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Buachaill
Buachaill, Barrister
Category: Law
Satisfied Customers: 10527
Experience:  Barrister 17 years experience
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I wish to pay off a portion of my parents mortgage, about 30

Resolved Question:

I wish to pay off a portion of my parents mortgage, about 30 000GBP. THEY ARE AGED 80 AND 78. I AM 54. We are all UK resident. The money is currently in France. What should I be aware of apart from potential IHT if I do not survive 7 years? Thankyou. Sophia
Submitted: 11 months ago.
Category: Law
Expert:  Buachaill replied 11 months ago.

1. Dear Sophia, if you intend that this be a gift to your parents, then the only thing to consider is IHT. However, if you wish to either obtain repayment of these monies or to obtain a property interest in their home, as a result of the advance, you will need to draw up an agreement whereby you are given either the right to seek recoupment of the loan or that you get a property interest in the property subject to the mortgage. This too can have tax advantages, as your parents' estate will be reduced in value by the amount of money due under the loan or the value of the property interest.

Expert:  Buachaill replied 11 months ago.

2. The tax advantage of treating the monies as a loan is that you don't then pay IHT upon the death of your parents' on the value of the monies you have advanced to them to pay off the mortgage.

Expert:  Buachaill replied 11 months ago.

3. Please Rate the answer as unless you Rate the answer your Expert will receive no payment for answering your question.

Customer: replied 11 months ago.
Thankyou. If I wish to draw up a recoupment loan agreement such that the loan is potentially repaid on their death and their estate is reduced by the amount of the loan:
-how do I go about this? is a simple loan agreement drawn up between us sufficient or would it need to be legally registered in some way?
-can it be "open-ended"? ie repayable on the death of the second parent or sale of the property, whichever is soonest?
Sophia
Expert:  Buachaill replied 11 months ago.

4. You can have a simple loan agreement drawn up to provide for repayment upon the death of the second of your parents or upon the sale of the property. A solicitor can draw one up for you and register the loan as a charge on the property so it takes precedence over any other competing interest. However, the issue of registration of it as a charge only arises if there is the possibility of someone else lending money.

Expert:  Buachaill replied 11 months ago.

5. The terms of the loan agreement can be open ended. You don't have to specify an exact time of repayment. However, you will merely specify occasions when the loan can be called in, such as the death of the second parent or the sale of the property.

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Customer: replied 11 months ago.
Perfect, thankyou.

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