Inheritance problems

[grahame]

First time poster, please be gentle with me!

I hope that you can give me some advice.

Sadly, my Mother In Law has recently passed away.

She originally had a will that split her property 50-50 between my wife and her brother. That will was made over 30 years ago when her husband died.

Over the last 10 years or so the brother has had very little contact with my Mother In Law. In the last 5 years he only visited twice and had not phoned her in all that time, just Christmas and birthday cards.

Several years ago she started to suffer from Alzheimer’s. My wife and myself initially cared for her with regular visits, we lived over a hundred miles away but still managed to see her at least every other week and spoke to her on the phone every day. She managed okay for a while and was able to have more or less of a normal life. She decided early on that because her son had effectively not shown any interest in her and little contact, that she wanted to have a new will which excluded the son from everything except a small bequest, leaving everything else to my wife. We tried to persuade her not to do this, as we felt that there would be a lot of friction when she died. But she was a stubborn woman and she just went ahead and did it, making the solicitor the sole executor of the estate.

Things moved on and about six years ago we tried to have her move in with us, but she wasn’t happy to move away from her many friends and interests.

We decided that there were two options, 1, that she should live in a care home or 2, we would sell up and move in with her. We took the very difficult decision to move in with her at her request, as we didn’t like the idea of her being in a home.

My wife had a job, which she had to leave and I had a small computer repair business with lots of customers that I would have to leave behind.

It took some time for us to sell our house and eventually lost about £40,000 as it got to the stage that my Mother In Law was unable to safely look after herself and we had to go for a quick sale.

Her house was in desperate need of repair (nothing had been done since the 70’s) and a refurb, we had an extension built as the tiny galley kitchen was inadequate and unsafe. We also changed the bathroom and did many other things to make the home habitable. We calculate that we have spent at least £35-40,000 on improvements to the house, being most of the profit we made on the sale of our house.

The last year had been very hard on us as my Mother In Law went down hill with challenging behaviour and increased frailty as the Alzheimer’s really took hold. Her son did nothing in all that time and the burden of care fell on my wife and I. I was only able to work part time and my wife, her full time carer as she could never be left by on her own.
In December, Mother In Law finally went into a care home and she died a short while ago.

Her son was told about her condition and he visited the care home several times in the last few weeks she was alive.

I apologise for the lengthy post but am nearing the end!

We always felt that it was unfair that her son was effectively cut out of the will and we want to redress that, if only for the sake of his grand children. However, we have lost a considerable amount of money due to the quick sale of our house, the loss of my wife’s job, the loss of earnings from my business and the money we have put in to improve the house and it’s value.

In view of the above, what would you say would be a fair split given the above circumstances?

Many thanks for your patience.

[swill453]

It's not really a legal question then, you just want to know how much your wife should give to her brother. Presumably via Deed of Variation.

It might help if you said roughly what size the estate was.

Scott.

[grahame]

Hi,
The size of the estate is approx £400,000.
Grahame

[Dod101]

A legal mind would be better than mine for some aspects but the first question is, presumably you are dealing with the matter under English law not Scots, because in Scotland the children of the marriage would have legal rights (50% of the moveable property split between him and his sister, your wife, that is excluding real estate such as a house; 50% because MIL had no spouse) If that were to apply you could leave it at that. These legal rights apply irrespective of what the Will says. Otherwise it sounds to me as if you must have had a very hard time and made considerable financial sacrifice anyway. Personally I would leave matters to be sorted out according to the Will.

If you want to do more, then you would need to start at a 50/50 split and then calculate your financial losses and be sure you deduct at least that from the 50% due to the brother. That though seems incredibly generous to me. Are you proposing to do this as a legal matter through the executor as a Deed of Variation, or just between yourselves? Whatever you do it needs to be watertight to avoid any problems for the future.

You could always do it as a benefit for the grandchildren, leaving the brother to get whatever is due via the Will.

Best of luck.

Dod

[didds]

Would it need a deed of variation?

Could the OP and wife merely inherit as per the will, ditto the brother,

then after the distribution make a payment equal to the amount decided?

Notwithstanding anything else involved for a starting suggestion based on a 50/50 split between wife and her brother what about

(value of House when OP moved in) divided by 2

or

(value of house at death - 40K) / 2

That 40K could be made into 80K I suppose, being loss of own home's value AND cost of repairs. That could be extended again I suppose if you factored in the cost of the visits before moving in (fuel etc). Maybe more if you factored in your subsequent loss of earnings. Ultimately its whatever the OP can make fly, and what his wife is happiest with.

I reiterate these are merely ideas to consider depending on what the OP+wide feel they would like as some sort of recompense

Good luck.

[swill453]

I would say that given the house is now your home, and you've also made improvements to it, then you'd be entirely justified in keeping all of that.

Maybe as a starting point consider giving half of what's left after the house?

Scott.

[Watis]

Not a legal opinion, but I'd leave it to the brother in law to make a claim if he thinks it appropriate.

And that may depend on whether he is aware of the contents of either, or both, Wills.

Worst case is that he thinks the first Will is still valid but has no knowledge of the later Will, so its contents will come as a shock to him.

Also, you mention taking a loss of £40,000 on the sale of your house and in the next sentence, spending the £40,000, being the profit on the sale of your house. Have I misunderstood?

Watis

[grahame]

The value of the house is approx £385K and £15K approx cash etc.

