator(s)

The CAB says this:

If there is no valid will, and you are the next-of-kin, you can apply to be an administrator in the following order of priority:

  1. you are the married partner or civil partner of the person who has died
  2. you are the child of the person who has died
  3. you are the grandchild of the person who has died
  4. you are the parent of the person who has died
  5. you are the brother or sister of the person who has died
  6. you are the nephew or niece of the person who has died
  7. you are another relative of the person who has died.
Soontobe60 · 27/10/2024 07:44

If the car is leased (and it’s not entirely clear if it is) then the lease will be over a set number of months, usually 36 months. After that point, the person who leased the car has 2 choices. Return the car or buy it at a value determined by the company they leased it off. The person who is paying for the lease is not the owner neither is the person who has possession of the car. Once you clarify how the car was purchased - lease, car loan, PCP - you can determine who the actual owner is.

Original poster
Chopsticks888 · 27/10/2024 08:02

They are joint administrators

OP posts:
HappyTwo · 27/10/2024 08:02

There is something not quite right here - we recently bought a car and the max lease options were 4 years - so this car being 2yrs old already with 5 years to go does not make sense. Besides in lease situations the car goes back to the car company unless the owner agrees to pay a bubble payment.

We were also asked how much mileage etc so they could come up with the lease payment amounts.

Also, the car would HAVE to be in her dad’s name so in theory part of the estate. A finance deal is always going to be in the name of the person paying the bills incase they default and the car needs to be taken back.

I would ask to see the paperwork and go back to car dealer to get them to explain things to you.

It’s not impossible but I would be very surprised if she does not know all the above.

Original poster
Chopsticks888 · 27/10/2024 08:09

SIL has dealt with all of this, she had the paperwork from the dealership that FIL had the agreement with, DH does not know the nature of the finance agreement, accessed funds to pay off the car from the joint account her and DH set up to put FIL savings/bank accounts etc into. Maybe she transferred the car into her ownership at some point in the process.

OP posts:
MontyDonsBlueScarf · 27/10/2024 08:19

I can see your DH would be upset about not being treated equally, but that already happened when FIL provided the car. Making it up financially now would even up the cash effect, but it won't alter how DH feels about his dad's decision. He needs to get his head around that as a separate issue. Getting into a financial dispute with his sister in an attempt to resolve an emotional issue would not be a smart move.

Equally, his sister probably feels that her dad's gift to her was made out of love and care for her, and that would be somehow tainted if she had to pay some of it back. She needs to get her head around the fact that her dad, for whatever reason, tried to give her something that wasn't entirely his to give.

Overall I instinctively feel that the best solution would be to split the disputed amount 50/50 between them. This acknowledges that they both feel disappointed and to some extent cheated out of something. Going forward they will be able to think that they treated each other fairly regardless of what their dad may have done.

Love51 · 27/10/2024 08:24

Everyone is saying don't fall out over 5k. But half of that 5k would be hers regardless of order of operations. So it would be 2.5k you were falling out over.
Having said that if I were the executor I would want to do everything correctly even if I had to find a way to vary the will to legally give her the extra 2.5k.

Original poster
Chopsticks888 · 27/10/2024 08:28

Thank you everyone for taking the time to respond. I am taking away from this that technically the extra 5K probably legally isn’t an entitlement due to SIL, but morally, it is the righf thing to just “complete” the gift, before dividing the estate. It would be very sad for them to fall out over this. Thanks all.

OP posts:
whowhatwerewhy · 27/10/2024 09:01

I would settle the finance bill out of the estate. Then split the remaining estate 50/50 .
Your DH wasn't gifted a car for reasons only your FIL knew , the finance became part of the estate so your SIL needs to accept that the estate will now be split 50/50 .

BettyBardMacDonald · 27/10/2024 09:05

Chopsticks888 · 27/10/2024 06:42

Thank you for your responses. The car was leased in FIL’s name but SIL is registered keeper and owner. It wasn’t used in anyway to benefit FIL as they live far apart.
SIL has used funds from the estate to pay off loan, and does expect to receive additional 50% of remaining estate and keep car. Her view is that the car was gifted two years ago, FIL didn’t tell her it was financed and had likely intended for it to be paid off before his unexpected death. Her view (which I do understand) is that as it was a gift, it should be honoured, keeping the spirit of it being a gift as her father had intended (FYI there was no will and the estate falls below IHT threshold.) DH view is that the outstanding £5k should be deducted from her 50%.

I agree with her. FIL intended to provide the car and if he'd lived longer would have finished paying for it.

The remaining amount is a debt owed by his estate and like all other debts should be paid before the remainder is divided among the heirs.

DustyAmuseAlien · 27/10/2024 09:18

The size of the estate can't even be calculated until all the debts of the deceased have been discharged so it will depend on the wording of the contract dad signed up to abd wherher he bought any kind of insurance policy that would cover the debt in the event of his death. Some car finance deals are more like rental agreements with an option to purchase at the end and if it was one of those then there is no debt to pay and SIL just needs to take over the payments from her 50% share of the assets. Others are structured with more commitment and if that's the case the executor must pay off the debt before calculating the amount to be divided 50:50.

Harassedevictee · 27/10/2024 10:22

@Chopsticks888 As joint administrators I believe DH should have full disclosure and see the paperwork. As pp have said establishing the facts will help decide the correct approach.

WRT the car and IHT this again may depend on the actual situation. Technically, if FIL made regular gifts out of income these may be exempt from IHT. Check if the repayments were completely out of his monthly income or not.

SheilaFentiman · 27/10/2024 10:58

Harassedevictee · 27/10/2024 10:22

@Chopsticks888 As joint administrators I believe DH should have full disclosure and see the paperwork. As pp have said establishing the facts will help decide the correct approach.

WRT the car and IHT this again may depend on the actual situation. Technically, if FIL made regular gifts out of income these may be exempt from IHT. Check if the repayments were completely out of his monthly income or not.

Edited

OP has said the siblings are inheriting 60-80k each so sounds like the estate is worth well below the top of the nil rate band and there won’t be IHT.

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