Cash Gift Written in a Will but Given Early

[flawless101]

Our family finds itself in a strange situation after our mother's death.

One family member has been pleading poverty for years and so Mum wanted to leave her money in her will.
So Mum put in a clause in her will saying that this family member was to be given around £50,000 on her death.

About 2 years ago, this member came to mum and said that she was in dire financial straits and said she couldn't afford to pay the mortgage. Mum discussed this with me and I said I was ok with it but it was up to her. Mum paid most of her mortgage off - in fact, mum paid over £80,000 into her mortgage account, well over the £50,000 mentioned. Mum was trying to help her out as Mum's thinking was that this member would get her money now rather than on her death.

Mum never got around to changing her will because of ill health - she was virtually housebound, so the clause (£50,000 on mum's death to this family member) never got removed from her will.

My question is, now Mum has passed away, do the executors still have to give this family member the £50,000 - as stated in the will - even though this family member has already been given the cash?

Thanking you for your reply.

[des8]

Shouldn't really cause too much of a problem.

There are two aspects to this matter.
One is the "Hotchpotch rule", and the other is "Double portions"

To save me a lot of typing I found this explanation on the Kingsley Napely website

Executors of a Will, directed to divide an estate equally among the deceased’s children, are not required to bring into account ('hotchpot') any sums received by individual children during the deceased’s lifetime.

If an allowance is to be made for lifetime gifts before dividing the estate, then:

• The person making the Will (the “Testator”) should include a specific 'hotchpot clause' in their Will (and, sensibly, keep a list of gifts with the will, updated from time to time as necessary); or
• Should leave specific sums of money to one or more of the children to compensate them for gifts made to the other children. Perhaps the parent has been helping each child with a deposit on their first house or flat purchase. The parent might want to ensure that those children yet to be helped on the property ladder receive an equivalent payment under the Will.

But there is a rule against 'Double Portions'

The law assumes that even if a Testator doesn’t leave his estate equally among his children by his Will, that he wouldn’t want any division upset unfairly by reason of a substantial gift after the Will was made.

The law states that any gift sufficiently large to be sensibly assumed to be on account of the child’s share in the estate on death, will be treated as a 'portion' and brought into account on the division of the estate.

It’s for the child that received the substantial gift to produce evidence that the gift was not intended to be on account of /a portion of their entitlement on the parent’s death.

To be a portion, the gift needs to be substantial, a financial 'leg up', rather than a gift that might have been expected to have been made in any event.

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Don't forget IHT might be due on the gifted money

[flawless101]

Shouldn't really cause too much of a problem.

There are two aspects to this matter.
One is the "Hotchpotch rule", and the other is "Double portions"

To save me a lot of typing I found this explanation on the Kingsley Napely website

Executors of a Will, directed to divide an estate equally among the deceased’s children, are not required to bring into account ('hotchpot') any sums received by individual children during the deceased’s lifetime.

If an allowance is to be made for lifetime gifts before dividing the estate, then:

• The person making the Will (the “Testator”) should include a specific 'hotchpot clause' in their Will (and, sensibly, keep a list of gifts with the will, updated from time to time as necessary); or
• Should leave specific sums of money to one or more of the children to compensate them for gifts made to the other children. Perhaps the parent has been helping each child with a deposit on their first house or flat purchase. The parent might want to ensure that those children yet to be helped on the property ladder receive an equivalent payment under the Will.

But there is a rule against 'Double Portions'

The law assumes that even if a Testator doesn’t leave his estate equally among his children by his Will, that he wouldn’t want any division upset unfairly by reason of a substantial gift after the Will was made.

The law states that any gift sufficiently large to be sensibly assumed to be on account of the child’s share in the estate on death, will be treated as a 'portion' and brought into account on the division of the estate.

It’s for the child that received the substantial gift to produce evidence that the gift was not intended to be on account of /a portion of their entitlement on the parent’s death.

To be a portion, the gift needs to be substantial, a financial 'leg up', rather than a gift that might have been expected to have been made in any event.

************************************************** ****************************************

Don't forget IHT might be due on the gifted money

Thank you for your reply.
I just want to make sure that I understand the 'Double Portions' rule with an example.

Keeping it simple, Say there are four beneficiaries - A, B, C and D.
They are going to inherit a total of £450,000 from a parent/grandparent.
That should mean that normally each would get £112,500 each.

Let's say D was given £50,000 before the parent/grandparent passed away.

If we take into account the 'Double Portions' rule, does that mean:

A gets £50,000 plus £75,000 = £125,000 (where £75,000 is £300,000 divided by 4).
B gets £50,000 plus £75,000 = £125,000 (where £75,000 is £300,000 divided by 4).
C gets £50,000 plus £75,000 = £125,000 (where £75,000 is £300,000 divided by 4).
D gets £75,000 (where £75,000 is £300,000 divided by 4).

Is the above correct?

I guess what I am trying to ask is whether A, B and C would be given an additional £50,000 each and then the rest shared equally amongst all four.

[des8]

Using your example:
The standard way of calculating is to take the amount of the estate and add to it the amount already gifted to D, so you reach the size of the estate if the advanced gift had not been made.

So amount to be divided is £450,000 +£50,000 +£500,000
Divided by 4 each is entitled to £125,000
D has already received £50,000, so is given £75,000
The pot remaining (£375,000) is divided 3 ways so each ( A, B & C) receives £125,000

Same result as doing it your way