Loan agreement in respect of inheritance advance

[gillian54321]

My mother is 93 years old and no longer has capacity. She is my only surviving parent. I have one older brother, who is very wealthy, having lived at home for free his entire life, never having married or had children. He already owns one half of the family home, inherited in many years ago, my mother owns the other half, which she has left to me in her will. As she no longer has capacity (and there is no lasting power of attorney in place), it is effectively impossible for her to vary her will without the involvement of the Court of Protection; a route we do not wish to pursue.

I have come to an arrangement with my brother whereby he has agreed at this point to pay me for the half of the house I am due to inherit in advance of my mother’s death (the Asset), thus allowing him to secure the entire property in which he intends to remain living in future. This arrangement will grant me access to funds that I require now and allow my brother to secure the entire property at a price likely lower that he would otherwise pay for it in the future.

My brother’s only request is that the arrangement be formalised in a legal document, to be lodged at the family solicitors with my mother’s existing will but I am concerned that these solicitors may not be the most imaginative in matters not strictly routine. I appreciate there is no straightforward way to create a watertight legal agreement that caters to this scenario, as I am yet to inherit the asset for which my brother is to pay me.

My proposed idea for the basis of the legal document is as follows: a non-interest-bearing loan agreement whereby my brother agrees to lend me the current value of the Asset in exchange for repayment in kind upon my mother’s death, by way of ensuring the Asset vests in my brother. There would be no security pledged under the agreement, as I do not own any property in my own right, and I cannot pledge the Asset as I am not yet entitled to it.

There would also need to be provisions in the agreement to address the following:

• a highly unlikely scenario whereby I did not inherit the Asset, and therefore could not direct it to be transferred to my brother
• to provide that repayment would not fall due until my mother’s death and distribution of the estate

If anyone has any alternative ideas to formalise the arrangement I have outlined, bearing in mind the lack of capacity of my mother at this stage, I would be very grateful.

[Sam101]

It should not present a problem to arrange this in a legal format that would be acceptable to all and would not take any advantage of your Mother's situation, which is paramount in this instance.

If your brother is able to pay you in advance of your Mother's death, ( now), then it would be a written agreement signed and witnessed by you, your brother and a preferably a solicitor, which would remain with the Will and certified copies held by all.

That agreement would say that you would waive your right to that part of the property that is Willed to you in favor of your brother for a consideration of a sum which you have both agreed on to replace your inheritance.

In your own interest, I would suggest that you make sure that the valuation at this time is accurate and acceptable, as it may still be some time before your mother passes on and the property may be of higher value at that time. You would be disadvantaged by not having the payment now rather than when you mother dies, as you could be investing that sum for the remaining years

I hope you can see that this should not be difficult and feel sure that others have been in a similar position where solicitors have made such agreements. It would be advantageous if you could ask your brother to met the solicitors costs, but that's up to you both.

The agreement can incorporate what is necessary for the Land Registry to transfer the property to your brother when your mother dies.



Sam

[Sam101]

Gillian, I forgot to mention that your way of thinking makes no difference at all from waiting until your Mother passes on. The advantage to you is to be paid now for your inheritance which is in the Will. I have not considered other assets or investments that may be in the will to be distributed, which presumable you have considered.

[gillian54321]

Sam, I am most grateful to you for taking the time to respond to this matter, which is of significant importance to me.

Best wishes

Gillian

[Sam101]

My pleasure. Let me know if you need anything more, or if you wish to check out anything that is prepared for you.

If you do need more, it would be better to ask the question on the WILLS section of the forum as the Welcome forum may not be seen by those who can help you. Good luck.
Sam