A fiddly wills question

[MyNameIsUrl]

This is a question about how to achieve an agreed split of an estate – it’s not a family conflict but all are aware of the need to do things properly.

Elderly Mother is in care. Father lives in the matrimonial home owned by both as tenants in common. Mother’s own cash is now reduced to a low level by care home fees. The rest of the family does not want Father to use his own cash or withdraw money from the house he lives in.

Their wills each leave everything to the spouse on the first death, then on the second death remaining assets are to be split with a large proportion to Daughter, the remainder being split equally between numerous grandchildren. The value of the whole joint estate will be less than the IHT threshold.

A generous relative has offered to pay Mother’s care home fees as her own cash runs out. This is not to be a loan, he does not want repaying.

Clearly, every pound paid by the generous relative will preserve the value of the assets of Mother and Father, and in due course that pound would be split between Daughter and grandchildren.

However, the Daughter does not feel it is right to benefit from the generosity – so the objective is for the additional preserved value of the assets to find its way eventually to the grandchildren only.

What is being envisaged by the family at the moment as a way of achieving this is some sort of loan note which specifies the money paid by the generous relative is a loan to Mother, repayable on death of Mother from her estate to the grandchildren in equal shares.

Will this work or are there complications we haven’t thought of, particularly if the size of the loan gets large compared with the residual value of Mother’s assets? What should the wording of such a ‘loan note’ be?

[didds]

I may have missed something.

Surely the simplest way is to leave it as it is, and when daughter inherits she then just gifts each of the grandchildren a share of what she feels is the total amount she benefitted by?

didds

[MyNameIsUrl]

I may have missed something.

Surely the simplest way is to leave it as it is, and when daughter inherits she then just gifts each of the grandchildren a share of what she feels is the total amount she benefitted by?

didds

This just seems a bit too informal - we'd like to do it 'properly', have something documented so that the intention is clear to all.

I certainly don't expect any legal challenges, but if it goes wrong and I come back on this board in a couple of years looking for guidance, I would expect to get challenged as to why there was no documentation whatsoever regarding what would by then be a large sum of money.

[melonfool]

I'm really confused by this.

I admit I don't really understand the concept of 'his money; her money' in a married couple. Surely all money is 'their' money?

Anyway, let's break it down a bit:

Person A = mother. Father = Person B.

Person A is in a home, funded by Person C - a generous relative.

Person A dies, all remaining money goes to Person B; or Person B dies, all remaining money goes to Person A.

Next A or B dies. Money goes to D (conveniently Daughter), and some shared between an undetermined number of Grandchildren.

Gift from C has preserved capital in A/B partnership and thus D would like the equivalent of C's input to go to the g'children (presumably C is a great aunt or something, or just a mediocre aunt....and thus has some sort of interest in seeing the g'children benefit, more than seeing D benefit).

I can't work out how to achieve it. What if C dies first? Why doesn't C just leave their money to the g'children and B pay for the care (as he should be doing anyway!). What if C's money, or goodwill, runs out? Or, they need care and have to pay?

I suppose changing the proportion of the money left to D vs g'children in the will/s would achieve it to an extent, but you won't know how much is needed. Also, is A capable of making a new will? Presumably if not, you have POA and can make financial decisions (but cannot change the will)?

I don't really understand the loan aspect - if the loan is repaid to C from the estate, where do the g'children come into that?

I'm obviously missing something though.

Mel

[vrdiver]

If the family friend (FF) wants to contribute to the care fees, and Daughter wants to avoid the perception of "taking money from family friend" as would effectively occur if her parents' estate is preserved by said payments, then how about asking if FF would be OK to open a savings account for each of the grandchildren and make the appropriate contribution that way?

Alternatively, thank FF for the offer and accept it, and then arrange for father* to gift a similar amount each month to the grandchildren?

Is there something sacrosanct about preserving the estate as-is? If father wants to preserve the estate in case he needs it for his own care, then I'd suggest the scenario is starting to get complicated and needs to be detailed as to how Mother and Father really want things to work out before further advice is appropriate.

VRD


*Could become messy if father predeceases mother, as presumably the care home fees would still be being paid by the family friend, but the asset transfer to the grandchildren would be interrupted.

[MyNameIsUrl]

I'm really confused by this.

I admit I don't really understand the concept of 'his money; her money' in a married couple. Surely all money is 'their' money?

