Money transfer to a sibling

[Red Jim]

Hi everyone. I took over the mortgage on my family home some years ago. Part of the agreement was then when I was able, I would give my brother 20k to compensate him for what would have been his share if the house was sold. I am now in a position to do this, but am concerned about attracting negative attention or fees if I just do it as a bank transfer. Could anyone please offer me some advice on how I go about this?

Many thanks in advance

James

[jaguarsuk]

What sort of negative attention and from whom?

[ostell]

So was your brother left the share of the property in a will?

[Red Jim]

I was just unsure if you could transfer large sums of money legally.

No. We just agreed between ourselves that I would keep the house and I would give him 20k.

Thanks

[Phaeton]

Whose names are on the deeds, by getting the £20K is he giving up all his rights to the property (if he has any) if it is sold later.

[jaguarsuk]

The bank may contact you to ask why you are transferring it as part of their anti-fraud measures, to make sure some crook hasn't got your internet banking details and is lifting your money.

Other than that you shouldn't have any troubles.

[Amethyst]

Whose names are on the deeds, by getting the £20K is he giving up all his rights to the property (if he has any) if it is sold later.

And to add to this, do you have an agreement in writing between yourself and your brother ?

I would check with your bank as some banks have transfer limits - HSBC used to have a £10k limit (not sure if it's gone up as that was a while back) and Natwest have a £20k limit. For transfers over their limit you might have to do a chaps payment which carries a fee usually ( about £20 ) - Speaking to your bank in advance will also save any issues when you make the transfer and prevent the money being held up while checks are carried out / anti-money laundering checks are made. You could get a cheque made out to your brother instead.

[Red Jim]

Thank you very much for your replies. The deeds are in my name and I have a mortgage on the house now. He has no present or future legal rights on the property. I bought the house from my mum (she is still alive). There was a large outstanding mortgage which I had to pay off. Once bought, the property had 40k equity in it. As this 40k would have been our future inheritance, I agreed to give him 20k.

upon your advice, I will contact the bank first. I just wanted to ensure that it was legal to transfer a large sum of money and that there were not any tax implications.

[jaguarsuk]

Thank you very much for your replies. The deeds are in my name and I have a mortgage on the house now. He has no present or future legal rights on the property. I bought the house from my mum (she is still alive). There was a large outstanding mortgage which I had to pay off. Once bought, the property had 40k equity in it. As this 40k would have been our future inheritance, I agreed to give him 20k.

upon your advice, I will contact the bank first. I just wanted to ensure that it was legal to transfer a large sum of money and that there were not any tax implications.

Your brother isn't inheriting it from you though nor has he sold anything so no capital gains tax either. You're just a brother who is being nice to his brother and giving him a gift of £20,000.... nudge nudge, wink wink

[Phaeton]

Red Jim we weren't insinuating anything but you read on this forum things you would not believe happening between family members, it's as much protection for yourself as anything else, but the bank will advise you, also your brother may have to declare it as unearned income & possibly pay tax on it if you do not survive 7 years, hopefully will be able to tag somebody who can confirm that last bit.

See I stand corrected Thanks jaguarsuk

[warwick65]

Your brother isn't inheriting it from you though nor has he sold anything so no capital gains tax either. You're just a brother who is being nice to his brother and giving him a gift of £20,000.... nudge nudge, wink wink

Not exactly true I'm afraid. If you give your brother £20,000 you will have to survive 7 years to ensure there is no CGT however there are ways of mitigating it, you could give £3000 a year every year

https://www.moneyadviceservice.org.u...nheritance-tax

I would take some advice

It used to be that you could use up the last two tax years so could give 9K with no implications

[jaguarsuk]

Red Jim we weren't insinuating anything but you read on this forum things you would not believe happening between family members, it's as much protection for yourself as anything else, but the bank will advise you, also your brother may have to declare it as unearned income & possibly pay tax on it if you do not survive 7 years, hopefully will be able to tag somebody who can confirm that last bit.

See I stand corrected Thanks jaguarsuk

I was referring more to capital gains tax than inheritance.

If you passed in 7 years he would be liable for tax on the sum, the reason behind this is to prevent people from just giving away all their wealth a couple of years before they die to purposely avoid tax.

[jaguarsuk]

There are also other ways around it.

If you have a partner and children you could give them £3K each and then they feeling very generous could give your brother £3K each.

[Red Jim]

Yes, I understand the inheritance tax bit.

Thank you all so much for your advice. It’s admirable that so many on here give there time and knowledge for free.

im sure you’ll be due some good karma

[warwick65]

There are also other ways around it.

If you have a partner and children you could give them £3K each and then they feeling very generous could give your brother £3K each.

Sorry this is wrong. The 3000 limit is an overall total not per person.

I know this via my parents financial advisor