Eighteen years ago I opened what was then known as Jacqueline Emmerson Solicitors in Sunderland with one secretary and no clients. I had no idea where I would be eighteen years later. All I knew was that I had hit the glass ceiling, I wanted a better career and I knew that I could offer […]
We were contacted recently by a lady who had loaned her parents tens of thousands of pounds to assist them to purchase their home. This being a family affair there were no documents available showing her interest in her parents home. She wanted to know how she was going to get her money back!
In Divorce and Separation cases Emmersons Solicitors Family Law Department are frequently dealing with situations where one or other of the parties, or sometimes both, say that their parents want their money back now that the couple are separating.
It is now extremely common for younger people to be given gifts of money or loans to help them purchase their first home. At Emmersons we would say that this happens in about 10% of cases. The property is then either purchased by one person using that money or by a couple using money from either one or both sets of parents.
Yet very few families sit down and discuss the situation properly. Is the money a gift in which case the parent does not expect to be paid back whatever the circumstances. Or is it a loan, and if so what are the terms of repayment? When money is handed over it is often seen as a good thing; your child is making their way in life and you are proud to be able to help them. But did you plan for the following situations?
In one case a young couple,Tom and Laura, moved to London. As you can imagine house prices were beyond their means. Tired of renting, Laura asked her parents if they could help out. They gave their daughter £40,000 which Laura and Tom used as a deposit on a nice flat. Fast forward two years. Tom decided it would be a good idea to become a cocaine addict. He got into debt and Laura frankly had had enough of him. When she asked Tom to leave, he said he would happily go if he could take his share of equity in the flat. Neither he nor his parents had contributed any capital and often he hadn’t even contributed to the mortgage because of his drug habit.
Unfortunately Laura and her parents had assumed that as they had contributed the deposit Laura would be OK. In fact the property was owned by Tom and Laura in such a way that he was now entitled to half of the equity. No one had taken legal advice on the point. There was no evidence of the money being given as a loan, there was no trust deed showing either Laura or her parents as owning a greater share of the property than Tom. Worse was to follow; the flat had shot up in value and the equity was now £120,000. So Laura had to find £60,000 to buy out Tom’s share or lose her home. Yet again her parents had to come to the rescue!
In another case, Evie and Sal wanted to buy a house together. Unfortunately Sal couldn’t obtain a mortgage in her name. So the house was purchased in Evie’s name only. Shortly thereafter Sal had money available to contribute to the property. The couple contacted the building society and, finding out that it would cost about £500.00 in legal and other fees to have Sal’s name added to the legal title, they decided not to bother.
During the next five years Sal paid her share of the mortgage and she paid a lump sum to have a conservatory built on the property. Unfortunately Evie’s business folded during the recession and she amassed a huge amount of debt. She was eventually declared bankrupt and her Trustee in Bankruptcy sought the full equity in the property. Because Sal had no registered interest in the house it was a very difficult process to convince the Trustee that Sal had money tied up in the house. It took over a year to defend Sal’s position and to make sure that she was able to retain some of her equity. It cost Sal thousands of pounds to defend her case. A lot more than £500.00!
Have you been asked to lend or gift money to a relative so that they can purchase a home? Do you want their partner to benefit from your savings if the couple separate? Do you want your savings to benefit a Trustee in Bankruptcy?
Have you given money to elderly parents? If they have to go into a care home then how are you going to protect your money from being used to pay care home fees?
It is essential that you obtain the right legal advice when giving or taking money in these circumstances. Everyone involved needs to agree, and record in legal documentation, the terms of the monetary advance.
If this applies to you, contact us at Emmersons Solicitors to see how we can help you.
If you have just lost a relative you may be feeling overwhelmed and unable to work out what to do next. In practical terms you should see if your relative had a pre-paid funeral plan. This is very important because such plans can only be used with the company from whom they were purchased. You need to avoid using the ‘wrong’ funeral parlour which would mean in effect having to pay a second time.At Emmersons Solicitors we ask our clients, when they make a will with us, if they have a pre-paid funeral plan. If they do we keep a record of the same. If you can’t find a plan in the home of your relative have they advised their solicitor that they have one? If you are reading this and you have such a plan have you advised your relatives or friends about it, could they find it easily when needed? If there is not a plan in existence then any funeral director will need to know that they are going to be paid.
At Emmersons, if we have evidence that there is money available in your relative’s estate, we will contact the funeral director and confirm this. We will arrange for the invoice to be sent to us if we are instructed to deal with the estate. Then we will apply directly to the bank for a cheque to be made payable to the funeral director. We find that for many clients this takes away the worry of how to pay for a funeral.
Another issue that will require your urgent attention is in relation to empty home insurance. If your relative lived alone then their home will now be empty. Their insurer needs to be contacted and advised of this. Some insurers will allow the insurance to continue in the name of the estate. Others will require window locks on all windows and five lever mortice locks on doors. Some will refuse to continue the insurance as they will see it as too risky. You must not overlook this.
We have had cases where property has been set on fire whilst empty or has flooded. This will obviously affect the sale price. Have you told your relatives the name of your insurer? Could they easily locate your insurance policy? If a property is empty you should also consider turning off the water. Some insurers will insist upon this. Who has keys to the property? Were there carers holding keys? If you are not sure that you can locate all keys you should consider changing the locks on an urgent basis.
The estate now technically owns all of your relative’s assets until such time as it is distributed, usually after a grant of probate. Therefore you must protect all assets within the estate. This includes jewellery, cash and antiques. You will need to register the death at your local civic centre
or town hall. You will find the Registrars Department to be very helpful. It is often possible to book an appointment. They will hand you forms so that the death can be registered once with all relevant government departments. You should order about five death certificates.
Financial institutions will need to see an original rather than a photocopy. You will also need to arrange the funeral. Did your relative let you know their wishes? If you didn’t have a discussion about this it may be included within their will.
At Emmersons Solicitors we ask all of our clients if they would like to include their funeral instructions within their will. About half choose to do so. It is important if you have particular wishes that you let your relatives or friends know what those wishes are even if included in your will. Sometimes a funeral has already taken place before we are contacted by relatives. If there is to be a burial in a family plot you will need to locate the paperwork relating to this. Again this information may be held by the family solicitor. The above issues are the most important that need to be addressed following the death of a relative or close friend. They will be dealt with within the first two weeks. Obtaining probate is the second part of the process. This obviously takes longer, usually between four to six months.
At Emmersons Solicitors our Private Client team are able to help you by offering you expert help and by taking away further worry and stress. Whilst this is not the most joyful of topics, I hope that it gives you food for thought in relation to your own affairs. If you are faced with the death of a loved one then hopefully this information is of some practical help. If you do need advice then please don’t hesitate to contact us on 0191 2846989.