Yes I completely agree ordinarily, but when one is in a care home, in some circumstances finances may be assessed (example from a factsheet: Q: Does my partner have to pay towards my care home fees? A: No – only your individual finances should be assessed.)

Now you've challenged my assumption, I can see that his/hers is a bit irrelevant at the moment.

Anyway, let's break it down a bit:

Person A = mother. Father = Person B.

Person A is in a home, funded by Person C - a generous relative.

Person A dies, all remaining money goes to Person B; or Person B dies, all remaining money goes to Person A.

Next A or B dies. Money goes to D (conveniently Daughter), and some shared between an undetermined number of Grandchildren.

Gift from C has preserved capital in A/B partnership and thus D would like the equivalent of C's input to go to the g'children (presumably C is a great aunt or something, or just a mediocre aunt....and thus has some sort of interest in seeing the g'children benefit, more than seeing D benefit).

Yes, exacly, very succinctly put.

I can't work out how to achieve it. What if C dies first? Why doesn't C just leave their money to the g'children and B pay for the care (as he should be doing anyway!). What if C's money, or goodwill, runs out? Or, they need care and have to pay?

I suppose changing the proportion of the money left to D vs g'children in the will/s would achieve it to an extent, but you won't know how much is needed. Also, is A capable of making a new will? Presumably if not, you have POA and can make financial decisions (but cannot change the will)?

I don't really understand the loan aspect - if the loan is repaid to C from the estate, where do the g'children come into that?

I'm obviously missing something though.

Mel

If you're missing anything it's probably only the 'why' of all this - which I didn't detail in my post - and is really all about middle-aged members of a close family protecting the elderly members, one of whom is in a bad way in a care home and the other is distraught. The last thing they need is money worries or their wills being delved into.

I can see from your comments there are ways this could get more complex if circumstances change. But, just to try to explain your question of the loan aspect: if the money given by the relative is not a loan, then some of it legally will ultimately pass to Daughter. Making it a loan is seen as a way of keeping the option to pass it on to grandchildren in a way which is not determined by the wills. This was my original query - though I've since researched 'loan notes' and have seen they can be very complex, depending on circumstances. What we envisaged was a few lines in an email, along the lines of, 'this money transferred monthly for payment of care home fees, see attached schedule, is a loan from C, no interest payable, repayable on the death of A. The repayment sum to be split N ways between grandchildren of A'.

[MyNameIsUrl]

If the family friend (FF) wants to contribute to the care fees, and Daughter wants to avoid the perception of "taking money from family friend" as would effectively occur if her parents' estate is preserved by said payments, then how about asking if FF would be OK to open a savings account for each of the grandchildren and make the appropriate contribution that way?

You have put your finger on Daughter's position exactly, which is what is driving our need for help in achieving the aim of generosity finding its way to the right people in due course.

Having grandchildren's savings accounts would have a similar effect over time, but if the Family Friend passes the money to grandchildren now, there remains the cashflow issue of paying the care home fees now.

Alternatively, thank FF for the offer and accept it, and then arrange for father* to gift a similar amount each month to the grandchildren?

We - the younger members of the family - are trying not to involve Father as he is overwhelmed at the moment and this reciprocal arrangement of FF paying fees one the one hand and Father paying grandchildren on the other would be too much.

Is there something sacrosanct about preserving the estate as-is? If father wants to preserve the estate in case he needs it for his own care, then I'd suggest the scenario is starting to get complicated and needs to be detailed as to how Mother and Father really want things to work out before further advice is appropriate.

It's not that preserving the estate is sacrosanct, although Father may well need his own care. At the moment it really comes down to the Family Friend generously paying for care, whilst preserving a longer-term aim of grandchildren benefiting too.

[vrdiver]

Thanks for the updates - helps to understand more about this problem.

There is a risk that if FF pays the fees, and father then needs care, the assets that have been preserved with the intention of being passed to grandchildren, get consumed in the second round of care. A loan to the father, repayable on demand (as mentioned by another poster, payable to the gc) might be a way to protect against this.

In any case, I'd probably draw up a list of scenarios and then book an appointment with a solicitor: better to pay a small fee now than to risk a massive mess right when you don't need it later.

e.g.
Objective: the outcome you want to achieve (possibly more than one version, depending on differing scenarios, e.g. different survivor outcomes).

The proposed plan of action #1
The proposed plan of action #2 etc.

Always difficult to think clearly at a time of family stress: hope it goes well.

VRD