[swill453]

The value of the house is approx £385K and £15K approx cash etc.

So basically you'd be taking money out of your own savings and giving it to the brother in law. Very generous, but I don't think I would.

Scott.

[didds]

Also, you mention taking a loss of £40,000 on the sale of your house and in the next sentence, spending the £40,000, being the profit on the sale of your house. Have I misunderstood?

Watis

The OP can clarify but I took this to mean...

Example:
Bought house for 200K
Wanted to sell for 280K
Sold for 40K

thus lost 40K on the sale, but made 40K profit.

didds

[grahame]

Didds is correct, I was referring to the sale of our old house and using the profits to make improvements to my Mother In Laws house.

[didds]

bah - meant to put

Sold for 240K

didds

[Chrysalis]

I agree with the others, that you should not try to alter the will. If you want, and are able, to give some gifts to your BIl and his children, that’s probably a separate issue. It’s a can of worms though, as whatever you give will probably not be considered enough.
What is motivating your desires here? Does the BIL know about either of the wills?

[JohnB]

I'd make the BiL make the first move. He may not be expecting anything, but if he ignored your MiL he might be heartless enough accept any money you offered, even though he knew he didn't deserve it.

You MiL made her wishes clear when she made the revised will, and that was before you confirmed her trust by devoting the extra time and cost to her. I don't think you should go against her wishes and give any money to the BiL freely.

If he disputes the situation, you might give some money, but make it appear grudging.

[Clitheroekid]

In view of the above, what would you say would be a fair split given the above circumstances?

There's no simple answer, as the concept of what's fair is highly subjective.

However, the starting point is always what the testator wanted. It was your MIL's estate to dispose of, and she evidently gave it a lot of thought before making her decision. Consequently, there’s a strong argument to say what's fair is what the Will says. The brother gets his bequest and that’s it.

Once you move away from that idea of fairness it comes down to what you and your wife personally feel is right. This is impossible for any of us to know, and it really depends on your starting point.

If, as I suspect, your starting point is equal division then I suppose I'd adopt a mathematical model to arrive at what might be objectively considered a fair division.

It's clearly unreasonable that the brother should receive any part of the increase in the value of the house that's attributable to your efforts, so if you were merely to deduct the £40k you've spent (and the value of the work carried out if you did any significant amount yourselves) this wouldn't be enough. Your input has almost certainly enhanced the value of the house well in excess of the £40k / value of labour you've put into improving the house.

I would therefore start by assessing the value of the property before you moved in and then assessing what it would have been worth in that condition at the time of death. This removes any calculation of the value of the improvements you've made.

Assuming the house would have been worth, say, £250k, this would give a starting point of £125k for the brother. Then add £7.5k for the half share of the cash to arrive at £132.5k. Assuming the funeral and administration costs at £9k and deducting half that would give a figure of £128k.

By way of deduction from that total it's not unreasonable to include the £40k loss on your sale. Neither is it unreasonable to calculate the net loss of income for both of you since moving to look after your MIL. After all, if you’d stayed where you were, earning a decent income, you’d have had to pay someone to look after her or, once this became impracticable, pay for her to go into a home, which would probably have cost a fortune.

As you don't give any figures I can't put a figure on this, but say for example your wife was earning £25k a year net and your net income dropped from £50k to £25k. This would give a net loss of £50k per year.

You could alternatively work out the cost of supplying care from a commercial care provider to the level that you and your wife have given.

Strictly speaking, you should give credit for the saving you were making on not having to finance your own house, but I doubt that would make a lot of difference. In any event, you've lost the tax free capital gain that you would have enjoyed on your own house, which I suspect would have far outweighed the costs of financing it.

At the end of this calculation see what figure is on each side of the balance sheet. I suspect you'll discover that the brother actually owes you money!

Nevertheless, if you're determined to give him some money then there’s no point messing about with a Deed of Variation. You may as well just give him the money and have done. However, I would wait a while and see what his attitude is. If he accepts the Will as written then I'd actually be inclined to give him a bit more for at least having recognised that he didn’t deserve any more than the bequest.

However, if he indicates he's going to make a claim (and I might be slightly concerned about the fact your MIL made her Will after she'd been diagnosed with Alzheimer's) then instead of making him a gift you could offer him a sum by way of full and final settlement of his claim. This would avoid the risk of him accepting a gift and then making a claim anyway, and it would also have the merit of removing any guilt you may feel at having deliberately overridden your MIL's wishes.

[grahame]

Many thanks for all your helpful replies. You have given us some ideas as to how we are going to proceed.

We will be seeing the solicitor shortly and hopefully we will be able to sort things out to everyones satisfaction.

Grahame

[Charlottesquare]

Subject to the validity of the will it is obviously up to your wife to decide what she wants to do with the estate which ,from what you say ,has solely been left to her.

One area of very slight concern would be your MIL's mental capacity when she varied / rewrote her will, presumably the solicitor who drafted the revised will considered this when it was executed and will be able to attest to her mental competence at that time if so required. (The will is contested)

The reason I mention this is my father's solicitor who was also his ex junior partner (my father at the time long retired as a solicitor) had the unenviable job of ensuring my father had the mental capacity to execute a Power of Attorney in his later years, it was an interesting conversation but I think my father convinced him re his capacity by quoting relevant case law and statute, despite having been retired for over 20 years.